Annual Report (ESEF) • Mar 30, 2023
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Download Source FileUntitled 2022 Integrated annual report Table of contentsTable of contents Core report...............................1 01 Barco at a glance ...................................3 02 Our company .....................................12 03 How we create value ..............................21 04 Shaping our strategy ............................. 29 05 Our technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41 06 Our markets ..................................... 49 07 Our results....................................... 65 Governance & risk report . . . . . . . . . . . . . . . . .85 01 Corporate governance........................ CGR/3 02 Risk management and control processes . . . . . CGR/29 03 Additional risk information pursuant to the non-financial disclosure directive ...........CGR/44 Report on planet - people - communities 133 01 Our sustainability ambition statement ..........PPC/3 02 Our sustainability strategy . . . . . . . . . . . . . . . . . . . . . PPC/4 03 Our sustainability performance ...............PPC/10 04 Reporting on EU taxonomy ...................PPC/55 05 Managing sustainability ......................PPC/63 06 Annex .......................................PPC/66 Financial report. . . . . . . . . . . . . . . . . . . . . . . . 205 01 Barco consolidated .............................FIN/6 02 Information about the share .................. FIN/95 Integrated Data Pack . . . . . . . . . . . . . . . . . . . 310 Glossary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 323 GRI Content index ..................... 336 Assurance report. . . . . . . . . . . . . . . . . . . . . . . 344 All definitions for alternative performance measures (APM’s) as used in this report are available in the glossary as available on Barco’s investor portal and in Annex of the Annual Report This is the core section of Barco’s 2022 integrated annual report. Other sections are available via the download center at ir.barco.com/2022. CORE MORE • Governance & risk report • Report on planet - people - communities • Financial report ANNEX • Integrated Data Pack • Glossary • GRI Content index • Assurance report Barco Integrated report 2022 2 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Visioneering a bright tomorrow #wearevisioneers ‘Visioneering a bright tomorrow’, highlights our belief that truly great engineering starts with a clear vision – a vision of a better, smarter, healthier world. We are constantly thinking about how we can help and transform the quality of life of our customers, our employees and the world around us – not only today, but also in the next 10 or even 20 years. The concept of integrated reporting, which we launched in 2020, aligns perfectly with that vision. Integrated reporting focuses on how a company creates long-term value, and eectively tells the story of how value is created, both inter - nally and externally. By sharing that story, openly and transparently, with our inves- tors, employees and all other stakeholders, we can win their trust, which we need to achieve our ‘visioneering a brighter tomorrow’ mission. Barco Integrated report 2022 3 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Interview with our CEOs While the world economic outlook is shaky, our co-CEOs Charles Beauduin and An Steegen look back upon 2022 with satisfaction – and even a sense of pride. During their first full year at the helm of Barco, they have been able to turn the tide and steer the business forward. More than that, they’re confident the future looks good for Barco, even in today’s uncertain economic climate. Barco endured some rough times during the pandemic. Last year, you anticipated that 2022 would be a year of transition. Did this turn out to be true? Charles: I’d call 2022 a year of recovery. The engine picked up speed and kept accelerating as the year progressed. Barco met or maybe even exceeded expectations: both our sales and share price went up, which are clear tokens of market confidence. An: What’s just as important – or even more so – is the renewed dynamics in our teams. We managed to bring back a positive vibe, which became really apparent to us at our Capital Markets Day in September 2022. We gave our dierent teams the stage to talk about their performance, vision and strategy, and they did so with enormous enthusiasm. Our brand-new experience center, by the way, was a fantastic setting for show- casing the power of Barco technology. In 2022, the engine picked up speed and kept accelerating. That was reflected in our financials, yet just as important – or even more so – is the renewed dynamics in our teams. An Steegen Barco Integrated report 2022 4 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Looking back: keys to our 2022 success So, what is the secret behind that recovery and the new vibe? Charles: When we came on board, we immediately decided to simplify our organization. The structure had become too com- plex, at the cost of eciency, accountability, innovation and customer intimacy. While there was some skepticism about the reshue in the beginning, I’m pretty sure that everyone will now agree that this was a smart thing to do An: Indeed, that is one of the keys to our success. On top of that, we keep highlighting all the opportunities that Barco has in its markets and invest intensely, up to 11% of our sales, to accelerate innovation. Of course, we know that we won’t reap all the fruit of those investments immediately, but they are an absolute must for a successful future. Charles: We shouldn’t forget our investments in our manufac- turing capabilities. The focused factories that are underway will be largely automated and state-of-the-art, which will boost eciency, quality and agility. I’m sure these investments inspire trust as well, among all our stakeholders. China strategy China plays a leading role in Barco’s plans, yet 2022 hasn’t been the best year for the Chinese economy. Does that impact your China strategy? An: We can’t ignore the fact that it’s been a dicult year to conduct business in China. The covid lockdowns have really burdened the economy. Still, the foundations remain unshaken and we are hopeful that the economy will recover in 2023. Charles: Let me highlight that there are multiple reasons for us to strengthen our foothold in China. Sure, we are expanding our manufacturing footprint there, but not for mere cost-saving reasons. China is the world’s second largest economy and our market potential there is huge, especially in entertainment and healthcare. In our Chinese factories, we research, design and produce solutions for both local and global markets, and our on-site sales team understands the needs like no other. Looking forward: challenges along the way Looking forward, what do you consider to be Barco’s biggest challenges? An: Accelerating innovation, for sure. Image processing is part of everything we do at Barco and we’ve always been a visualization champion, but we need more groundbreaking, value-added solutions that ultimately set us apart. And we need them quickly, in order to keep ahead of our competitors. That does require a dierent mindset and new skills. We’ve taken great leaps forward in the field over the past year. What about the looming recession. Are you afraid it might impact Barco’s business? Charles: Most economists and other experts predict a mild recession in Europe and the Americas, and we hope they are right. Our portfolio is strong enough to weather a recession. Just look at today’s major market trends: images take center stage, hybrid is the new normal, big data is on the rise … Barco has the solutions to meet those exact needs. Sure, we are expanding our manufacturing footprint in China, but not merely to save costs. China is the world’s second largest economy and our market potential there is huge, especially in entertainment and healthcare. Charles Beauduin Barco Integrated report 2022 5 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS ESG: more than Environmental, also Social Sustainability is also one of the mega trends. Barco has set the tone in that field for years. Can you retain that frontrunner position? Charles: Sustainability has been in Barco’s roadmap for years and we keep sharpening our focus in that field. Besides boost- ing the sustainability of our own operations, we also help our customers cut CO 2 emissions, by providing them with increas- ingly modular, energy-ecient and circular solutions. An: What’s more, some Barco products are really part of the sustainability solution, like our ClickShare tools for hybrid meet- ings. When looking at the Social pillar of our ESG approach, we decided to put diversity and inclusion high on the agenda. It’s apparent even at the very top of Barco how diversity spurs dialogue, discussions and, therefore, creativity and innovation – and that’s just what we need as a global technology company. 2023 and beyond In conclusion, what are your expectations for 2023 and beyond? Charles: To continue along the path that we have been busy paving. Barco has tons of experience and expertise in visual- ization, which is a field with huge potential these days. And we have diverse, smart and ambitious teams who all work hard to build our future. I’m positive about what’s coming. An: I can’t agree more. And let’s not forget our customers, partners and investors who help us shape our story. Thanks to every single stakeholder for their continued support. Barco has tons of experience and expertise in visualization, which is a field with huge potential these days. And we have diverse, smart and ambitious teams. I’m positive about what’s coming. Charles Beauduin It’s apparent even at the very top of Barco how diversity spurs dialogue, discussions and, therefore, creativity and innovation – and that’s just what we need as a global technology company. An Steegen Barco Integrated report 2022 6 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS A word from our chairman Frank Donck Barco delivered strong results in 2022. We managed to recon- nect with our long-term strategic growth ambitions. Thanks to the entrepreneurship and creativity of all our teams, we reached our financial targets, in spite of the supply chain con- straints and unstable macro-economic context. 2022 was the first full year under the leadership of CEOs An Steegen and Charles Beauduin. The new organization they put in place has spurred the entrepreneurship, customer intimacy and focus in every single team. Together with the reopening of many of our markets, this has definitely accelerated our growth. Looking ahead, we remain vigilant about the macro-economic situation, but we are confident that Barco has laid solid foun- dations for further growth. We are expanding our markets and product portfolio and accelerating our innovation eorts to continue setting the standard in visualization and collaboration technology in the years to come. Looking ahead, we are confident that Barco has laid solid foundations for further growth. Frank Donck Barco Integrated report 2022 7 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS 1. How does the recession impact Barco? After two challenging years due to the pandemic, the world looks a lot brighter for Barco today. Our activities are well spread geographically across the globe, and the end-markets where our products are sold are very diverse. This provides a natural balance and buer. Although the recession and inflation are impacting many people and businesses around the world, Barco is resilient, as the underlying growth trends in its business areas are strong and sustainable: hybrid working, digitization of healthcare and an increasing demand for compelling entertainment experiences. Read more 2. Is ClickShare ready to thrive on the hybrid meeting trend? 2022 has proven that hybrid oce working – and, con- sequently, hybrid meetings – are here to stay. Yet, 71% of meeting participants complain that it’s hard to truly collab- orate and interact in hybrid meetings. ClickShare’s wireless conferencing room solutions are agnostic, utterly user- friendly and super secure. In this way, they ensure meeting equity: they make sure that everyone in a hybrid meeting is valued and heard, whatever platform and device they are using. Read more 3. What is the future of cinema? Cinema is alive and kicking. Throughout 2022, the box oce has improved significantly and is expected to continue its recovery in 2023. What is changing, however, is the need for premium experiences. More than reliving a great story, movie-goers want to enjoy a real night out – something they can’t experience from their couch at home. Cinionic and Barco are perfectly positioned to deliver that experience with the all-laser portfolio. By replacing the first generation of lamp-based digital projectors, exhibitors get absolute peace of mind, while reducing operational costs and lowering energy consumption. Read more The future of Barco: 3 ‘burning questions’ every stakeholder is asking Barco Integrated report 2022 8 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Key figures Barco’s standard customer experience metric, measured quarterly (upper quartile industry performance) Customer NPS (Net Promoter Score) Ecoscore Employees Reported in heads, excluding temporary workforce % revenues from products with Barco ECO label 50% 44 2020 3,303 2021 3,141 2022 3,302 Sales In millions of euro Gross profit In millions of euro EBITDA in millions of euro 770 804 1,058 284 288 413 37% 36% 39% 2020 2021 2022 2020 2021 2022 2020 2021 2022 54 59 127 7% 7% 12% (Database Corporate Associates per 31/12/2022) Gross profit margin EBITDA margin 100 200 300 400 500 600 700 800 900 1,000 1,100 50 100 150 200 250 300 350 400 450 500 550 10 20 30 40 50 60 70 80 90 130 120 110 100 140 150 Barco Integrated report 2022 9 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Highlights FEBRUARY Dubai’s new Museum of the Future celebrates the power of technology Crafted by visionary designers, artists and engi- neers, Dubai’s Museum of the Future is the pinnacle of interactivity and immersion. It features the very latest technology, including an impressive range of Barco solutions. » Read more FEBRUARY Expanding our single-chip projector range to meet every need and budget Our successful family of single-chip projec- tors keeps growing. With 3 new G62 projectors launched in February and September 2022, we oer the fixed install market an ever-larger range of solutions for every budget. » Read more APRIL Ensuring a premium cinema experience in 3,500 AMC theaters AMC, the world’s largest theatrical exhibitor, goes laser. Thanks to Cinionic’s Cinema-as-a-Service program, they will be able to elevate the cinema experience with minimal upfront investment. » Read more MAY Wireless conferencing made easier with ClickShare smart meeting flows The 2022 software update to our ClickShare range takes our meeting solution to the next level of sim- plicity. New meeting flow features make hosting hybrid meetings from a laptop as simple as making a phone call. » Read more MAY The most reliable LED solution in the market? TruePix ticks all the boxes From the installation through to after sales support: our new TruePix LED video wall was designed from the ground up to ensure a seamless experience in control rooms, broadcasting and any other enter- prise environment. » Read more JUNE weConnect makes healthcare training more accessible and sustainable The weConnect virtual classroom that we set up with Nipro Medical Europe in 2020 won a Life Sciences Trainers & Educators Network Excellence Award for providing the highest-standard virtual and hybrid training in the sector. » Read more Barco Integrated report 2022 10 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS SEPTEMBER Introducing Dermicus, a new digital health skin solutions company Our healthcare incubator Demetra merged with the teledermatology platform of Gnosco to become Dermicus. The new company will help clinicians transform the way they diagnose and manage skin conditions. » Read more SEPTEMBER ITEA Innovation Award of Excellence for healthcare-related project IMPACT How can data intelligence help optimize patient treatment and clinical workflows? Together with 13 other firms, Barco researched the topic in the IMPACT project. It led to several breakthroughs – and an ‘inno- vation award’. » Read more NOVEMBER Giving Schiphol operators a shared view on airport operations Thanks to the Barco OpSpace workstations, control room operators at the brand-new Schiphol Airport Operations Center now have all the information they need to plan, monitor and control the entire airport logistics, at the moment they need it, 24/7. » Read more NOVEMBER Healthcare team launches new diagnostics and surgical displays In the course of 2022, our diagnostics and surgical teams extended their portfolios with the high-bright- ness Nio Gray 5.8MP display specially for breast imaging and the MDSC-8532 and MDSC-8527 4K UHD surgical displays, which ensure excellence in surgical precision. » Read more NOVEMBER Lightweight, compact and designed with the planet in mind When designing the UDM projector in 2019, we made zero concessions. As technology evolves, we keep raising the bar. The result: 2 new 30K projectors, a brightness upgrade path and an A+ ECO label. » Read more NOVEMBER Standing ovation for Barco HDR Lightsteering at Asian World Film Festival Our innovative HDR Lightsteering technology dropped jaws during the Asian World Film Festival in LA. The moviemakers and audience were impressed with the bright highlights, black levels and the high dynamic range in the images. » Read more Barco Integrated report 2022 11 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Our company Barco Integrated report 2022 12 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Introduction to Barco About Barco Barco. Visioneering a bright tomorrow. Barco is a global company with headquarters in Kortrijk (Belgium). Our visualization and collaboration technology helps professionals accelerate innovation in the healthcare, enterprise and entertainment markets. We count over 3,000 visioneers, whose passion for technology is captured in over 500 unique patents. Our company is listed on the Brussels Stock Exchange. Our purpose: visioneering a bright tomorrow At Barco, we believe truly great engineering starts with a clear vision. A vision of a better, smarter, healthier world. With technology, we accelerate the brightest minds in entertainment, enterprises and healthcare to create a bright tomorrow. To touch people’s hearts and minds. To work better together. To transform the quality of life. Barco Integrated report 2022 13 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Enterprise Meeting Experience Large Video Walls Healthcare Diagnostic Imaging Surgical & Modality Entertainment Cinema Immersive Experience Commercial operations Operations and service delivery DivisionGlobal functions Business unit 1 Business unit 2 Products Products SWIT Finance, Strategy, HR and legal R&D R&D Sales Sales Software and Information Technology (including global platorms) Barco Labs Our organization A focused organizational structure When our new leadership team came on board in 2021, they decided to overhaul Barco’s organizational structure. The matrix organization was replaced by a more focused model with six global business units. Every business unit handles sales, product management and R&D, while more general functions (services, sales support, operations, digitization, finance, HR, legal and Barco Labs) are managed on a global level. It is clear that the new structure has boosted agility, market responsiveness as well as accountability and has been the perfect stepping-stone to get Barco’s business back to pre- covid-19 levels and ready for further growth. It makes so much business sense to bring R&D, supply chain, product and sales together in one team. More than accountability, this has truly fostered customer intimacy. It’s hard to prove but I’m sure our solid customer bonds helped grow our business in 2022. Johan Fornier EVP Surgical & Modality Barco Integrated report 2022 14 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS 41% The Americas 38% EMEA 21% APAC * EMEA: Europe & Middle East & Africa 32% Healthcare 30% Enterprise 38% Entertainment * Breakdown based on sales 2022 Sales per division Geographical footprint The people of Barco Geographical breakdown of sales Barco has sites in nearly 30 countries and R&D and/or manufacturing facilities in 10 countries. Our people are the driving force to our success. A team of over 3,000 employees, located around the globe, all join forces to enable bright outcomes; Americas • Brazil • Canada • Colombia • Mexico • United States Asia-Pacific • Australia • China • Hong Kong • India • Japan • Malaysia • Singapore • South Korea • Taiwan Europe, Middle East & Africa • Belgium • France • Germany • Italy • The Netherlands • Norway • Poland • Russia • Spain • Saoudi Arabia • Sweden • Turkey • United Arab Emirates • United Kingdom Sites R&D and/or manufacturing facilities 71% male 29% female Gender Number of employees 3,3032020 3,1412021 3,3022022 Per functional group 8% General & Administration 21% Sales & Marketing 31% Research & development 40% Operations 12% The Americas 55% EMEA Geographical 33% Asia-Pacific Figures reported are in heads (not FTE). For definitions on indicators: see glossary. We refer to note in the financial chapter for more information on the headcount evolution. Barco Integrated report 2022 15 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Leadership Barco believes that the role of its leadership team and its Board of Directors is not only to protect the corporation but also to ensure that Barco is able to create value for society at large. While the Board of Directors sets, steers and monitors our stra- tegic direction, our Core Leadership Team (‘CLT’) is responsible for implementing our group strategy and policies and achieving our objectives and results. In this way, all governance bodies contribute to value creation at Barco. The composition of the Board of Directors meets the gender diversity requirements. All directors hold or have held senior positions in leading international companies in organizations. The Board of Directors remained unchanged in 2022. Board of Directors An Steegen CEO Hilde Laga Charles Beauduin CEO Lieve Creten Frank Donck Chairman Ashok K. Jain Check the CGR report for more 2022 details. Biographies are available on our corporate website. 5 3 4 Directors with 5 years of seniority Female members of the Board Independent directors Barco Integrated report 2022 16 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS An Steegen CEO Gerwin Damberg Cinema & Acting CTO The CLT, which operates under the chairmanship of the CEOs, comprises key ocers from various functions, businesses and regions. Two new CLT members came on board in 2022. Our Core Leadership Team Charles Beauduin CEO Johan Fornier Surgical & Modality Ann Desender Chief Financial Ocer Tom Sys Chief Digital & Information Ocer Wim Buyens Cinionic Kurt Verheggen General Counsel Geert Carrein Diagnostic Imaging Anthony Huyghebaert Chief HR Ocer Kenneth Wang MD Barco China Erdem Soyal Immersive Experience Rob Jonckheere Global Operations Chris Sluys Large Video Wall Experience Check the CGR report for an overview of the changes in the CLT in 2022. Biographies are available on our corporate website. 11 2 4 CLT members with 5 years of seniority Female CLT members Non-Belgian CLT members Stijn Henderickx Meeting & Learning Experience Barco Integrated report 2022 17 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Culture & ethics Every organization has a culture; implicit or explicit. It is its personality – a set of unwritten rules on how an organization behaves. And it reveals itself in many dierent forms. Our corporate culture, which we rejuvenated in 2019, defines the cultural traits that we must embrace to continue leading in our dynamic markets. In 2022, we took a next step in our culture journey. Barco culture: how we live our DNA Corporate culture is everywhere. It comes alive in how we act towards our customers and how we talk and listen to them. It becomes visible in the way we design our processes: have we designed them from our perspective or from the perspectives of those who are aected by them? It guides us in creating teams, but also in how we treat each other as team members. Culture even comes alive in our decision of how to greet each other in the morning. And above all, it defines how we execute our strategy. Culture is how we live our DNA. Learn more about our corporate culture The importance of ethics and compliance Barco’s reputation and continued success depend on the con- duct of its employees as well as its business partners. That’s why we put great emphasis on ethics and compliance: we continuously invest in building a company culture in which ethical conduct and compliance with our policies and the applicable regulations are at the core of how we do business. We team up to win globally In 2022, we took the next step in our culture journey, organizing workshops to make sure that everyone at Barco understands and lives and breathes our culture. The focus in 2022 was on the building block: ‘We team up to win, globally’, as it highlights our growing commitment to diversity and inclusion. » Learn more in the ‘people’ chapter of our PPC report The 5 building blocks that summarize the Barco culture We build the best team to take the leap from ideas to proof points, to execution. We truly understand what it is we want to achieve together. We regard diversity of background, experi- ence and skills as our strength. We focus on helping each other, across regions & functions, to reach our goals. We celebrate success together and have fun while getting there. That’s how we live our DNA. Barco Integrated report 2022 18 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Planet, people and communities At Barco, we firmly believe that sustainable business is good business – and vice-versa. To that end, we are committed to taking ownership of a sustainable future. Our sustainability strategy (‘Go for Sustainable Impact’) has been an integral part of our corporate strategy for quite some years now and we are constantly accelerating our eorts. More than safeguarding the future of our planet, sustainability at Barco also incorporates responsibility to our employees and to the communities in which we operate. For each of our three sustainability pillars – Planet, People, and Communities – we defined an overall ambition statement as well as medium- and short-term targets that guide and motivate us to infuse sus - tainability across the organization. Our ambitions and targets are linked to the sustainability areas that matter most to our stakeholders and where we can achieve the greatest impact: our material topics. We will lower the environmental footprint of our customers and further reduce our own footprint. We invest in sustainable employ- ability by creating the right conditions for our employees to have an engaging, enriching and healthy career at Barco. We do this by encouraging our people to learn and develop themselves and by ensuring a healthy work- ing environment – both physically and mentally. We engage in build - ing an inclusive workplace that embraces the diversity of our peo- ple as this boosts our innovation capacity. We play an active role in the communities we operate in by upholding the highest ethical and quality standards and expecting the same from our business part- ners. We always aim to deliver added value to our customers through our solutions, services and capabilities. In addition, we help ensure more people can par- ticipate in and benefit from Barco’s innovation. PeoplePlanet Communities It is our ambition to fully integrate sustainability in our corporate DNA, the design of our products and solutions and the way we act and operate. We want to take the lead in topics that are real value drivers, like product security, lower energy consumption and employee engagement. Ann Desender CFO Barco Integrated report 2022 19 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS As markets are evolving strongly and customer demands are changing, diversity and inclusion (D&I) is more important than ever. Barco is committed to becoming a truly diverse and inclusive organization. To achieve that aim, we consider diversity and inclusion not as a standalone project, but work hard to fully embed it in our Barco culture. Why is diversity and inclusion so key to Barco? • It drives our innovation: Innovation is at the core of what we do at Barco. Every day, our people collaborate closely to come up with the brightest ideas to solve cus- tomer problems. By actively bringing together people with diverse perspectives we are able to face the most complex challenges. • Serving world markets requires having world leaders: We are a global company that serves markets all over the world. We believe it is essential to represent the same diversity inter- nally as the diversity present in the markets we serve. • It sparks employee engagement: An inclusive culture where dierent perspectives are welcomed and actively encour- aged has a positive impact on employee engagement. We believe diversity and inclusion are key to ensure that we nourish the potential every employee brings. How we fully embed diversity and inclusion in our culture We have defined a D&I strategy in line with our business goals that outlines what steps we want to take in the next three years to embed D&I into our culture. Creating ‘awareness’ is the starting point. In addition, we have also defined actions to take throughout our employee journey to ensure we can attract, grow and retain diverse talent. All these actions gradually drive change, putting D&I top of mind in our daily operations. Diversity and inclusion at Barco Every person in our company has a role to play to ensure people are given equal opportunities and are well accepted for their dierences. We embrace one and another’s uniqueness to become a more diverse and inclusive organization. Erdem Soyal Program sponsor Diversity and Inclusion Barco Integrated report 2022 20 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS How we create value Barco Integrated report 2022 21 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS PeoplePeople PlanetPlanet CommunitiesCommunities ManufacturedManufactured IntellectualIntellectual FinancialFinancial E n t e r p r i s e d i v i s i o n H e a l t h c a r e d i v i s i o n E n t e r t a i n m e n t d i v i s i o n S t r a t e g y Visioneering a bright tomorrow Value creation model The concept of ‘value creation’ fits perfectly with our mission of enabling bright outcomes. The value creation model on the right describes how we create value to all our stakeholders in the short, medium and long term. The model articulates the mission of our company and links it to our strategy and the markets we cover. The horizontal layers represent the six capitals in which we group the respective KPIs. Check the full Value creation model on our website Check the Integrated Data Pack for a full set of KPIs (financial and non-financial) with the respective performance over the last 3 years. * Together these 6 capitals represent stores of value that are the basis of an organization’s value creation. See background paper of International Integrated Reporting Council (IIRC). The capitals and underlying KPIs remained the same in the annual report of 2022 compared to 2021 and aligned with the recommendations of IIRC. Only the KPIs with ‘materiality’ and ‘value driver’ properties for Barco were selected for reporting in the value creation model. Barco Integrated report 2022 22 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Financial Sales (in millions of euro) 770 804 1,058 -29% +4% +32% Orders (in millions of euro) 746 979 1,058 -32% +31% +8% 2020 2021 2022 Net earnings (in millions of euro) -4 9 75 EBITDA (in millions of euro) 54 59 127 7% 7% 12% % growth % growth EBITDA margin Visioneering a bright tomorrow 2020 2021 2022 2020 2021 2022 2020 2021 2022 20 40 10 20 30 40 50 60 70 80 90 100 60 80 100 120 140 160 100 200 300 400 500 600 700 800 900 1,000 1,100 100 200 300 400 500 600 700 800 900 1,000 1,100 Barco Integrated report 2022 23 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS ROCE (%) 3% 4% 16% Product revenues inhouse manufactured (over hardware revenues) 70% 66% 62% Manufactured Capex (millions of euro) 15 19 21 2% 2% 2% 2.3 2.4 2.1 Inventory value (millions of euro) 175 176 246 % of sales Inventory turns Visioneering a bright tomorrow 2020 2021 2022 2020 2021 2022 2020 2021 2022 2020 2021 2022 5 10 15 20 25 10 20 30 40 50 60 70 80 90 100 20 40 60 80 100 120 140 160 260 200 220 240 180 5 10 15 20 25 Barco Integrated report 2022 24 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Intellectual R&D spend (in millions of euro) Employees in R&D # of new patent filings # of patents at year-end 103 941 9 461 101 945 17 504 121 1,008 13 550 13% 13% 11% 29% 30% 31% % of sales % of total employees Visioneering a bright tomorrow 2020 2021 2022 2020 2021 2022 2020 2021 2022 2020 2021 2022 1 2 3 4 5 6 7 8 9 10 13 14 15 16 17 11 12 50 100 150 200 250 300 350 400 450 550 10 20 30 40 50 60 70 80 90 120 110 100 100 200 300 400 500 600 700 800 900 1,000 1,100 500 Barco Integrated report 2022 25 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS 34 39 30 54% 52% 57% Energy footprint of sold products (relative reduction vs base year 2015) TARGET : -% Energy consumption in own operations (MWh/mio € revenues) TARGET : Planet * Product and project revenues as reported in Note 3 of the financial chapter of our integrated report % of revenues from products with ECO label TARGET : % 31% 26% 50% -27% -34% -30% -33% -27% -51% Greenhouse gas emissions from own operations (tonnes CO 2 e/mio € revenues) TARGET : 53 54 40 0.73 0.70 0.73 % renewable % reduction vs 2015% reduction vs 2015 Visioneering a bright tomorrow 2020 2021 2022 2020 2021 2022 2020 2021 2022 2021 2020 2022 10 20 30 40 50 60 70 80 100 90 5 10 15 20 25 30 35 45 40 10 20 30 40 50 60 70 80 0.2 0.1 0.8 0.6 0.7 0.4 0.5 0.3 Barco Integrated report 2022 26 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS % women overall & senior management 17% overall senior management 29% 19% 16% 27% 28% Average training hours/employee 11.3 10.5 12.3 People Total number of employees (# heads) 3,303 3,141 3,302 Employee Net Promoter Score TARGET: 16 Visioneering a bright tomorrow 2020 2021 2022 2022 2020 2021 2022 2020 2021 2022 5 10 15 20 25 30 35 40 1 2 3 4 5 6 7 8 9 11 12 10 13 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 5 10 15 20 25 30 35 40 45 50 Barco Integrated report 2022 27 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Communities Customer Net Promoter Score (Relationship NPS) Average cybersecurity maturity score (NIST CSF) TARGET : . ISO 27001 certification (security) (# of product lines in scope) TARGET: + YEARLY Suppliers scored on sustainability performance (% of production spend) TARGET : % 2 2 2 2.23 2.19 2.66 58% 44% 71% 47 47 44 Visioneering a bright tomorrow 2020 2021 2022 2020 2021 2022 2021 2020 2022 2021 2020 2022 10 20 30 40 50 60 0.5 1 1.5 2 2.5 3 3.5 4 1 2 4 3 10 20 30 40 50 60 80 90 70 100 Barco Integrated report 2022 28 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Shaping our strategy Barco Integrated report 2022 29 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Our vision To be a ‘One Barco’ company defined around our ‘image processing’ capability. The solutions that we develop and provide are to set the industry standard and make a visible impact. In this way, we are able to seize commanding market shares in healthy markets. 2 0 0 9 2 0 1 2 2 0 1 4 2 0 1 6 2 0 1 9 2 0 2 2 2 0 2 5 Setting the visualization industry standard Navigating covid Focus to perform Focus on three target markets Growth in networked visualization Resume growth & restore profitability Stepping up for the next episode At Barco, our strategy acts as a guiding light: it defines how we play to win in our markets. While the foundations of a corporate strategy should remain unaltered, the strategy itself needs to be dynamic and agile, particularly in today’s disruptive, volatile markets. Over the past few years, we have continuously refined our approach and priorities to keep them in line with changing dynamics, including relevant market trends, material topics and risks. In the post-covid year 2022, we decided to review our strategy more thoroughly. Our revamped, three-levered strategy will help us gear up to set the visualization industry standard and capture commanding market shares in our markets. Barco Integrated report 2022 30 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Three strategic levers To accelerate progress towards our vision, we redefined our strategic levers in 2022. Our renewed strategy now comprises three levers: capture profitable and ecient growth, inno- vate for impact and go for sustainable impact. These are the priorities we want to focus on to remain relevant and flourish in the short-, mid- and long-term. They help us prioritize our business activities. Innovate for impact Go for sustainable impact Capture profitable and ecient growth Barco Integrated report 2022 31 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Focus areas Status Proof points in 2022 Organizational redesign to enhance customer intimacy, end-to-end accountability and entrepreneurship • Roll-out of simplified organization with BUs and global support services • Integrated BU teams with sales, product development and R&D all in close con- tact with the customer Commercial and operational eectiveness through digital transformation • Global roll-out of Salesforce CRM for sales and customer service • Launch of new services e-portal for customer service • Strengthening platform strategy for major IT applications • Finance functions and processes are certified future-proof Seize the China opportunity with stronger local presence • New healthcare plant in Suzhou operational since December and ramping up throughout . • Start of construction Wuxi plant, focused on the projection technology market • STEP talent development program for Chinese healthcare team, embedding strong local presence for product development and sales Develop new market segments and expand in healthcare, control rooms and immersive entertainment • Broadening the Immersive Experience portfolio with mid-market products • Expanding expertise in digital immersive art experiences into Asia • Strengthening our business in the digital pathology segment (Healthcare) with the world’s first FDA approved pathology monitor • Launch of TruePix, a gamechanger in LED video walls, offering a premium visual- ization experience • LTEN Excellence award for Barco and partner Nipro as provider of highest-stand- ard virtual and hybrid training in life sciences sector • New Dermicus digital health skin solutions company combines the strengths of Barco Demetra and Gnosco Dermicus • New collaboration with Strategic Radiology, an association of ,+ private radiology practices in the USA Related to these highly material topics: Customer engagement // Product quality, safety & security // Information security & data protection // Financial resilience // Sustained profitable growth // Product stewardship Lever 1: Capture profitable and efficient growth Barco has been a global technology leader for decades. Just look at our massive expertise and experience, and smart, com- mitted teams. We are active in markets with solid foundations, where we oer mission-critical solutions. In order to optimally seize all the market opportunities ahead and further strengthen our leading role in our markets, we are determined to exploit our strengths to the fullest, and even more than we’ve done in the past. To achieve that aim, we set a number of short- and mid-term strategic objectives: • reshue our organization into 6 business units (BUs) in order to step up accountability, entrepreneurship, and cus- tomer intimacy; • increase operational eectiveness through digital transfor- mation and standardization; • grasp our market potential by broadening our geographic coverage with a focus on China and by developing adjacent markets. Assessment Overall, we score between 2 and 3 out of 4 on the ‘Capture profitable and ecient growth’ focus areas. The reorganiza- tion positively impacted accountability, customer intimacy and entrepreneurship in 2022 and we continued investing in our business in China, despite the covid hurdles. In the field of ‘developing new market segments’, several initiatives have been taken, but with plenty of potential remaining. Barco Integrated report 2022 32 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Focus areas Status Proof points in 2022 Focused factories • Kick-off of focused factories approach: create factories that produce a limited set of products, for a particular business unit. Strengthen downstream value chain through OPEX business models and channel management • Roll-out of OPEX business models (Cinema-as-a-Service, weConnect, Dermicus) focusing on customer experience and full lifecycle management of products • Addition of new distribution and channel partner agreements Strengthen supply chain, reducing component dependency through redesign and bringing critical components in-house • Reduction of dependency on critical components (semiconductor and other) through product redesigns that allow for more flexibility to change components during the products’ lifecycle • Bringing production of critical subassemblies in-house (e.g. optical components for projectors or bonding glass for healthcare displays) Rebalance R&D investment portfolio • % of turnover spent on R&D, with a more balanced R&D pipeline focusing more on new growth investments • Strengthened patent management with new patent filings and holding pat- ents at year-end • Global platforms software development strengthened under cross-divisional man- agement in SWIT (Software and IT) organization • Barco selected as Euronext Tech Leader, among Europe’s top innovative high-growth companies Develop adjacencies and new solutions based on core technologies • HDR Lightsteering, for the next-gen laser cinema projector piloted and presented to cinema industry professionals • Expanding ClickShare proposition with new functionalities on a continuous basis, such as smart meeting flows and digital signage Enhance ROI in innovation combining entrepreneurship and financial discipline • R&D managed in the business units, close to customer, enhancing market effective- ness • Strengthened innovation governance, led by CEO An Steegen, with frequent innova- tion boards and fast-fail principles Related to these highly material topics: Product quality, safety & security // Innovation management // Product stewardship We are determined to retain our position as a technology leader and further dierentiate ourselves from our competi- tors. To achieve that aim, we will continue to accelerate our innovation and technology capabilities. While innovating, we always keep in mind that innovation at Barco should deliver impact, i.e. add value for all our stakeholders, including the broader communities in which we operate. Innovating for impact is about more than mere technology innovation. It includes: • enhancing and extending our product portfolio • increasing the eciency of our operations with focused factories and a stronger supply chain • creating new business models to strengthen our down- stream value chain. Assessment Overall, we score between 2 and 3 out of 4 on the focus areas in the ‘Innovate for impact’ lever. In 2022, we were suc- cessful in minimizing the supply-chain constraints caused by the pandemic. We managed to instill a stronger innovation governance, which will help us achieve more breakthrough innovation in the mid to long term. The focused factories strategy, for its part, has just been launched and will help us optimize the manufacturing footprint in the coming years. Lever 2: Innovate for impact Barco Integrated report 2022 33 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Sustainable business is good business. Barco has been con- vinced of that for many years. When first deciding how to execute our strategy, we chose to operate with respect for the planet, our people and the local communities. Year after year, that commitment has become more deeply embedded in our corporate DNA. That’s why, ‘Go for sustainable impact’ remains a key lever for our long-term success. To remain the sustainability frontrunner we’ve been in our sector for years, we keep • refining and strengthening our sustainability governance and organization • reinforcing our sustainability strategy • improving the sustainability performance of our operations and our products Assessment Overall, we score between 2 and 3 out of 4 in the field of ‘Go for sustainable impact’. In 2022, we kept strengthening our governance and organization, and reinforcing our sustainabil- ity strategy. Improving our sustainability performance in all fields – planet, people and communities – remains an ongoing commitment in everything we do at Barco. Lever 3: Go for sustainable impact Focus areas Status Proof points in 2022 Strengthen governance and organization • Strong ESG governance in place, under the leadership of CEO An Steegen as chair of the executive sustainability steerco, and workstream leads for every highly material topic • Bottom-up operator engagement strengthened with iGemba program taking further momentum in Kortrijk, Suzhou and Noida plants • Raising continuous internal and external awareness and communication about sustainability, e.g. in our Bright Insights magazine Reinforce our sustainability strategy • Next milestone reached in Barco’s wind turbine project, with the environmental permit granted (pending on further appeal) • Further electrification of the company car fleet: + charging stations installed at HQ • Diversity and inclusion launched as a global workstream, with senior sponsorship and dedicated ambassador group Improve our sustainability performance in the fields of planet, people and communities • On track with our main planet sustainability goals for 2022: - Greenhouse Gas emissions from own operations at -51% versus 2015 - 50% of revenues from products with ECO label • Broadening limited assurance audit to include ECO labelled products and emissions of own products; first time taxonomy-aligned reporting with 27.0% aligned revenues • Acknowledgements for increased transparency and improved performance: - Barco recognized by The Financial Times and Statista as one of Europe’s climate leaders, companies that contributed the most to the prevention of global warming - ESG ratings: consistently scoring in top-20% among Electronics Industry sector peers with a score upgrade to AA for MSCI in 2022 (see external evaluations) - ISO 45001 Health and Safety certification for sites in Beijing: Tai Yang Gong and Chang Ping Related to these highly material topics: Information security & data protection // Business ethics // Employee engagement // Diversity & inclusion // Product stewardship // Climate change & energy Barco Integrated report 2022 34 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Managing our strategy in a changing world Even the best plan must be adapted continuously. The global pandemic, the Ukraine war, the persistent inflation and the accelerating climate crisis that have been impacting our business in the past few years, all highlight the need for agility and resilience. That is why we constantly question, fine-tune and even reimage our strategy to ensure that it remains anchored in the realities of our business and the rapidly changing world around us. In order to keep our strategy in shape, we look at it through dierent lenses. We monitor relevant market trends, keep track of evolutions in the material topics and closely follow up on the risks that could aect our business. Market trends Materiality Risks Barco Integrated report 2022 35 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS 5 relevant market trends Our customers, our markets and even our world are changing faster than ever. As these changes largely impact our business, we keep a close eye on trends and act upon them when going forward. The following shortlist of five market trends is not exhaustive but is considered as really relevant for the business that we’re active in. They are shaping our solution portfolios and strategy. TREND #1 We live in a visual world. YouTube, TikTok, marketing videos, infographics, large bill- boards, digital signage: images are anywhere these days. As technology evolves, so does the way we process information and even the way we interact with our environment. On lap- tops and smartphones, in meeting rooms and boardrooms, in hospitals as well as in museums, movie theaters and during events: images always say more than a thousand words. Crisp, clear, high-quality visuals are a must to meet the needs of users and audiences. Get wowed by the ultimate visual experience: projection mapping Barco Integrated report 2022 36 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS TREND #2 The continuing rise of all things hybrid Meetings, seminars, training courses and even surgeries are no longer fully in-person or fully virtual. Hybrid collaboration has become the new normal. The big challenge for organizations, universities and hospitals is creating equity for participants, no matter where they are. Technology that connects people and makes collaboration truly flow while keeping it secure will lead to success in the new, hybrid world. Discover how to optimize your digital meeting experience TREND #3 Customer is king A familiar adage, the ‘Customer is king’, remains relevant in the 2020s, as savvy consumers demand flexible, personalized, customer-centric services. More than ever, in fact, consumers want to feel a strong connection with brands and be part of a community. Organizations that manage to ensure customer intimacy, listen and respond to customer needs, and provide outstanding customer services throughout the customer life- cycle are set for success. Read all about our eorts to boost customer intimacy Barco Integrated report 2022 37 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS TREND #4 The need for insights Whether in boardrooms, control rooms, radiology or operating rooms: everyone generates astronomical volumes of digital data these days. A massive amount of computing power, smart visualization solutions and intelligent software are needed to collect, store, process, distribute and retrieve this data to then distill insights from it. Organizations that invest in solid, reliable solutions for data processing, analysis and visualization are sure to enhance decision-making and gain an edge over their competitors. Read how Barco provides the right perspective on data in control rooms TREND #5 The world wants genuinely sustainable outcomes Authorities, investors, customers, suppliers and employees are all challenging companies to set more ambitious environ- mental, social and governance (ESG) targets. Greenwashing, however, will no longer do. They demand genuine commit - ments to reduce CO 2 emissions, embrace diversity and ensure sustainable employability. Organizations that have the courage to embrace ESG targets beyond box-ticking will be rewarded and win in their markets. Check out Barco’s carbon emission reduction commitments Barco Integrated report 2022 38 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS 1. Customer engagement 2. Product quality, safety & security 3. Information security & data protection 10. Financial resilience 11. Sustained profitable growth 18. Product stewardship 2. Product quality, safety & security 8. Innovation management 18. Product stewardship 3. Information security & data protection 4. Business ethics 13. Employee engagement 17. Diversity & inclusion 18. Product stewardship 19. Climate change & energy Capture profitable and ecient growth Innovate for impact Go for sustainable impact UN SDGs HIGHLY MATERIAL TOPICS Materiality Continuous monitoring of material issues is critical to staying on top of emerging risks and opportunities. A materiality assessment helps organizations understand what topics matter most to their businesses and stakeholders and where to focus the attention. We regularly update our materiality assessment to make sure it reflects changes in our business and the external environment. Linking our materiality matrix to the UN SDGs Our last extensive materiality assessment was done in 2020, in close cooperation with a broad group of stakeholders. It remains relevant, as stakeholder interactions in 2022 did not reveal major changes. Our Board of Directors decided to raise the topic ‘Diversity and inclusion’ from medium to highly material in 2021. In 2022, we started accelerating our eorts to create a more inclusive workplace that embraces the diversity of our people. In the table, we link the highly material topics to the six UN SDGs that best fit our materiality matrix and our own corpo- rate strategy. Read all about our materiality assessment, the UN SDGs and our stakeholder engagement on our corporate website Barco Integrated report 2022 39 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Risks Within the context of its business operations, Barco is exposed to a wide variety of risks that can aect its ability to achieve its objectives and to execute its strategy successfully. To anticipate, identify, prioritize, manage and monitor the risks that impact its organization, we put a sound risk management and control system into place, which is actively supported by the Board of directors. Risk management process Risk management is firmly embedded into our processes, at all levels. For every key management, assurance and supporting process, Barco has a systematic risk management approach that consists of five steps: identification, analysis, evaluation, response and monitoring. 2022: main risks Every year in the fourth quarter, Barco performs a compa - ny-wide risk assessment and compliance gap analysis. In 2022, that led to a slight reclassification and renaming of certain risks, leading to the following overview. Read more on Barco’s risk management Risk Trend Material topics Strategic levers 1 Innovation, new technologies & product portfolio • Innovation management • Market reach • Product stewardship • Customer engagement • Innovate for impact • Capture profitable and efficient growth 2 Supply chain & ‘Nth’ party risk • Responsible supply chain management • Sustainable profitable growth • Product quality, safety and security • Capture profitable and efficient growth • Go fo sustainable impact 3 Human capital & talent management • Employee engagement • Learning and development • Employee health, safety and wellbeing • Diversity and inclusion • Capture profitable and efficient growth • Go fo sustainable impact 4 Product quality • Product quality, safety and security • Customer engagement • Brand • Innovate for Impact • Capture profitable and efficient growth 5 Macroeconomic & geopolitics risk • Market reach • Capture profitable and efficient growth 6 Information security risk • Information security and data protection • Product quality, safety and security • Innovate for impact • Go for sustainable impact Barco Integrated report 2022 40 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Innovation and technology Barco Integrated report 2022 41 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Barco can build on decades of engineering excellence in visu- alization and imaging technologies to realize its purpose of ‘visioneering a bright tomorrow’. In the last years, we invested on average 11% to 13% of our turnover in R&D in order to meet – or, rather anticipate – the rapidly evolving market demands. Since 2022, we have been strengthening, sharpening, and accelerating our innovation eorts, with more focus on breakthrough, disruptive solu- tions – primarily for our core and adjacent markets but also in totally new domains. While we are reinforcing our teams with visioneers who spark innovation, we retain a disciplined approach to innovation, with a dedicated budget. Every new product, solution or ser- vice is the result of extensive market research, and stems from dialogue with our customers and partners, together with inter- nal teams. Moreover, exceptional product performance and quality, not forgetting security, stewardship and sustainability are all deeply embedded in our solution design processes. Visioneering a bright tomorrow Acquire / Capture Optimize / Manipulate Distribute / Transmit Process / Render Visualize / Display • Dermicus, skin imaging camera Key examples • Nexxis coding & decoding • ClickShare • Media servers • Switchers • Controllers • Displays • Projectors • Video walls • HDR Lightsteering Mastering the entire visual chain Innovation has always been the lifeblood of Barco. Ever since our company was founded back in 1934, we have been pioneers. While displays and visualization hardware were our initial focus in our earlier days, we now master the entire visual chain, from acquisi- tion through to the display of images, adding all the capabilities that help bring the image to the screen. The challenge is to innovate radically – and dare to fail. Charles Beauduin Barco CEO, in Trends Magazine Barco Integrated report 2022 42 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Our innovation approach Successful innovation creates both value for the customer and true business benefit. To ensure that our ideas are tightly connected to our strategy and purpose, and can be turned into revenue growth potential, we adopt a disciplined approach to innovation: • Balancing start-up dynamics with fast-fail principles • Focus on early customer involvement • Governance: disciplined management with dedicated budget 2. SEED FUNDING GATE Idea is feasible with a promising business case. 3. PROOF OF CONCEPT Proof of concept becomes a viable product/solution 4. BREAK-EVEN GATE INCUBATOR SEED SCALE UP IDEATION 1. FUNNEL ENTRY GATE Business unit-related breakthrough & dierentiating innovation Central organization / BarcoLabs Business unit Breakthrough idea not related to business unit Our innovation process Sustainable, high-quality product innovation Barco products stand for top quality, safety, reliability – and increasingly also for sustainability. To make sure that every new Barco solution exceeds the most stringent sustainability criteria, we take sustainability into account in the earliest phases of our innova- tion and design processes. Before any prototype is conceptualized and presented, we estimate the impact of the materials, its energy consumption, packaging, shipping, etc., so that we can still adjust the design if needed. Barco Integrated report 2022 43 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS These meetings are a source of inspiration for everyone involved. As are the demo sessions that our BarcoLabs teams organize for everyone at Barco. On top of that, BarcoLabs increasingly collaborates with people from the business units, which creates a new, dynamic vibe. I’m happy to see that we’re no longer innovating in a vacuum.” Entrepreneurial spirit “Now that we’ve built a strong foundation for execution, we have to keep going beyond 9 to 5, to get our seed ideas to the next level. That’s not always easy in a corporate environment but it is great to get clear, authentic sponsorship from our CEOs and we are progressing really well. We’ve definitely found a new innovation cadence,” Gerwin concludes. Things have changed significantly at Barco, since Gerwin Damberg came on board as CTO in 2020 – not least in the field of innovation and technology. The start-up like approach, that he dreamt of instilling, got an extra impulse when An Steegen and Charles Beauduin became CEO. “Ramping up over two years, we now have the right mind- set, people and processes in place to innovate successfully,” says Gerwin, “and we can be proud of our first results already. Some early products, like Dermicus, weConnect and our HDR Lightsteering projection technology, proceeded from early seed into the growth phase. Many new ideas make it into the seed funnel. Successful entrepreneurship however also requires having the courage to stop, if an idea is not viable or cannot add enough value.. That’s painful, yet it’s good to understand it won’t work, sooner than later. That too, is key in an innovation mindset.” Innovation board Decisions on whether a new innovation idea will receive fund- ing, are made in the innovation board that meets three times a year. The board comprises our co-CEOs, Gerwin himself and stakeholders from BarcoLabs and the business units. “This is where new ideas are pitched and assessed, where we discuss the progress of ongoing projects, exchange ideas and provide advice,” Gerwin explains. We’ve found a new innovation cadence I’m happy to see that we’re no longer innovating in a vacuum. Gerwin Damberg CTO Barco Integrated report 2022 44 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Creating big sparks: how BarcoLabs truly visioneers the future How can we, as a company, remain relevant in today’s – and tomorrow’s – global, tech-driven world? By developing disruptive solutions that add value to our customers’ lives – and doing it quickly. A growing group of visioneers is helping us to achieve that objective. Peru Dharanipathy is one of them. He joined our central R&D group, BarcoLabs, in early 2022 to head our Advanced Displays X team. If you ask Peru, the sky is the limit when it comes to innovation. Or, rather, there are no limits: Peru loves to shoot for the stars. “These are such extraordinary times to be active in technology,” he starts. “Still, for a tech company to remain mean- ingful, being disruptive is a must.” Dirty prototypes: choose progress over perfection “The key to creating groundbreaking new technology is being fast and unafraid to fail.” he goes on. “On top of that, you must keep the dialogue open from the start and involve as much people as possible, so that you can explore all available opportunities and spot limitations.” To improve the speed of innovation and arouse interest in innovative new technologies, Peru introduced the concept of ‘dirty prototypes’: his team converts ideas into basic prototypes fairly quickly and then demonstrates them to everyone at Barco during informal demo days. Organic, bottom-up innovation “The input we get there is really valuable. Our col - leagues from the business units, for example, can quickly tell if our prototype addresses a real market need. Moreover, we hope that our demos inspire other colleagues, from whichever business unit and whatever role, to come up with new ideas. Innovation is a process of creating as many sparks of disruptive ideas as we can – and hoping that the best idea catches fire. This bottom-up approach, where ideas bubble up from any- where in the organization, is sure to result in more innovation. It’s pretty new at Barco, but we’re making steady progress.” Sneak peek: the future of displays The prototypes that Peru and his team demonstrated most recently were 3D displays. Still, that is just the beginning, he says: “Until now, displays have remained fairly static: they emit light, just like displays have always done. It becomes more fun when you can turn walls, curtains, glass and any other surface Innovation is a process of creating as many sparks of disruptive ideas as we can – and hoping that the best idea catches fire. Peru Dharanipathy Technology Director, BarcoLabs Barco Integrated report 2022 45 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS or object into a display. Or better still: if images popped up everywhere as we walk in a room. While that still feels like sci- ence fiction, these dynamic, displays will eventually become part of the display technology mix. Additionally, the case of reflective display technology can be particularly interesting too, is that it brings energy use down by over 90% – that sus- tainability aspect is a very valuable argument to look further into these types of technology.” Connecting people and data While Peru is passionate about technology and innovation, he stresses that it is the relevance of the solutions that really counts: “What attracted me to Barco, apart from its global scale, is how Barco technology improves the lives of people around the world. Just take our projectors. The photons of Barco projectors have touched the faces of billions of people and made them smile.” “When it comes to displays, our real purpose is to invent solu- tions for people to connect with and get insights out of the massive amounts of data available in the world, in order to help solve key problems. We’ve got a great team here to visioneer that future, in close cooperation with our other colleagues from BarcoLabs and from the BUs.” Towards mature patent management Intellectual Property (IP) represents a competitive advantage for a technology company like Barco: patent holders have a higher chance of attracting customers, investors and even employees. In the past two years, we have been strengthening our IP management and refocused our strategy. We assigned pat- ent delegates in each business unit and also hired a new patent engineer in Taiwan, a Paralegal and a Patent Attorney in Belgium thus further strengthening our internal patent group and adding much important international expertise to the team. More than educating employees on the importance of IP, the team has now fully incorporated IP in our innovation process. Patentability is checked early on in the new product development cycle, more patents are filed and we introduced professional IP infringement checks. As a result, the quality of our patent portfolio is clearly improving. The real purpose of our innovation is to come up with solutions for people to connect with the massive amounts of data available in the world. Peru Dharanipathy Technology Director, BarcoLabs We keep strengthening our internal patent group and adding much important international expertise to the team. Anders Ballestad Director Innovation Strategy Barco Integrated report 2022 46 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Innovation at Barco is not just about new products. New workflows, business models and tools all complement product innovation to retain our leadership position. The focused factory strategy that we introduced in the second half of 2022 is a great example of that: Barco will invest 100 million euro in new manufacturing facilities and in the automation and digitization of its manufacturing processes over the period 2023 - 2025. Rob Jonckheere explains. What is a focused factory? “A focused factory manufactures a limited set of products, for a particular business unit. It’s a dierent approach than conventional plants, which often mix many manufacturing processes and even serve dierent business lines.” Why did Barco choose to invest in focused factories? “The focused factory approach will simplify the organization and speed up decision making. Moreover, thanks to the large degree of automation in manufacturing and logistics we’ll be able to further simplify our production processes and increase eciency. Last but not least, product quality will structurally improve. Our products increasingly integrate miniaturized components with narrow tolerances, which are dicult to handle with manual assembly processes. So all-in-all, the implementation of the focused factory strategy will increase our competitiveness and also reduce the supply chain risks.” How exactly do focused factories reduce supply chain risks? “We’re moving from a pure assembly factory towards a more vertically integrated factory. That means producing laser driv- ers, for example, assembling optical components for projectors Focused factories: another face of Barco innovation Focused, automated factories will simplify the production processes, improve and speed up decision-making, and lead to faster and better results. Rob Jonckheere EVP Global Operations or bonding glass for healthcare displays. This allows us to move up within the value chain, capture ‘more share of wallet’ and limit our supply chain risks.” With new plants in Suzhou and Wuxi, China remains key in Barco’s manufacturing strategy? “As China is a crucial market for Barco, a regional presence of manufacturing and development is crucial to support our growth ambitions. Our focused factory strategy does ensure that every factory in China has a mirror factory outside China. This allows us to answer specific market or customer requests, but also means we can quickly anticipate in case of geographic and/or geopolitical issues.” Barco Integrated report 2022 47 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Image processing has been and remains the cornerstone of Barco’s technology map. On the base of this first component, we have defined three more building blocks which form the foundation for Barco’s innovation for impact in the future. Image processing Professional visualization requires both classical image pro- cessing algorithms and data-driven approaches. Barco’s image processing technology domain covers image and video capture, enhancements, processing, understand- ing and rendering as well as techniques to enhance human-machine interaction. Increasingly important is the implementation of high-performance software solutions on modern hardware such as graphics processing units. Advanced display & projection The display and projection technology that lies at the heart of Barco’s visualization solutions include optics, electronics and signal processing, manufacturing and calibration tech- niques related to projection systems and direct view display technologies, including LCD and LED. This advanced tech- nology powers a wide range of advanced display solutions for use in demanding markets – from cinema projectors and high-resolution medical displays to video walls for large screen visualization. Computational optics Computational optical technology exploits the properties of light to enable visual experiences that cannot be delivered using traditional optical systems alone. This technology opens the door to a spectrum of new solutions with functional- ities or value that cannot be delivered by other visualization or imaging techniques. Examples include Demetra, Barco’s multispectral skin imaging platform and the high dynamic range (HDR) Lightsteering technology that uses real-time pro- grammable lasers and lenses to shape light into high-contrast, high-brightness images on screen. Connectivity & data analytics Technology that enables connectivity is at the core of Barco’s solutions, as it allows the real-time monitoring of devices or the local or remote streaming of audio and video data. The connectivity platforms that power Barco solutions are always highly optimized for the professional application at hand, whether that is live entertainment, diagnosis or surgery in healthcare settings or sharing content in the workplace. On top of enabling connectivity, Barco increasingly helps customers understand the data transmitted, thus providing trustworthy, actionable insights and boosting productivity, collaboration and engagement. Technology: domains Barco Integrated report 2022 48 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Our markets Barco Integrated report 2022 49 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Healthcare We provide our customers with imaging capabilities that enable them to make a visible impact, creating experiences, generating insights and ensuring connectedness in three healthy markets: Healthcare, Entertainment and Enterprise. Our presence in these three markets goes back many years and is mainly based on the potential of our technology to deliver top-notch imaging capabilities. Thanks to our deep-rooted expertise and experience, we are well equipped to lead the pack in all three markets. We work hard to keep consolidating our leadership position, by oering innovative, high-quality and increasingly also truly sustainable solutions that create value and meet – or rather: exceed – the expectations of our customers and end-users. Three divisions, six business units We serve our markets through three divisions, which are split into two business units each. Each business unit is fully empowered to execute strategic priorities. Three healthy markets, three divisions Enterprise Entertainment 32% Healthcare 30% Enterprise 38% Entertainment * Breakdown based on sales 2022 Barco Integrated report 2022 50 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Customer engagement Across markets, divisions and business units, whether in Belgium, the US or China: Barco always goes the extra mile to meet its customers’ requirements. And yet, we realize that customer demands are changing and that it is more important than ever to engage with our customers, exchange ideas with them and put them at the very heart of what we do. How our reorganization fosters customer intimacy 2022 has demonstrated that the reorganization that we carried out in October 2021 greatly helps to improve the customer experience. By centralizing sales among the managers of the business units, we got closer to our customers. This allows us to respond faster and more eectively to their questions and needs. A mature customer experience management model The customer experience roadmap that we launched in 2018 has reached maturity: it’s a solid foundation on which to build further initiatives. As we move forward, we increasingly digitize the end-to-end customer engage- ment process to meet customer needs for speed and high-quality services. Our new experience center: where Barco and customers get together In 2022, our experience center was given a thorough makeover, convert- ing it into a fully-immersive environment and the perfect place for Barco, cus- tomers and partners to meet. This new space at our One Campus HQ is an extra motivation for customers and part- ners to come and visit us in Kortrijk and share experiences, learn and co-create. The word ’customer’ was probably used more than any at Barco in 2022. While we’ve always been closely involved with our customers, at Barco, the commitment to take customer engagement to the next level has really never been higher. Rebecca Vanderpiete VP Global Marketing Connecting to customers and their ecosystems The key to delivering an outstanding customer experience is understanding the customer. The more ‘connected’ we are to our customers’ lives and ecosystems, the better we know what they want and need. That’s why our people seize every opportunity to intensify their connections with our cli- ents, share insights and discuss trends, collaborate and even co-create solutions. Read more on our customer engagement initiatives Barco Integrated report 2022 51 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Healthcare Barco connects healthcare professionals at almost every patient touchpoint. From the imaging room to radiology, during specialist consultations and in the surgical suite: our solutions and services help medical professionals to enable better health outcomes and work more eciently in an increas- ingly complex healthcare environment. The Healthcare division comprises two business units: Diagnostic Imaging and Surgical & Modality. Enabling better healthcare outcomes for more people 46% Diagnostic Imaging 54% Surgical & Modality What if you could diagnose people before they get sick? Advanced display Advanced display Image processing Image processing 32% Healthcare Barco Healthcare: quick facts • +30 years of experience, recognized market and tech- nology leader • Trusted brand, providing solutions and services that healthcare professionals can rely on with top-notch product quality • Focused on clinical outcomes, beyond product fea- tures and specs • Large installed base: 800k+ installations since start Barco Integrated report 2022 52 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS How Barco Healthcare creates value Solutions and services that healthcare professionals can rely on There’s no room for compromise when Barco develops medical displays: we systematically exceed product quality guidelines. After all, our healthcare solutions can make the dierence between life or death. We provide radiologists, surgeons and other physicians with reliable, medical-grade display solutions that promote clear and consistent image quality, anytime, anywhere, to make accurate diagnoses, identify the best options for treatment and perform flawless surgical procedures. As a surgeon, you should be able to just concentrate on the main goal of the procedure, which is delivering optimal care to your patient. Technology should not be a distraction. For Barco, that’s very important to keep in mind when developing new products or improving existing ones. Nick Maynard Upper GI Surgeon at Oxford University Hospitals and member of our Surgical Advisory Board A trusted brand that puts customers first To make sure our healthcare solutions truly help healthcare professionals in delivering better patient outcomes, we involve medical professionals in the design, concept and validation stages of every new product development. A Radiology Advisory Board and a Surgical Advisory Board that consist of customers as well as key opinion leaders help our teams to understand their needs, spot trends and discuss ideas, roadmaps and solutions. A division with a purpose: we go for sustainable impact Our healthcare team is on a mission to ensure better health outcomes for more people. That mis- sion makes us a division with an intrinsic purpose: everything we do is aimed at improving people’s lives. More than that, we are truly dedicated to the environment. Since 2005 already, we have been considering the carbon footprint and recyclability of our products when designing new solutions. More than having a sustainable impact, our healthcare division has a true purpose: we’re here to make the lives of patients better. That makes it easier to retain and attract talent, as jobseekers and employees increasingly look for purpose-driven careers. Geert Carrein EVP Diagnostic Imaging Barco Integrated report 2022 53 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Healthcare division - Diagnostic Imaging Diagnostic Imaging oers an extensive line-up of high-precision medical display systems for disciplines including radiology, mammography, dentistry, pathology and clinical review imaging, plus a full suite of support services. Our strategy Capture profitable and ecient growth With over 30 years’ experience, Barco is the world’s No. 1 in diagnostic imaging. Building on those strong fundamentals, we want to grab growth opportunities in adjacent markets, like mammography home reading and pathology, and strengthen our position across geographies, like in China. Innovate for impact To extend our indisputable leadership position in diagnos- tic imaging, we will further accelerate innovation in dierent fields: launching propositions beyond display hardware, devel- oping new flagship products, and addressing new trends, such as cloud, AI and 3D. Investments in focused factories and innovative business models like Display as a Service will further fuel growth. Go for sustainable impact Our healthcare division started lowering its carbon footprint in 2005 already. While it remains a challenge to reconcile the exceptional image quality and protection that radiologists need with environmental concerns, we are making signif- icant progress year by year, in close collaboration with our suppliers. Recently, we started implementing more circular business models to further enhance the lifecycle of our med- ical products. 2022 ZOOM The rise of remote radiology reading Remote radiology, including mammography, is dramatically on the rise, especially in the US. Our product line oers robust remote display systems, flexible controllers and high-quality medical plat- forms that address the issues remote radiologists experience: performance and workflow, security and patient privacy, quality and compliance with the stringent regulations. Related trend: The rise of hybrid In a nutshell • Leader and innovator for 30+ years • Strong position with flagships in radiology and mammography • New adjacent markets in digital pathology and dentistry • Installed base: 350k+ displays in last 7 years Cancer rates continue to rise globally and 70 to 80% of diagnosis and treatment decisions involve pathology – while the number of pathologists is dropping. Digital pathology helps face this challenge. We are a frontrunner in this field, providing unique solutions for multiple digital pathology vendors. Moreover, the Barco-branded pathology display is the first to have received regulatory clearance as a medical device in this market. Geert Carrein EVP Diagnostic Imaging Barco Integrated report 2022 54 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS 2022 ZOOM NexxisLive: remote collaboration in operating rooms Similar to all other sectors, remote collaboration is gaining importance in surgical training, assistance and conferences too. Our NexxisLive platform enables participants to talk, chat and annotate as if they were in the same OR, with excellent audio and video quality, and low latency. Related trend: The rise of hybrid Healthcare division - Surgical & Modality Surgical & Modality brings together two activities with great synergistic potential, as they target the same end-customers (often operating rooms) and, thus, require the same go-to-market strategy. More than surgical displays, the oering of this business unit includes our digital operating room portfolio (based on video-over- IP-technology), as well as custom medical displays for modality imaging, plus a full suite of support services. Our strategy Capture profitable and ecient growth Barco defined and led the transition to IP in operating rooms over 10 years ago and has remained a leader ever since. To grasp the huge market opportunity (200k+ operating rooms worldwide), we are strenghtening our commercial focus, by reinforcing our partnership approach, driving service reve- nues (maintenance contracts and Saas) and strengthening our foothold in China. Innovate for impact While innovation has always been in our DNA, we are now accelerating our eorts. Increasing product dierentiation is our number one goal. To-do’s on our innovation roadmap include developing a premium and mid-segment Nexxis oer- ing, co-creating new solutions with customers, integrating more features and embracing new tech trends, such as OLED, HDR and 3D. Go for sustainable impact Just like in diagnostic imaging, it remains a challenge to reconcile exceptional image quality and protection with sustainability, in Surgical & Modality. Yet here too, we are making significant progress. In 2022, we launched several new products with an A ecoscore, including three dierent modality displays for OEM customers and two new encoders/ decoders for our Nexxis ecosystem. In a nutshell • Leader and innovator in digital operating rooms (OR) • Supports trends of minimal invasive surgery and remote collaboration • Pioneer: first digital OR over 10 years ago • Installed base: 7k+ digital ORs More than our pioneering role in OR-over-IP, our focus on customer intimacy helps us win deals. Strategic Partner Success Team and Account teams are in close touch with our customers and we increasingly interact with clients to discuss possible new solutions and product improvements. Johan Fornier EVP Surgical & Modality Barco Integrated report 2022 55 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS 58% Meeting Experience 42% Large Video Walls What if the hybrid workspace was better than in real life? 30% Enterprise Enterprise Engaging you to unleash the power of knowledge and emotions Every Barco enterprise solution is designed to help people collaborate better by ensuring engaging experiences. From boardrooms and workplaces to control rooms and classrooms: all our solutions help people unleash the power of knowledge, insights and emotions – for brighter ideas, stronger collabo- ration and, ultimately, better results. The Enterprise division comprises two business units: Meeting Experience and Large Video Walls. Advanced display Advanced display Image processing Image processing Advanced projection Advanced projection Barco Enterprise: quick facts • Market and technology leader in wireless presen- tation and conferencing • Long-standing reputation in control room market • Wide portfolio, for every meeting and control room • Large installed base: 1.1 mio ClickShare meeting room installations, 15k control rooms Barco Integrated report 2022 56 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS How Barco Enterprise creates value Solutions and services that organizations can rely on Our collaboration and control room solutions are marked by a relentless focus on the user experience. Thanks to a con- tinuous stream of ClickShare feature upgrades, we constantly elevate the experience for meeting participants. In control rooms, every innovation that we launch aims to simplify the operator workflows and speed up response times. Everyone in the Enterprise division is committed to exceptional quality, reliability, and durability. We want to be at the forefront of expertly integrating new advancements in AV technology to better serve our clients. To do that, working closely and in collaboration with Barco’s first-rate technical team enables us to provide exceptional customer service, and deliver the high-quality workmanship that we are known for. Jim Ferlino President of Vistacom A trusted brand that puts customers first In 2018, the Enterprise division decided to take customer engagement to the next level and started mapping the cus- tomer journey and launching initiatives to boost customer intimacy. In the meantime, that initiative has been rolled out company-wide. By working closely together with customers, end-users and partners, we understand their hardware and software needs. In turn, we share expertise and experience with our resellers and consultants, which helps them reinforce their market position. A division with a purpose: we go for sustainable impact Over the course of 2022, we have been preparing a major next step in our sustainability journey: the launch of our first fully carbon-neutral product: the Barco ClickShare CX-50 second generation. This achievement further underlines our posi- tion as an industry-broad leader in sustainability. Moreover, Barco is also supporting the wider indus- try to move towards more eco-friendly solutions through our leading role in the AVIXA sustainability initiatives. 95% The Ecopower standby of TruePix reduces the power consumption by up to 95% ver- sus black mode. Thanks to this functionality, amongst others, our new LED video wall platform received the A++ ecoscore. Barco Integrated report 2022 57 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Enterprise division - Meeting Experience Meeting Experience (MX) is one of the few manufacturers in the market to oer all main collaboration and visualization technologies for a smart workplace or learning environment: ClickShare wireless conference and presentation systems, installation projectors, video walls, weConnect Virtual Classroom, image processors as well as services. Our strategy Capture profitable and sustainable growth Barco is a global leader in wireless presentation and con- ferencing. Thanks to the hybrid working trend, demand for video-enabled rooms is growing, which spurs our growth potential. To accelerate the growth of ClickShare and strengthen our leadership position, we are expanding our presence in the market, refining our value propositions and continuously launching new software features that improve the user experience and raise the bar. Innovate for impact The constant evolution of ClickShare as a state-of-the-art meeting and video conferencing solution is a fine example of bright innovation at Barco. Yet, we don’t want to limit ourselves to the scope of wireless presentation and conferencing. In our quest to elevate the user experience, we want to also explore other innovative meeting room solutions; and move into collaboration workflows and analytics. Go for sustainable impact The hot topic of sustainability has many dierent faces. Our Meeting Experience team meets all expectations: ClickShare has the A++ ecoscore, new products will be carbon neutral, and we have a very diverse, global team – which is a must to fully understand our customer needs. 2022 ZOOM The quest for meeting equity Successful hybrid meetings keep the connection going between in-house and remote workers. Still, 1 in 3 remote workers feel disengaged in hybrid calls. Our ClickShare wireless conferencing room solu- tion can help ensure that all meeting participants have equal opportunities to communicate, con- tribute and share ideas, wherever they are located. Related trend: The rise of hybrid In a nutshell • Market and technology leader in wireless pre- sentation and conferencing • Wireless conferencing solutions accounting for 60% of volumes • Installed based ClickShare: 1.1 million meeting rooms • Award-winning product design: 55+ awards • Strong innovation with 50 patents in US, Canada, EU and China We have the technology, expertise and market knowledge to meet the needs of today’s and tomorrow’s collaboration market. We want to elevate the meeting experience further by addressing the strong market potential for ClickShare and exploring new innovative propositions for meeting rooms, together with our partners in the broader collaboration eco-system. Stijn Henderickx EVP Meeting Room Experience Barco Integrated report 2022 58 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Enterprise division - Large Video Walls Large Video Walls oers a package of solutions to help control room operators view better, share faster and resolve quicker – and make well-informed decisions: video walls, video wall controllers, control room software and a full suite of support services. Our strategy Capture profitable and sustainable growth We have a long-standing reputation in mission-critical control rooms. To become a true leader in the control room market, we want to strengthen our software solutions with a special focus on our security roadmap; leverage our installed base for renewal opportunities and increase our operational eciency. Innovate for impact To ensure sustained growth of our business unit, we explore the potential of new, ‘deeper’ solutions in adjacent markets: expand to mid-end through advanced integrated video wall and operator desk solutions and deepen our reach in specific verticals by widening our application focus. Go for sustainable impact Energy-eciency has become a major concern in the control room business, both for cost and sustainability reasons. Yet, our large video wall solutions tick a lot more sustainability boxes. TruePix got the A+ ecoscore for its energy eciency, optimized packaging, use of halogen-free plastics and repair- friendly design. Moreover, we increasingly refurbish existing rear-projection video walls and repair their lenses on-site. 2022 ZOOM It’s a data-driven world Our world has become data driven. Whether in boardrooms or in trac, airport or emergency con- trol rooms: there is an abundance of information to analyze and manage – in order to gain insights. As humans are highly visual creatures, they want to be able to correlate images, data and infographics to drive discussions and decisions. Large video walls provide the canvas they need to do so. Related trend: Need for insights In a nutshell • Top 3 in control rooms • Integrated solutions, based on unique triple-play video wall technologies • Technological leader with control software, UniSee and TruePix video walls • Installed base: 15k+ control rooms worldwide The OpSpace installations at Heathrow and Schiphol were definitely two highlights of 2022. The latest version of our OpSpace software solution makes it much easier for operators at the Airport Operations Centers to manage the complex passenger flows and the increasing number of flights. Chris Sluys EVP Large Video Walls Barco Integrated report 2022 59 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS 48% Cinema 52% Immersive Experience What if you could bring a T-rex back to life? 38% Entertainment Barco Entertainment: quick facts • Industry’s most complete range of laser-based pro- jection and image processing solutions • Long-lasting market position, recognized market and technology leader • Strong reputation for product quality, reliability and brand • Large installed base: 100k+ cinema projectors and 10k+ high-end entertainment projectors No Barco, no show At Barco Entertainment we bring experiences to life. Because we believe in the power of images to amplify great ideas. For everyone and anywhere on this planet. This belief drives our passion every day to continuously design the highest perform- ing, most innovative, most reliable immersive experience and cinema solutions. Enabling our partners and customers to cre- ate and deliver their visual miracles. To everyone. Everywhere. All the time. The Entertainment division comprises two business units: Cinema and Immersive Experience. Advanced display Image processing Image processing Advanced projection Advanced projection Entertainment Barco Integrated report 2022 60 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS How Barco Entertainment creates value Solutions and services that entertainment professionals can rely on Barco stands out from the crowd in every entertainment and simulation market, thanks to its wide portfolio of visualiza- tion solutions. From graphics processing, media handling, projectors to direct view displays and more: every solution is designed with an unwavering dedication to product perfor- mance, reliability and service quality. To maintain and further elevate this high standard and meet customers’ needs, we continually invest in product innovation and improvement, end-to-end services and new business models. From custom solutions to the on-site professional services, the Barco team thought outside the box every step of the way. Phil Marlowe Managing Director Middle East at AVI-SPL on his cooperation with Barco when setting up the Museum of the Future. A trusted brand that puts customers first A close relationship with the customer is key in the entertain- ment market. More than that, the customer comes first when designing new solutions. From dedicated Facebook groups and customer advisory boards to early field trials: every new channel for sharing our customers’ experiences, insights and ideas with our teams brings us one step closer to delivering exceptional end-user experiences. A division with a purpose: we go for sustainable impact As the world’s largest cinema projector maker, we deeply engrain sustainability in our design culture and consider it from the earliest concept until the end of life of our products. Our solutions increas- ingly meet the most stringent ecoscoring criteria, thanks to measures like the shift to a complete laser technology portfolio, lighter projectors, less packaging, modularity and ecofriendly materials. 70% Thanks to their EcoPure™ design, our Series 4 laser cinema projectors ensure energy savings of as much as 70% vs. traditional Xenon-based illumination. Barco Integrated report 2022 61 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Entertainment division - Cinema Our Cinema BU oers the industry’s most complete range of laser projectors and media servers. Barco’s cinema solutions are brought to market and supported by CFG-BARCO (for China) and by Cinionic (for the rest of the world). Our strategy Capture profitable and sustainable growth Barco has been a leader in the cinema market for years. With more than 200,000 cinemas worldwide, the market oppor- tunity remains immense. To consolidate our No. 1 market position and grow our market share, we want to lead the renewal and upgrade to laser, further expand our No. 1 tech- nology position in Premium Large Format with new and disruptive technologies and grow in private, residential and independent cinema with compact models. Innovate for impact Barco has been a cinema technology innovator for years. We are again accelerating our eorts, by leading the industry adop- tion of HDR Lightsteering and anchoring recurring software and services revenue within our portfolio. In addition, we want to further diversify our portfolio to cover all market segments, including non-exhibition adjacencies such as (post)production, content creation software, delivery, services… Go for sustainable impact Today’s exhibitors want to know how every part of their cinema value chain is working to support the green value proposition. With 200,000 cinema screens and only 50,000 laser-powered (of which 30,000 Barco-branded) projectors sold, there is still a lot of room for improvement. Barco ensures sustainability on steroids, oering ever more energy-ecient and eco-friendly products. While our laser projectors were already top, our next-gen HDR Lightsteering technology is even more ener- gy-ecient than laser. 2022 ZOOM Cinema goes premium Whether it’s image, sound or seating, you can’t beat the premium viewing experience in a cinema. So, exhibitors invest big in this premium experience to attract more moviegoers back to their theatres. Cinionic/Barco oer all the technology they need: bright laser projectors and in the future also HDR Lightsteering technology that makes the images pop out of the screen – as if visitors were within the story. Related trend: We live in a visual world In a nutshell • Market leader with 50+% share worldwide • Installed base: 100,000+ projectors • All-laser projector portfolio and strong technol- ogy for Premium Large Format screens • Strong innovation with HDR Lightsteering We can be incredibly proud of the products resulting from the Series 4 projector platform. We really invested big in ensuring its modularity – like Lego building blocks. It took quite a bit of time and eort but it was definitely worth it. Customers across the board with large premium screens to small cinemas can now all benefit from one family of Barco laser cinema projectors to meet their demanding needs. Gerwin Damberg EVP Cinema Barco Integrated report 2022 62 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Cinionic: our ultimate commitment to cinema Since 2018, Cinionic has been the marketing and sales channel for Barco’s wide range of cinema projectors and media servers in all regions except China. As a full-service channel to the market, Cinionic connects with exhibitors and the wider world of cinema to oer them peace of mind – through exceptional services, unique financing models and, increasingly, the new Cinema-as-a-Service model. As of 2022, Barco holds 80% of the shares in Cinionic, versus 55% in the period 2018-2021. After two decades and more than 100,000 projectors, we have built a strong foundation for the future of cinema. The opportunity to elevate the experience for millions of moviegoers every day is thanks to the partnership and trust of those who stand beside us. Wim Buyens CEO Cinionic Barco Integrated report 2022 63 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Entertainment division - Immersive Experience Our Immersive Experience business unit oers solutions tailored to the specific needs of large venues, live events, projection mapping, themed entertainment (such as museums and theme parks) and simulation applications: projection, image processing and a modular support service solution. Our strategy Capture profitable and sustainable growth To outperform the market, we invest big in commercial excel- lence and service capabilities; go for large and strategic deals; expand our image processing oering to any screen; build on our experiences in digital art and enter into global partnerships. The customer experience is a key focus in everything we do. Innovate for impact We aim to become an unrivalled leader in the markets of themed entertainment and events. To achieve that aim, we are focusing our innovation eorts on next-generation image processing and projection platforms; growing our 4K port- folio; oering more hardware, software and service solutions and expanding in the mid-segment market with cost-ecient projectors. Go for sustainable impact We aim to create impressive visual experiences with truly sustainable impact. When designing new tools, we ensure they can promote the highest quality at the lowest ecological impact. UDM, for example, was our first projector with an A+ ECO label. Year after year, the range of products with an A or A+ ECO label grows. More than that, our teams are diverse and international and we constantly intensify our focus on customer engagement. 2022 ZOOM A futureproof museum is digital Technology is changing the way art and culture are consumed. Museums are looking for ways to meet the needs of their audiences, who want expe- riences, stories and immersion instead of static artifacts or artwork. From South Korea to Dubai and from Paris to the US: Barco’s immersive visu- alization technologies, unique display solutions and tools for interactivity help tell stories with an experience-driven approach. Related trend: We live in a visual world In a nutshell • Strong market position in high-end (global top-3) • Expanding in mid-segment • No. 1 in simulation applications for training • Large installed base, including 10k+ high-end UDX projectors The Museum of the Future in Dubai is one of the most iconic projects in 2022. It hosts a wide array of Barco projectors, including the Guinness Book of records canvas screen, built by our experts to deliver visitors a truly immersive experience. Erdem Soyal EVP Immersive Experience Barco Integrated report 2022 64 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Our results Barco Integrated report 2022 65 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Barco’s standard customer experience metric, measured quarterly (upper quartile industry performance) % revenues from products with Barco ECO label Customer NPS (Net Promoter Score) Ecoscore 44 50% Group results Sales In millions of euro Gross profit In millions of euro EBITDA in millions of euro 770 804 1,058 284 288 413 37% 36% 39% 2020 2021 2022 2020 2021 2022 2020 2021 2022 54 59 127 7% 7% 12% Gross profit margin EBITDA margin 32% Healthcare 30% Enterprise 38% Entertainment * Breakdown based on sales 2022 Sales per division 100 200 300 400 500 600 700 800 900 1,000 1,100 50 100 150 200 250 300 350 400 450 500 550 10 20 30 40 50 60 70 80 90 130 120 110 100 140 150 Barco Integrated report 2022 66 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Comments on the group results Group topline – strong sales and order growth across all divisions Order intake for 2022 was 1,058.4 million euro, 8% more than in 2021. This result was driven by a solid recovery of demand across all divisions. Sales for the year increased 32% to 1,058.3 million euro, close to the pre-pandemic level in 2019. Excluding China, all regions posted sales back at the levels of 2019. We expect the Chinese activity to pick up from the second quarter of 2023 onwards. Year-over-year, all divisions delivered double-digit sales growth. The steady improvement in the supply chain over the sec- ond half of 2022 allowed for faster delivery of the existing orderbook, which was still at a record-high year-end position. The order book at the end of December 2022 stood at 496.5 million euro, which is more than 50% above the level at year- end 2019. (1) All definitions for alternative performance measures (APM’s) are available in the glossary as available on Barco’s investor portal 32% topline growth with significant profitability improvement, positioning Barco well for long-term profitable growth Financial highlights fiscal year 2022 (1) • Orders € 1,058.4 million, +8% versus orders in 2021 • Sales € 1,058.3 million, +32% versus sales in 2021 (+24% at constant currencies) • Orderbook year-end € 496.5 million, up € 9.5 million euro versus year-end 2021 • EBITDA € 126.5 million euro or 12.0 % of sales versus € 58.5 million in 2021 • Adjusted EBIT € 90.1 million compared to € 19.4 million in 2021 • Free cash flow € 13.1 million versus € 78.0 million in 2021 • Net earnings € 75.2 million euro versus € 8.9 million euro in 2021 • Proposal to increase the gross dividend to 0.44 euro per share from 0.40 euro last year Barco Integrated report 2022 67 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Division topline – confirmed rebound in all divisions and business units In Healthcare, order intake remained strong throughout 2022. This reflects the resumption of demand in both the Diagnostic Imaging and Surgical & Modality market segments, in all regions, including China. The Diagnostic Imaging business unit benefited from further customer investments in replacement displays for radiology and from the resumption of mammogra- phy display sales which have been softer during the pandemic. The Surgical & Modality business unit generated particularly strong growth in the Americas and in China, driven by large modality projects and digital operating rooms. Enterprise saw continued recovery from the pandemic with significant sales growth in both segments. Meeting Experience sales accelerated in all regions, starting in EMEA, followed by Americas and Asia. This growth was supported by the return- to-the-oce wave, the increasing trend towards video-enabled hybrid meetings and the growing recognition of ClickShare’s Bring Your Own Meeting value proposition. Large Video Walls realized double-digit sales growth in all regions, fueled by deployments of control rooms. The Entertainment division produced encouraging results in 2022. During the first half of the year, the division dealt with component shortages. From mid-year onwards, the situa- tion improved steadily, allowing for a ramp up of deliveries on the high order book. While 2022 Cinema sales have not yet returned to pre-pandemic levels, Cinema ended the year with an order book that was twice as high as year-end 2019. For Cinema, solid demand for Barco’s all-laser portfolio led to growth in all regions except Asia, where the lockdowns in China impacted the business. The Immersive Experience topline reached an all-time high, with a particularly strong uptake in the fixed install business that reflected greater demand from museums, projection mapping and theme parks. Profitability and free cash flow – significant EBITDA margin improvement The gross profit margin improved quarter-over-quarter throughout 2022 to an average level of 39.0%, up 3.3 ppts year-over-year. This rebound in gross profit margin back nearly to 2019 is attributable to gross profit actions, a more favorable product mix most outspoken in the Enterprise division and a less constrained supply chain during the second half of the year. The EBITDA margin reached 12.0% for the full year, up 4.7 ppts versus last year. Both gross margin recovery and operational leverage on the topline growth contributed to this result. As the supply chain constraints were largely resolved, the EBITDA margin jumped from 9.8% in the first half of the year to 13.7% in the second half, reconnecting with the 2019 level. Each of the business units contributed positively to the EBTIDA margin except Large Video Walls where the profitability keeps lagging. Management intends to conduct a strategic review of the busi- ness unit in 2023, focusing on profitable products and markets. Free cash flow for 2022 was 13.1 million euro compared to 78.0 million euro in 2021. This decrease is entirely due to higher working capital. First, we ended the year with higher trade receivables after the record-high sales in the fourth quarter. Second, inventory levels of mainly components remained high as a result of volume purchases and a build-up of safety stocks for critical components. We expect working capital to return to normalized levels in 2023. Barco Integrated report 2022 68 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Outlook FY23 The following statements are forward looking on a like-for-like basis and actual results may dier materially Assuming stabilizing macro-economic conditions, manage- ment confirms its expectation of sales growth between 10 and 15% for 2023 versus the previous year. The EBITDA margin is expected to further improve and move above 14% for the full year 2023, reflecting operating leverage on higher sales and an increase in gross margin as a result of the further easing of the supply chain constraints. Dividend Barco’s Board of Directors will propose to the General Assembly to distribute a gross dividend of 0.44 euro per share, a 10% increase from 0.40 euro a year ago. Ready for Barco’s further growth ambitions 2022 was a transition year for Barco but it managed to bring its business back on a successful track. Throughout the year Barco kept accelerating, and the company is ready for its fur- ther growth ambitions. Barco’s CEOs were happy to see the renewed dynamics in all the Barco teams, with more accountability and custom- er-centricity. The supply chain was challenging, but creativity and perseverance from the teams turned 2022 into a success. Barco starts 2023 fully engaged to deliver on its long-term strategic growth plans. Besides optimizing the company’s oper- ational eciency and manufacturing footprint, Barco is looking forward to expanding its market potential with growth in both the company’s core and adjacent markets. Furthermore, Barco intends to focus more than ever on world-class innovations with its visualization and collaboration technology. Barco Integrated report 2022 69 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Consolidated results for the fiscal year 2022 Order intake Order intake was 1,058.4 million euro, up 8% from 978.8 million euro a year ago. All regions contributed to the increase except APAC, where the lockdowns in China significantly impacted market demand. Order book Order book at year end was at 496.5 million euro compared to 487.0 million euro at FY21 year-end, an increase of 2% ver- sus last year. After a period of component shortages, we are now delivering on this orderbook and gradually shortening the lead times. The book-to-bill ratio for the full year 2022 was very close to 1. Order intake by division In millions of euro FY FY FY Change vs FY Healthcare . . . -% Enterprise . . . +% Entertainment . . . +% Group ,. . . +% Order intake In millions of euro FY FY FY Change vs FY Order intake ,. . . +% Order book In millions of euro FY FY FY Change vs FY Order book . . . +% Order intake breakdown by region In millions of euro FY FY FY Change (in nominal value) The Americas % % % +% EMEA % % % +% APAC % % % -% Global % % % +% Barco Integrated report 2022 70 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Sales Sales for the year 2022 were up 32% versus 2021, with a tail- wind from the currency eect. At constant currencies, the sales growth would have been 24%. Sales growth was driven by an improving order-to-sales conversion, especially in the second half of the year. The topline grew in all divisions and business units and all three regions. In Asia, the sales reached a double-digit growth despite the lockdowns in China which persisted throughout 2022. Sales In millions of euro FY FY FY Change vs FY Sales ,. . . +% Sales at constant currencies . +% Sales by division In millions of euro FY FY FY Change vs FY Healthcare . . . +% Enterprise . . . +% Entertainment . . . +% Group ,. . . +% Sales by region In millions of euro FY FY FY Change vs FY The Americas % % % +% EMEA % % % +% APAC % % % +% Global % % % +% Barco Integrated report 2022 71 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Profitability Gross profit The gross profit margin was 39.0%, increasing 3.3 percentage points from 35.7% last year. In addition to a favorable product mix, the higher broker and transport costs related to com- ponent shortages levelled o in the second half of the year. Diverse margin actions were implemented to compensate for the cost inflation, mostly related to labor, transport and higher component prices. Indirect expenses & other operating results Total indirect expenses grew 21% to 320.9 million euro ver- sus 265.4 million euro for 2021, partly in connection with the growing topline and increased headcount, but also due to the significant impact of general inflation, which reached peak levels not seen in decades notably in the Americas and Europe. As a percentage of sales indirect expenses were 30.3% in 2022 compared to 33.0% in 2021. • Research & Development expenses increased to 120.5 million euro compared to 101.3 million euro last year. As percentage of sales, R&D expenses were 11.4% of sales com- pared to 12.6% a year earlier. • Sales & Marketing expenses increased slightly to 142.7 million euro, compared to 116.2 million euro for 2021. As a percent of sales, Sales & Marketing expenses were 13.5% of sales compared to 14.5% in 2021. • General & Administration expenses amounted to 57.7 million euro compared to 47.9 million euro last year and were 5.5% as a percentage of sales compared to 6.0% in 2021. Other net operating expenses amounted to 1.7 million euro. EBITDA & adjusted EBIT The increase in indirect expenses was oset by the significant increase in gross profit, which resulted in an EBITDA level of 126.5 million euro, more than double the 2021 EBITDA of 58.5 million euro. EBITDA margin grew to 12.0% versus 7.3% in 2021. All three divisions posted profitable growth: • Healthcare’s EBITDA margin increased to 11.2%, driven by operating leverage on the topline growth. The profitability level of Healthcare is still 2.1 percentage points lower than 2019, reflecting product mix and temporary higher expenses linked to the ramp up of the new factory. • The Enterprise EBITDA margin was 19.1%, more than 3 times the margin of 2021 of 6.3%, and approaching the level of 2019. This result was fueled by operating leverage and a more favorable product mix for Meeting Experience, in addi- tion to topline growth and cost control in Large Video Walls. • Entertainment’s EBITDA margin at 6.9% was flat versus 2021. Severe supply chain constraints hampered the order to sales conversion in the first semester, resulting into a negative EBITDA margin of -1.7 % in the first half of the year. As these constraints were largely resolved and production capacity was ramped up, Entertainment turned around to a 12.6% EBITDA margin in the second semester. In millions of euro Sales EBITDA EBITDA % Healthcare . . .% Enterprise . . .% Entertainment . . .% Group ,. . .% EBITDA by division 2022 versus previous years: In millions of euro FY FY FY Change vs FY Healthcare . . . +% Enterprise . . . +% Entertainment . . . +% Group . . . +% Adjusted EBIT 2 was 90.1 million euro or 8.5% of sales, com- pared to 19.4 million euro or 2.4% of sales for 2021. As a result of reorganisations and team synergies in the enter- prise division, Barco booked 2.5 million euro in restructuring charges. Taking this charge into account, EBIT in 2022 was 87.6 million euro compared to 13.0 million euro in 2021. 2 Adjusted EBIT is EBIT excluding restructuring charges and impairments, see Glossary of the Annual Report. Barco Integrated report 2022 72 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Income taxes Taxes in 2022 were 15.9 million euro for an eective tax rate of 18%, compared to 2.1 million euro in 2021 for the same eective tax rate. Net income Full year net income attributable to the equity holders was 75.2 million euro compared to 8.9 million euro a year ago. Net income per ordinary share (EPS) was 0.84 euro versus 0.10 euro in 2021. Fully diluted earnings per share were 0.83 euro compared to 0.10 in 2021. Cash flow & balance sheet Free cash flow and working capital Free cash flow for 2022 was 13.1 million euro. A significant uptake in gross operating free cash flow, was offset by increased working capital, due to higher inventory levels and higher trade receivables. The higher trade receivables are linked to the peak sales of the fourth quarter. The higher inven- tories include proactive buying of inventories, as a response to supply chain challenges and inflation. In millions of euro FY FY FY Gross operating Free Cash Flow . . . Changes in trade receivables -. -. . Changes in inventory -. . -. Changes in trade payables . . -. Other Changes in net working capital . . -. Change in net working capital -. . -. Net operating Free Cash Flow . . -. Interest Income/expense . -. -. Income Taxes -. -. -. Free cash flow from operating activities . . -. Purchase of tangible and intangible FA -. -. -. Proceeds on disposal of tangible and intangible FA . . . Free cash flow from investing -. -. -. Free cash flow . . -. Barco Integrated report 2022 73 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Working capital Net working capital increased to 14.3% of sales compared to 5.8% of sales in 2021. The increase in working capital was caused mainly by an increase in inventory levels. Due to the component short- ages, safety buers were stocked for a number of scarce components. Additional purchases were made in anticipation of upcoming price increases. High sales in the last quarter helped to start reducing inventories, however inventory levels remained higher than usual at year end. In addition to the increase in inventory, higher trade receivables contributed to the increase in working capital, mainly due to very strong sales in December, for which cash will be collected in 2023. Capital expenditure Capital expenditure was 21.2 million euro, slightly higher than 18.8 million euro reported in 2021. This capital expenditure included investments in the expansion of the China footprint, renewal of the Experience Centre and the first Cinema-as-a- Service contracts. ROCE ROCE for the year 2022 was 16% versus 4% last year. Cash position Net financial cash position, including net cash held in Cinionic, was 264.0 million euro, compared to 309.8 million euro end of 2021. The decrease versus last year is attributable to the lower free cash flow caused by increased working capital, a number of minority investments and the increase of Barco’s share in Cinionic from 55% to 80%. In millions of euro FY FY FY Trade Receivables . . . DSO Inventory . . . Inventory turns . . . Trade Payables -. -. -. DPO Other Working Capital -. -. -. Total working capital . . . Barco Integrated report 2022 74 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Update Planet - People - Communities Barco has organized its sustainability program into 3 pillars: the planet, our people and the communities we operate in. For each of these three sustainability pillars, the company has formulated an overall ambition statement and defined several focus areas. In this chapter we oer some highlights on the progress we made in 2022 within each of these pillars. For a more comprehensive sustainability chapter please read our Planet – People – Communities report. FY FY FY Change vs Greenhouse gas emissions from own operations reduction (vs ) -% -% -% - ppts % revenues from ECO labelled products % % % + ppt s 3 For more information about Barco eco scoring methodology, see Barco’s latest Annual report on the Barco website. Planet Under the Planet pillar, Barco has set a goal of reducing its environmental footprint and that of its customers. Barco’s environmental footprint reduction showed a signifi- cant progress during 2022, with Greenhouse Gas emissions from our own operations 51% reduced versus the base level of 2015. This was driven by a logistics modal shift from air to sea transport, and on infrastructure level the temporary additional ventilation requirements, linked to covid-19, could be lifted. To reduce the footprint of its products and to improve the eco-friendliness of its solutions portfolio Barco has rolled out a company-wide ECO labelled scoring methodology from 2020 onwards. The target level for 2023 is set at 70% ECO labelled revenues. 3 In 2022, 50% of revenues came from products with a Barco ECO label compared to 31% for 2021. This is driven by a steady increase of ECO labelled product releases. Healthcare made a step up mostly with new releases in the modality area. In the Enterprise division, the full ClickShare range and the newest LED portfolio are now ECO labelled. Entertainment is driven by the uptake of Series 4 laser projector shipments in the second half of the year. Barco Integrated report 2022 75 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS People Barco invests in sustainable employability by creating the right conditions for our employees to have an engaging, enriching and healthy career at Barco. As the business picked up, the number of employees in 2022 grew to 3,302, a net increase of 161 employees year-over-year. Diversity and inclusion are key elements in our recruitment pro- cess and in 2022 this has led to a more diverse workforce on all three of our diversity dimensions: age, nationality and gender. In 2022, Barco launched an enhanced employee survey, including a specific eNPS (Employee Net Promotor Score) question. Due to the dierent methodology, this score cannot be compared with previous surveys. The eNPS survey resulted in a score of 16, which breeds into the category “good engage- ment”. With the insights of this more granular survey and our continued focus and actions on employee engagement, our target is to bring this score above 30, “great engagement”. FY FY FY Change vs Number of employees at year-end (heads) , , , +% Employee Net Promotor Score (eNPS) - - NA FY FY FY Change vs Customer Net Promotor Score - Communities Barco is committed to playing an active role in the commu- nities in which it operates in by upholding the highest ethical and quality standards and holding its business partners to the same standards. In this context Barco remains focused on a value-add customer experience. The company gathers feed- back from end-customers as well as partners on a quarterly basis using the relational Net Promotor Score (NPS) as its stan- dard customer experience metric. In 2022, Barco achieved an NPS score of 44, a decline of 3 points versus the previous year. This is mainly related to the component shortages in the market that Barco has been facing throughout the year, with longer lead times and impacting post-sales service. The NPS scores were mostly flat versus last year in Europe and China, while Americas and the rest of Asia showed a decrease. A score above 50 is considered excellent and that is also where we want to steer the company’s rating. Barco Integrated report 2022 76 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Results of the Healthcare division % revenues from products with Barco ECO label Ecoscore Division in the group Distribution based on sales 30% Sales In millions of euro Gross profit In millions of euro EBITDA in millions of euro 32% Healthcare 46% Diagnostic Imaging 54% Surgical & Modality 262 262 342 96 87 116 37% 33% 34% 35 22 38 13% 9% 11% Gross profit margin EBITDA margin 2020 2021 2022 2020 2021 2022 2020 2021 2022 50 100 150 200 250 300 350 400 20 5 40 10 60 80 15 20 120 100 140 160 180 40 35 30 25 200 Barco Integrated report 2022 77 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS The Healthcare division posted continued solid order intake following the strong order intake in 2021. Although the demand for our healthcare products was remarkably resilient throughout the pandemic in 2020 and 2021, we saw a gradual resumption of healthcare investments in Diagnostic Imaging and Surgical & Modality in 2022. Sales for the Healthcare division reached an all-time high in 2022, in part delivering on the high orderbook that had been built up in the previous year. For the Diagnostic Imaging segment, orders increased versus last year and the business unit delivered double-digit sales growth in all regions. Sales in the Americas were particu- larly strong with high volumes and a greater mix of high-end product. Mammography sales resumed, after being softer during the pandemic, when many doctor consultations were delayed. The segment also grew further with the world’s first stand-alone approved digital pathology display. The Diagnostic More than accountability, our new business unit structure has truly fostered customer intimacy in 2022. During the supply chain crisis, we sat together with our customers to find alternatives in case of shortages. That installed a feeling of connection that has reinforced the bond with our clients. Johan Fornier EVP Surgical & Modality Healthcare division In millions of euro FY FY FY Change vs FY Orders . . . -% Sales . . . +% EBITDA . . . +% EBITDA margin .% .% .% reflection of product mix, investments in product roadmaps and go-to-market, as well as temporary transfer and ramp-up costs linked to the new factory. Imaging segment accounted for approximately 46% of the divisional sales, versus 50% last year. In Surgical & Modality, orders were slightly lower than last year’s high order levels, mostly in EMEA and Americas. On the other hand, Asia, notably China, produced a strong increase in the order book. Sales reached a record-high level, with dou- ble-digit growth in all regions. Sales were particularly strong in the Americas and Asia, with the strongest growth in China. The performance of the segment was driven by higher vol- umes in several large modality projects. Furthermore, Barco’s digital operating room solutions gained momentum, reflect- ing the growing adoption of digital solutions in the operating room infrastructure market. The Surgical & Modality segment accounted for approximately 54% of the divisional sales, versus 50% last year. The EBITDA margin for the division improved to 11.2% from 8.6% last year, which is still below the level of 2019, a 250 275 300 325 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 Orders last 12 months Sales last 12 months Last 12 months (LTM) orders and sales 2019-2022 Barco Integrated report 2022 78 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Results of the Enterprise division % revenues from products with Barco ECO label Eco score Division in the group Distribution based on sales 79% Sales In millions of euro Gross profit In millions of euro EBITDA in millions of euro 217 233 317 105 109 172 49% 47% 54% 18 15 61 8% 6% 19% Gross profit margin EBITDA margin 30% Enterprise 58% Meeting Experience 42% Large Video Walls 2020 2021 2022 2020 2021 2022 2020 2021 2022 50 100 150 200 250 300 350 400 20 10 40 20 60 80 30 40 120 100 140 160 180 80 70 60 50 200 Barco Integrated report 2022 79 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS In the Enterprise division, orders increased by more than 7% and sales by 36% year-over-year. As pandemic measures eased, the business picked up, starting in the second quarter. In terms of the sales mix, the Meeting Experience business unit accounted for about 58% of Enterprise sales for 2022, while 42% of the sales were for Large Video Walls. In 2021, each business unit delivered half of the turnover. Meeting Experience saw growing adoption for wireless con- ferencing, as hybrid meetings have become the “new normal”. From a regional perspective, sales in 2022 were particularly strong in EMEA, where the return-to-the-oce trend started earlier than in other regions. Later in the year, this trend also picked up in the Americas and Asia. ClickShare has now been installed in more than 1.1 million meeting rooms globally. ClickShare Conference accounted for more than 60% of ClickShare’s volume for the full year. The installed base of ClickShare Conference more than doubled in 2022 versus last year with over 150,000 units shipped and installed since it was launched in 2020. In 2022, Barco further strengthened 2022 was a stellar year for Meeting Experience as the ClickShare product family proved to be very well positioned to address our customers’ collaboration needs. Looking forward, our focus on the user experience, strong innovation capacity and seasoned team will help us expand our role as a leading player in the collaboration market. Stijn Henderickx EVP Meeting Room Experience Enterprise division In millions of euro FY FY FY Change vs FY Orders . . . +% Sales . . . +% EBITDA . . . +% EBITDA margin .% .% .% The division produced a 19.1% EBITDA margin up from 6.3% last year. This was driven by operating leverage and a favorable product mix, which resulted in a significantly higher average gross margin. its community of leading meeting room ecosystem players from around the globe making ClickShare the most compatible solution for hybrid meetings. The division’s virtual conferencing weConnect growth initiative brought in a growing number of new customer references in dierent regions and a growing funnel of new opportunities. The Large Video Walls segment sales rebounded nearly to the level of 2019 with the contribution from a particularly strong fourth quarter. The Americas region performed well with larger projects in utility and governmental applications. In EMEA, growth was driven by large installations in the Middle East and the Benelux. APAC showed a mixed view: there was significant uptake in many Asian countries, while China sales were lower. As the profitability of Large Video Walls is lagging, management intends to conduct a strategic review of the business unit in 2023, focusing on profitable products and markets. 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 Orders last 12 months Sales last 12 months 150 200 250 300 Last 12 months (LTM) orders and sales 2019-2022 Barco Integrated report 2022 80 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS Results of the Entertainment division % revenues from products with Barco ECO label Ecoscore Division in the group Distribution based on sales 35% Sales In millions of euro Gross profit In millions of euro EBITDA in millions of euro 291 310 399 83 92 124 28% 30% 31% 0 22 28 0% 7% 7% Gross profit margin EBITDA margin 38% Entertainment 48% Cinema 52% Immersive Experience 2020 2021 2022 2020 2021 2022 2020 2021 2022 50 100 150 200 250 300 350 400 450 500 550 10 20 1030 40 50 2060 70 80 3090 130 40120 110 100 140 50150 Barco Integrated report 2022 81 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS The Entertainment division delivered an 18% increase in order intake and a 29% increase in sales for the year compared to 2021. Orders and sales gains reflect the resumption of the Cinema business and the strong demand for fixed installa- tions (museums, theme parks) and projection mapping in the Immersive Experience segment. Cinema sales growth was strong in Europe and Americas, while sales in Asia were lower hampered by the continued lockdowns in China. Throughout the year sales grew steadily quarter-over-quarter with a remarkable uptake in the fourth quarter. Order intake was also particularly strong in the last quarter resulting into an all-time-high order book at year- end. Laser projection has now become the norm for cinema. Barco has capitalized on the maturity of this technology with its leadership position and all-laser portfolio. Demand was driven in part by returning visitor counts in theatres, but just as much by the total cost of ownership value proposition for laser projectors, which feature more than 50% lower energy consumption and no need for lamp replacements during the More than ever, people want to be entertained these days. The pandemic has taught us that there’s more to life than material things, so people crave experiences – and that’s exactly what we do at Barco: touch people’s hearts and minds. As a result, 2022 surpassed our growth records from 2019.” Erdem Soyal EVP Immersive Experience Entertainment division In millions of euro FY FY FY Change vs FY Orders . . . + % Sales . . . +% EBITDA . . . +% EBITDA margin .% .% .% and driving simulators. Immersive Experience accounted for approximately 52% of the divisional sales in 2022, compared to 50% last year. The EBITDA margin for Entertainment was 6.9% for the full year, the same as last year, reflecting the significant impact of higher component and freight costs. This impact was most pronounced in the first half of the year which resulted in a negative EBITDA of -1.7%, while EBITDA jumped to 12.6% in the second half of the year as the supply chain challenges got largely resolved. lifetime of these projectors. This provides a clear incentive to replace first-generation lamp-based projectors with laser projectors. The roll-out of Cinema-as-a-Service was a growing success in 2022, oering exhibitors an all-in-one proposition, including service and support over the lifetime of the projector. Cinema accounted for approximately 48% of the divisional sales in 2022, compared to 50% last year. Just like in Cinema, sales grew steadily quarter-over-quarter in the Immersive Experience segment, with a record-high fourth quarter. Significant growth was achieved across all regions, with lowest but still double-digit growth in Asia, hampered by the China covid-19 regulations. Business resumed across all product segments, most outspoken in the fixed AV installa- tion business, with strong demand for installations in digital museums, immersive digital art experiences and projection mapping. The rental and staging segment benefited from the return of events, mostly in Europe, Middle East, and the Americas. The simulation business grew with a significant number of new reference customer projects, both in flight 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 Orders last 12 months Sales last 12 months 200 250 300 350 400 450 Last 12 months (LTM) orders and sales 2019-2022 Barco Integrated report 2022 82 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS barco.com Group management Beneluxpark 21 8500 Kortrijk – Belgium Tel.: +32 (0)56 23 32 11 Registered oce President Kennedypark 35 8500 Kortrijk – Belgium Tel.: +32 (0)56 23 32 11 VAT BE 0473.191.041 | RPR Gent, Section Kortrijk Stock exchange Euronext Brussels Financial information More information is available from the Group’s Investor Relations Department: Willem Fransoo Director Investor Relations Tel.: +32 (0)56 26 23 22 E-mail: [email protected] Copyright © 2023 Barco NV All rights reserved Realization Barco Corporate Marketing & Investor Relations Oce Focus Advertising Barco Beneluxpark 21 8500 Kortrijk – Belgium Barco Integrated report 2022 83 CORE Report 01 BARCO AT A GLANCE 02 OUR COMPANY 04 SHAPING OUR STRATEGY 03 HOW WE CREATE VALUE 05 INNOVATION AND TECHNOLOGY 06 OUR MARKETS 07 OUR RESULTS 2022 Integrated annual report Governance & Risk Report 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT Table of contents This is the Governance & Risk Report section of Barco’s 2022 Integrated annual report. Other sections are available via the download center at ir.barco.com/2022. CORE MORE • Report on planet - people - communities • Financial report ANNEX • Integrated Data Pack • Glossary • GRI Content index • Assurance report 01 Corporate governance..............................3 Corporate governance statement ......................4 Board of Directors....................................5 Core Leadership Team ................................6 Annual General Meeting .............................. 7 Activity report & Evaluation of the Board and its Committees .............................8 Remuneration report ................................12 Policies of conduct ..................................28 02 Risk management and control processes .......... 29 Control environment & Risk management process....... 31 Top risks ...........................................35 Deep dive on 2022 consequences and impact of the macroeconomic environment ........................42 03 Additional risk information pursuant to the non-financial disclosure directive. . . . . . . . . . . . . . . . . 44 Climate change and energy ..........................45 Business ethics......................................46 Financial risk management and internal control .........47 Barco Integrated report 2022 CGR 2 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT 03 ADDITIONAL RISK INFORMATION Governance & Risk Report Barco CGR Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT Corporate governance 03 ADDITIONAL RISK INFORMATION Barco Integrated report 2022 CGR 3 Governance & Risk Report 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT Barco's governance structure is one-tier, operating pursuant to the company's articles of asso- ciation and corporate governance charter. Both are available for download at www.barco.com/corporategovernance. There are no dual voting rights for certain shareholders. In accordance with article 3:6, §2 of the Code of Companies and Associations, Barco applies the 2020 Belgian Code on Corporate Governance. Below is an overview of the articles of the Belgian Code on Corporate Governance which Barco does not comply with, as well as an explanation for such non-compliance. Corporate governance statement • Art. 7.6: The Board of Directors decided not to grant shares to non-executive board members as part of their remuneration. Such grant will trigger tax and practical ramifications for non-Belgian residents. Moreover, several directors already hold a significant number of Barco shares. • Art. 7.8: The variable part of the executive remuneration package is linked to the overall corporate or business unit perfor- mance and sustainability criteria, which have become increasingly important for investors. Both are a function of, and thus also a measure for, the executives’ individual performance. • Art. 7.9: The Board of Directors has not set a minimum threshold of shares to be held by the executives. The remuneration package for executives is suciently balanced with various components to incentivize exec- utives to pursue a strategy of sustainable profitable growth. • Art. 7.12: The Board of Directors endeavors to insert a ‘clawback provision’ in contracts of employment with executives to the extent permissible by the law governing such contract. Declaration regarding the information given in the Integrated Annual Report 2022 The undersigned declare that: • The annual accounts, which are in line with the standards applicable for annual accounts, give a true and fair view of the capital, the financial situation and the results of the issuer and the consolidated companies. • The annual report gives a true and fair view of the develop- ment and the results of the company and of the position of the issuer and the consolidated companies, as well as a description of the main risks and uncertainties they are faced with. Charles Beauduin, CEO An Steegen, CEO Ann Desender, CFO Barco Integrated report 2022 CGR 4 Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT 5 Directors with 5 years of seniority Female members of the Board 3 Independent directors 4 The composition of the Board of Directors meets the gender diversity requirement laid down in article 7:86 of the Code of Companies and Associations. Moreover, a majority of directors is independent. All directors hold or have held senior positions in leading inter- national companies or organizations. Their biographies can be found on Barco’s corporate website. Board of Directors Situation on February Chair Frank Donck () Directors Charles Beauduin An Steegen Adisys Corporation (represented by Ashok K. Jain) () Hilde Laga () Lieve Creten () Secretary Kurt Verheggen General Counsel (1) independent directors * date on which the term of oce expires: end of the annual meeting Changes to the Board of Directors The General Meeting of 28 April 2022 approved the qualifica- tion of Adisys Corporation, permanently represented by Mr. Ashok K. Jain, as independent director as referred to in article 7:87 Code of Companies and Associations. Board of Directors Barco Integrated report 2022 CGR 5 Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT Changes to Core Leadership Team Barco NV is managed by a Core Leadership Team (‘CLT’) which comprises certain key ocers from business units and func - tions. The CLT operates under the chairmanship of the Chief Executive Ocers and shares responsibility for the deployment of Barco’s strategy and policies, and the achievement of its objectives and results. In April 2022, the CLT composition has gone through a num - ber of changes: • Iain Urquhart, EVP of Global Customer Success resigned from Barco to pursue career opportunities outside of Barco. The activities of the Global Customer Success organization were restructured with Sales Operations (including partner management) now reporting into CFO Ann Desender, Global Marketing reporting into CEO An Steegen and the Services organization reporting into EVP Operations Rob Jonckheere. • Marc Spenlé stepped down from his role as CDIO, and CLT members with 5 years of seniority 11 Female CLT members 2 4 non-Belgian CLT members 4 Core Leadership Team resigned from Barco. Tom Sys joined the CLT as new CDIO, responsible for IT and software platforms. The GEAX orga- nization was folded in the respective business units (with the exception of software platforms). • A change in the Business Unit leadership was announced with Stijn Henderickx stepping up as EVP Meeting Experience, taking over from Olivier Croly who resigned from Barco. Erdem Soyal joined the CLT as new business unit lead for Immersive Experience. The full biographies of the Core Leadership Team can be found on Barco’s corporate website. Barco Integrated report 2022 CGR 6 Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT Participation rate & Average of "For" votes Annual General Meeting The annual general meeting (AGM) is held on the last Thursday of April. In 2022, the company held its first truly hybrid meeting whereby shareholders could also cast their vote remotely, either prior to or real time during the meeting itself. This hybrid meeting was enabled using the company’s own weConnect technology. The company is open to discussions with investors and proxy voting agencies to better understand their policies and align the company’s governance practices therewith, considering its size, profile, jurisdiction as well as the geographical scope of its activities. Over the past years, shareholders' participation has been consistently above 50%. 2021 91% 64% 2018 95% 56% 2019 94% 54% 2020 95% 58% 88% 57% 2017 Physical attendance Approval rate by voting shareholders Voting by proxy * In 2020 and 2021, physical attendance was not possible due to covid-19. 2022 88% 51% 80 60 40 20 Barco Integrated report 2022 CGR 7 Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT Activity report on Board and Committee meetings Directors’ attendance at Board and Committee meetings Board of directors Audit committee Remuneration & nomination committee Technology committee Attendance Rate Charles Beauduin % Frank Donck () % Ashok K. Jain () % Hilde Laga () % An Steegen % Lieve Creten () % (1) independent directors Board of Directors Title 1 and 2 of Barco’s Corporate Governance Charter describe the responsibilities of the Board of Directors and its Committees. The table below provides a comprehensive overview of the directors’ attendance at Board of Directors and Committee meetings in 2022. Intermediate meetings are held via teleconference call if need be. All the Board of Directors meetings took place in Belgium with some of the directors attending via videoconferencing due to covid-related travel and sanitary restrictions. One meeting was closed with a dinner attended by several members of the Core Leadership Team to foster closer interac- tion between the directors and the managers of the company. Following the easing of covid-related travel restrictions, the directors have taken the opportunity of familiarizing themselves with the company’s activities in North America. In October, the Directors traveled to Vancouver (Canada), Los Angeles and the San Francisco Bay area (USA). The directors visited local oces and discussed the current state of aairs, future business plans and technology trends with the local leader- ship team. Moreover, they attended technology showcases in dierent domains relevant to the company (e.g. lightsteering, automated manufacturing, virtual production, robotic surgery, virtual classroom). Finally, the directors also met and discussed business opportunities with current as well as prospective customers of the company. At every meeting, the Board of Directors reviewed and dis- cussed the financial results as well as the short to mid-term financial forecast of the company. At the beginning of the year, upon recommendation by the Audit Committee, the Board approved the financial results of 2021 and proposed the dividend for approval by the shareholders. In line with the previous year, the Board also proposed to the shareholders the option to subscribe to newly issued shares by contributing the dividend. The Board, in close concert with the Core Leadership Team, reflected on each of the business units’ strategies for the short to mid-term, discussed and decided upon the growth initiatives for the company and approved the 2023 financial budget. The Board closely monitored the impact of the corona- related travel restrictions and disruptions in the supply chain, as well as geopolitical conflicts and tensions on the company’s operations and financial results. average total attendance rate 98% Barco Integrated report 2022 CGR 8 Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT Board of Directors Audit Committee Remuneration Committee Technology Committee Audit Committee The Audit Committee is composed of three members. Lieve Creten, who acts as Chair, Frank Donck and Hilde Laga. All members are independent directors. The Audit Committee’s members have relevant expertise in financial, accounting and legal matters as shown in the biographies on Barco’s corporate website. The Audit Committee met five times during 2022. All Audit Committee members were present during all the meetings. The Audit Committee reported the outcome of each meet- ing to the Board of Directors. The minutes of each Audit Committee meeting were submitted to the Board of Directors. The CFO and the VP Corporate Finance attended all regular meetings. The CEO Charles Beauduin was present at all reg- ular meetings and the CEO An Steegen attended two Audit Committee meetings. The Group’s internal auditor and the Group’s external auditor PwC Bedrijfsrevisoren BV were present in 3 meetings. The Group’s data protection ocer was invited to two audit committee meetings. The overview below indicates a number of matters that were reviewed and/or discussed in Audit Committee meetings throughout 2022: • The Company’s 2021 annual and 2022 interim financial state- ments, including non-financial information, the Company’s 2021 integrated report, prior to publication thereof. • The Company’s 2022 integrated report content and review. • The Committee also assessed in its quarterly meetings the adequacy and appropriateness of internal control policies and internal audit programs and their findings. • Matters relating to accounting policies, financial risks and compliance with accounting standards. Compliance with statutory and legal requirements and regulations, particu- larly in the financial domain, was also reviewed. Important findings, Barco’s major areas of risk (including the internal auditor’s reporting thereon, as well as the review of litigation and other claims), follow-up actions and appropriate mea- sures were examined thoroughly. • Quarterly review of critical accounting judgements and uncertainties, including impact of the macro-economic environment. • Each quarter, the Committee reviewed the Company’s free cash flow generation and working capital ratios. • The Committee monitored potential impairment indicators, reviewed the goodwill impairment test performed, financial impact of strategic investments and risk management. • The Committee reviewed the report provided by the Group’s compliance ocer on the application of Corporate Governance and the Code of Conduct and shared with the Board. Regular updates on GDPR were provided by the Group’s data protection ocer. • With regard to internal audit, the Committee reviewed and approved the internal audit charter, audit plan, audit scope and its coverage in relation to the scope of the external audit, as well as the stang, independence and organizational structure of the internal audit function. • With regard to the external audit, the Committee reviewed the proposed audit scope, approach and fees, the inde- pendence of the external auditor and non-audit services provided by the external auditor in conformity with Barco’s non-audit fee policy. The Committee also reviewed the key audit matters valuation of goodwill and valuation of deferred tax assets, as well as the group external auditor’s manage- ment letter, which contained no recommendations with material impact. • For information on the fees of Group auditor, please refer to note 22 'Related party transactions' in the Financial Statements 2022. Board Committees AUGUSTJANUARY MARCH MAYFEBRUARY APRIL JUNE DECEMBERSEPTEMBERJULY OCTOBER NOVEMBER Overview of the Board and Committee meetings in 2022 Barco Integrated report 2022 CGR 9 Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT • The Committee reviewed the report from the external audi- tor in which the auditor set forth its findings and attention points during the relevant period. The Committee assessed the overall performance of the internal and external auditor. The Committee also reviewed and confirmed its current Audit Committee schedule Remuneration and Nomination Committee The Board of Directors has combined the Remuneration Committee and the Nomination Committee into a single committee. The Remuneration & Nomination Committee is composed of Frank Donck, who acts as Chair of the committee, Lieve Creten and Hilde Laga. All members are independent directors. The Remuneration and Nomination Committee fulfils the mis- sion imposed on it by law and meets at least three times per year, as well as whenever the Committee needs to address imminent topics within the scope of its responsibilities. The CEOs are invited to meetings, except for matters that concern them personally. The meetings are prepared by the Chief HR Ocer, who attends the meetings. In 2022, the Remuneration and Nomination Committee met three times. First focus point for the Committee has been Barco’s HR strat- egy for 2022-2023, which is articulated around Organizational eectiveness, Workforce Strategy, Culture, People & Leadership Development and Operational Excellence as key enabler. Second focus point was the continuation of the simplification of the matrix organization. Main initiative has been the transfer of Business Unit specific Application development teams from the CDIO organization to the respective Business Units. The rationale of this reorganization is to have these software devel- opment teams closer to the products & services development of the Business Units, and at the same time also closer to the markets and customers. Additionally, it simplifies the report- ing lines and enhances more eciency and focus within the Business Unit R&D teams. The CDIO organization, now SW.IT, remained and focuses now on 3 main activities: • IT and digitalization program • Cloud platform development team • Long term software development strategy Given the dramatic increase of inflation rates, the Committee had as a third focus point the impact of said rates on the overall employment cost of the company. Other focus points have been: (1) Headcount planning, attrition and forecasting, (2) Leadership development and the launch of a management enablement track, (3) employee engage- ment, and (4) Performance management for CLT and their leadership teams. Also, the allocations of Stock Options for 2022 have been prepared and brought to the Board for approval. Barco Integrated report 2022 CGR 10 Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT Technology Committee The Technology Committee is an advisory body to the Board of Directors. The Committee is composed of three mem- bers; Charles Beauduin, who acts as Chair, Ashok Jain and An Steegen. The Technology Committee assists the Board of Directors in fulfilling its oversight responsibilities by preparing technology related matters that could influence Barco’s strategy, such as the identification of, and investments in, future technolo- gies through internal resources or technology acquisitions, technology roadmap strategy, operational performance and technology trends that may aect portfolio performance. Major technology investments relate to investments running over a number of years that involve a minimum commitment by the company of 10 million euro over the entire duration of the project. The investments might also include technology acquisitions. In 2022, the Technology Committee met two times. The Committee organized specific working sessions by division, thus ensuring appropriate depth and focus for each of Barco’s divisions. The Committee also performed the annual general review of foundational technologies as included in its strategic plan update presented to the Board. Regularly assessing the size, composition, functioning and performance of the Board of Directors and its Committees as well as the interaction with the executive management is an essential element of corporate governance. The principle of Board assessment is laid down in the Corporate Governance Code as well as Title 1 (1.5) of the company’s Corporate Governance Charter. See www.barco.com/corporategovernance. The Board of Directors carries out self-assessments under the supervision of the Chair with the aim to evaluate its functioning and that of its Committees. Further to the in-depth board review by a consultancy firm end of 2019, and the leadership changes of mid 2021, a renewed board assessment was carried out in September 2022. The Chair, assisted by the Company Secretary, developed a ques- tionnaire, building on the findings and improvement actions defined in the 2019 review. The Chair interviewed each director separately using the questionnaire as a basis. The feedback, collected during these interviews, has been summarized in a report, distributed to, and further discussed among, the direc- tors in the Board of Directors meeting of November 21, 2022. Evaluation of the Board of Directors and its Committees Barco Integrated report 2022 CGR 11 Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT Remuneration report for financial year 2022 General introduction This remuneration report must be read together with the remuneration policy which, to the extent necessary, should be regarded as forming part of this remuneration report. The remuneration granted to directors, CEO and CLT members with respect to financial year 2022 is in line with the remu- neration policy. This report covers the 2022 remuneration of the non-executive board members (Part A), of the Chief Executive Ocers (CEOs), who are also a member of the board and thus an executive director (Part B) and other members of the Core Leadership Team (CLT) who are not members of the board (Part C). Part 1: Introduction to the 2022 remuneration report The combination of the component shortage crisis that started in 2021 and continued in 2022 together with the energy crisis and resulting inflation rates have had a wide-ranging impact. This obviously resulted in higher employment and production costs. In response to that, Barco increased even more its focus on managing expenses, with specific attention on head count management. Part 2: Remuneration report on the non-executive board members, CEO and CLT members 2.A Remuneration of the non-executive board members On 28 April 2022, pursuant to article 17 of the Articles of Association, the General Meeting set the aggregate annual remuneration of the entire Board of Directors at 1,963,175 euro for the year 2022. Next to the board fees of the non-executive directors this amount includes the remuneration package of the CEO. Details on the CEOs remuneration are provided in section 2, B hereinafter. Barco Integrated report 2022 CGR 12 Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT Total remuneration non-executive directors Name Position Fixed remuneration Variable remuneration Extraordinary items Pension expense Total remuneration Proportion of fixed and variable remuneration Base compensation Attendance fees Other benefits One-year variable Multi-year variable Fixed Variable Frank Donck, Chair of the Board € , € NA NA NA NA NA € , % % Lieve Creten Member of the Board € , € , NA NA NA NA NA € , % % Ashok Jain, Member of the Board € , € , NA NA NA NA NA € , % % Hilde Laga, Member of the Board € , € , NA NA NA NA NA € , % % Total € , € , NA NA NA NA NA € , % % The remuneration paid to non-executive directors consists solely of an annual fixed component plus the fee received for each meeting attended. Considering the substantial time he devotes to the ongoing supervision of Barco group aairs, the Chair of the Board receives a dierent remuneration package that comprises solely a fixed component. Details on the remu- neration package of the Board of Directors can be found in the Barco Remuneration Policy. The company has provided one director with a projector for demonstration purposes. Non-executive directors do not receive any variable compen- sation linked to results or other performance criteria. They are not entitled to stock options or shares (see comment in the Corporate Governance statement on page 4 regarding the application of Principle 7.6 of the 2020 Belgian Corporate Governance Code), nor to any supplementary pension scheme. Barco Integrated report 2022 CGR 13 Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT 2.B Remuneration of the CEO 2.B.1 Total remuneration The remuneration package of the CEO consists of a base salary, a variable remuneration, stock options, a pension contri- bution, and other components. There were no shares granted. The remuneration package aims to be competitive and is aligned with the responsibilities of a CEO leading a globally operating industrial group with various business platforms. Details of the remuneration package for the CEO can be found in the Barco Remuneration Policy. The CEOs Mr. Charles Beauduin and Mrs. An Steegen are under analysis of this chapter. The amount of the remuneration and other benefits granted directly or indirectly to the CEOs, by the Company or its sub- sidiaries, in respect of 2022 for their CEO role is set forth below. Base Salary The base salary of the CEO consists of the actual salary paid by the company and may include a fixed director’s fee paid by Barco, Inc. and by Barco China (Holding) Ltd. Variable remuneration The variable remuneration of the CEO consists of an annual bonus which is subject to a deferral period of three years. The CEO is, contrary to other members of the CLT, not entitled to a long- term incentive (LTI) bonus. Variable remuneration, if any, vests on 31 December of the performance year. Therefore, such variable remuneration is reported for the year it vests and not for the (subsequent) year it is paid. The revised remuneration policy as approved at the annual general meeting of 28 April 2022 introduced a more simple, transparent and ecient STI policy, based on clearly defined financial and sustainability targets. As of 2022 the annual KPIs for the bonus of the CEO and their weights are the same as those set for the Core Leadership Team and other executives whereby the specific targets for the CEO relate to the Barco Group and are set annually at the beginning of the calendar year based on the annual Profit Plan as approved by the Board of Directors. In case of a material impact on any of these targets during the year, caused by a change of control (e.g., divestments, change in % ownership) or otherwise, these targets will be recalculated for the same amount as the impact on actual results, subject to approval by the Remuneration Committee. Reference is made to the section on variable remuneration for the CLT on page 18 for more detailed information on the annual bonus KPIs. The bonus for 2022 was vested in the hands of Mrs. An Steegen on 31 December 2022. Payment of 50% of the realized bonus amount will be made in March 2023, while the payment of 25% is linked to performance goals over a period of 2 years, and another 25% is linked to performance goals over a 3-year period. Considering his part-time assignment, Mr. Charles Beauduin is not entitled to an annual bonus. Total remuneration of CEO Name Position Fixed remuneration Variable remuneration Extraordinary items Pension expense Total remuneration Proportion of fixed and variable remuneration Base compensation Foreign director fees Other benefits One-year variable Multi-year variable Fixed Variable Charles Beauduin CEO € , € , € € € NA € € , .% .% An Steegen CEO € , € € , € , € € , € , € , .% .% * non-deferred annual bonus 2022 ** deferred payments vesting in 2022 *** includes one-time retention bonus paid March 2022 Barco Integrated report 2022 CGR 14 Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT Exceptional payments As reported in the remuneration report 2021, the Board, con- cerned about employee retention and engagement after two consecutive years without bonus payments, decided, on the proposal of the Remuneration and Nomination Committee, to provide a one-time retention bonus in March 2022. The one-time retention bonus for Mrs. An Steegen is reported as exceptional payment. Pension The pension benefit of the CEO is an individual defined con- tribution pension arrangement, which also includes a death cover. Considering his part-time assignment, Mr. Charles Beauduin is not entitled to a pension arrangement. Other components of remuneration The other components comprise the total cost of ownership of a company car, hospitalization insurance as well as a guar- anteed income insurance in case of disability. Considering his part-time assignment, Mr. Charles Beauduin is not entitled to these benefits. 2.B.2 Share based remuneration No stock options nor shares have been granted to the CEOs in 2022. The details on the stock options granted, vested and exercised by the CEOs are provided in the table below. Barco Integrated report 2022 CGR 15 Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT Stock options Main provisions of the stock option plan Information related to the financial year Name Position Plan Identification Grant Date Vesting Date End of retention period Exercise period Exercise price Number of options at the beginning of the year a) Number of options granted b) value underlying shares @ grant date a) Number of options vested b) value @ exercise price Number of options exercised Charles Beauduin CEO SOP -CEO // // // // - // € . , a) , b) € ,, SOP -CEO // // // // - // € . , SOP -CEO // // // // - // € . , SOP -CEO // // // // - // € . , SOP -CEO // // // // - // € . , An Steegen CEO SOP -CEO // // // // - // € . , a) , b) € ,, SOP -CEO // // // // - // € . , SOP -CEO // // // // - // € . , SOP -CEO // // // // - // € . , SOP -CEO // // // // - // € . , Barco Integrated report 2022 CGR 16 Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT 2.C Remuneration of the CLT members The Core Leadership Team under analysis of this chapter includes 15 people. The CLT members are employed by local Barco companies in their respective countries of residence. Their compensation packages, therefore, take local market remuneration and ben- efit practice into account. 2.C.1 Total remuneration The remuneration package of the Core Leadership Team members other than the CEOs consists of a base remunera- tion, a short-term variable remuneration, a long-term variable bonus, stock options, a pension contribution, and various other components. The remuneration package aims to be compet- itive and is aligned with the role and responsibilities of each CLT member, being a member of a team leading a globally operating industrial group in the technology market space with various business platforms. Details of the remuneration package for the CLT members can be found in the Barco Remuneration Policy. The amount of the remuneration and other benefits granted directly or indirectly to the CLT members, by the Company or its subsidiaries, in respect of 2022 is set forth below. Redundancy payments are not included in these amounts. CLT members Name Position Employer legal entity Joined/left CLT Geert Carrein EVP Diagnostics Barco nv (BE) Olivier Croly Barco Singapore Pte Ltd. (SG) left CLT: April Gerwin Damberg EVP Cinema & acting CTO MTT Innovation Inc. (CA) Ann Desender Chief Financial Officer Barco nv (BE) Johan Fornier EVP Surgical & Modality Barco nv (BE) Stijn Henderickx EVP Meeting & Learning Experience Barco nv (BE) Anthony Huyghebaert Chief HR Officer Barco nv (BE) Rob Jonckheere EVP Global Operations Barco nv (BE) Chris Sluys EVP Large Video Wall Experience Barco nv (BE) Erdem Soyal EVP Immersive Experience Barco Middle East L.L.C. joined CLT: May Marc Spenlé Barco nv (BE) left CLT: April Tom Sys Chief Digital & Information Officer Barco nv (BE) joined CLT: May Iain Urquhart Barco Inc. (USA) left CLT: April Kurt Verheggen General Counsel Barco nv (BE) Kenneth Wang MD Barco China Barco Visual Electronics Co., Ltd. (CN) Total remuneration of CLT (excluding CEO) Name Position Fixed remuneration Variable remuneration Extraordinary items Pension expense Total remuneration Proportion of fixed and variable remuneration Base salary Foreign director fees Other benefits One-year variable Multi-year variable Fixed Variable Core Leadership Team € ,, € , € , € , , € € , € , € , , % % * non-deferred annual bonus 2022 ** deferred payments vesting in 2022 *** includes one-time retention bonus paid March 2022 Barco Integrated report 2022 CGR 17 Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT Base salary The base salary reflects role responsibilities, job characteristics, experience, and skill sets. Variable salary The variable remuneration includes a short-term and a long- term incentive component, delivered in cash and stock options. Variable remuneration, if any, vests on 31 December of the performance year. Therefore, such variable remuneration is reported for the year it vests and not for the (subsequent) year(s) it is paid. Annual Bonus The revised remuneration policy as approved at the annual general meeting of 28 April 2022 introduced a more simple, transparent and ecient STI policy, based on clearly defined financial and sustainability targets. As of 2022 the individual bonus plan for the members of the Core Leadership Team is a so-called “metric” plan, with only predefined measurable and auditable KPIs and no subjective individual KPIs. The main characteristics of the annual bonus plan are: • Three (3) KPIs are defined, and a fixed weight is given to each of them. For CLT members leading a Business Unit or Barco China, the KPIs relate to a specific target group and for other CLT members, the KPIs relate to the Barco Group. • Each KPI is measured separately • Minimum threshold and maximum cap per KPI • Same pay-out schedule for all KPIs target awards • Maximum total bonus pay-out is capped at 35% of the on-tar- get bonus in case of negative EBITDA at target cluster level. The specific KPI targets are set annually at the beginning of the calendar year based on the annual Profit Plan as approved by the Board of Directors. In case of a material impact on any of these targets during the year, caused by a change of control (e.g. divestments, change in % ownership) or otherwise, these targets will be recalculated for the same amount as the impact on actual results, subject to approval by the Remuneration Committee. The Company does not disclose the actual targets per cri- terion, as this would require the disclosure of commercially sensitive information. The bonus plan provides for deferred payments, hence will substitute over time the LTI cash plan as it is a hybrid plan, combining both short-term incentive and long-term incen- tive. For CLT members with a Target Bonus Value ≥ 37.5% of the Annal Base Salary, the payment of the achieved bonus is subject to a deferral period of three years, i.e. the bonus for Bonus Plan Period 2022 is paid out as follows: • Achieved bonus on maximum 37.5% OT of the Annual Base Salary paid in bonus year (performance period) +1. • Should the OT be above 37.5%: 50% of the achieved bonus on the exceeding OT in bonus year (performance period) +2. • Should the OT be above 37.5%: 50% of the achieved bonus on the exceeding OT in bonus year (performance period) +3. No additional KPIs or conditions will apply on the payment of the deferred bonus amounts, except being employed by the company at the moment of payment. Bonus Plan 2022 - KPIs Bonus target clusters Performance criteria (measurable & auditable) Relative weight a) Minimum target performance & a) On-target performance & a) Maximum target performance & KPI performance and payment level at Barco group level b) Corresponding payment level b) Corresponding payment level b) Corresponding payment level Financial target group cluster KPI : sales % a) % b) . a) % b) . a) % b) . a) .% b) . KPI : EBITDA % at end of Plan period % a) % b) . a) % b) . a) % b) . a) .% b) . Sustainability Drivers on Barco Group level KPI : Greenhouse Gas emission reduction and Eco-labelled revenues % a) % b) . a) % b) . a) % b) . a) .% b) . Total Bonus Payment level individual bonus with lineair calculation in between milestones . . . Total Bonus: (individual OT bonus) x (total payment level) * payout level expressed as a multiple of the "target" bonus Barco Integrated report 2022 CGR 18 Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT 2.C.2 Share based remuneration As stated above, part of the LTI is delivered as stock options. The target SO value at grant is equal to 25% of the Participant’s target variable compensation. No shares were granted to the CLT members, nor was any other share-based remuneration provided to the CLT mem- bers, during 2022. Reference is made to the explanation given in the Corporate Governance Statement on page 4 regarding the reason for this deviation from article 7.9 of the Belgian Corporate Governance Code. In 2022, following authorization by the general meeting and at the proposal of the Remuneration and Nomination Committee, the Board of Directors allotted stock options to 9 members of the CLT. The exercise price amounts to EUR 21.74 per option, with a three-year vesting period. The number of options to be oered to each individual beneficiary is variable in part. The options are oered to the beneficiaries for no consideration. For CLT members on a Belgian payroll the stock options are taxable at the moment of grant in application of the Belgian tax regulations. 141,465 stock options were granted to the members of the CLT. All details on the stock options granted, vested, and exercised by the CLT members are provided in the table on page 20. Long-term incentive Plan As indicated above, the revised annual bonus plan for members of the CLT also provides for deferred payments, hence will substitute, together with the stock option plan, the Long-Term incentive Plan 2021 – 2023 as of 2024. The long-term incentive cash bonus 2021 – 2023 is subject to the Barco Group meeting certain defined performance targets: • Cumulated net earnings, EBITDA % at End of PLan Period and sustainability drivers (Greenhouse Gas Emission reduction and Eco-labeled revenues) over the respective 3-year plan period and continued employment on the last day of the plan period. Payment is capped at 150% of the target award. Exceptional payments As reported in the remuneration report 2021, the Board, con- cerned about employee retention and engagement after two consecutive years without bonus payments, decided, on the proposal of the Remuneration and Nomination Committee, to provide a one-time retention bonus in March 2022. The one-time retention bonus for CLT Members is reported as exceptional payment. Pension The CLT is entitled to a complementary pension benefit based on the provisions of the defined contribution plans for senior executives in their base countries. Other components of remuneration The other main components for all CLT members are company car or car allowance, hospitalization or medical insurance and guaranteed income insurance in case of disability, next to occasional local benefits in accordance with local market practice. Barco Integrated report 2022 CGR 19 Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT Stock options Main provisions of the stock option plan Information related to the financial year Name Position Plan Identification Grant Date Vesting Date End of retention period Exercise period Exercise price Number of options at the beginning of the year a) Number of options granted b) value underlying shares @ grant date a) Number of options vested b) value @ exercise price Number of options exercised Number of options expired Geert Carrein, EVP SOP -P // // NA // - // € . , SOP -EEA // // NA // - // € . , SOP -EEA // // NA // - // € . , Gerwin Damberg, EVP SOP -CLT // // NA // - // € . a) , b) € , SOP -P // // NA // - // € . , SOP -P // // NA // - // € . , SOP -P // // NA // - // € . , a) , b) € , Ann Desender, CFO SOP -CLT // // NA // - // € . a) , b) € , SOP -P // // NA // - // € . , SOP -P // // NA // - // € . , SOP -P // // NA // - // € . , a) , b) € , SOP -P // // NA // - // € . , , Johan Fornier, EVP SOP -CLT // // NA // - // € . a) , b) € ,. SOP -P // // NA // - // € . , Barco Integrated report 2022 CGR 20 Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT Stock options Main provisions of the stock option plan Information related to the financial year Name Position Plan Identification Grant Date Vesting Date End of retention period Exercise period Exercise price Number of options at the beginning of the year a) Number of options granted b) value underlying shares @ grant date a) Number of options vested b) value @ exercise price Number of options exercised Number of options expired Stijn Henderickx, EVP SOP -CLT // // NA // - // € . a) , b) € ,. SOP -P // // NA // - // € . , SOP -P // // NA // - // € . , SOP -P // // NA // - // € . , a) , b) € , SOP -EEA // // NA // - // € . , , Anthony Huyghebaert, CHRO SOP -CLT // // NA // - // € . a) , b) € , SOP -P // // NA // - // € . , Rob Jonckeere, EVP Operations SOP -CLT // // NA // - // € . a) , b) € , SOP -P // // NA // - // € . , SOP -P // // NA // - // € . , SOP -P // // NA // - // € . , a) , b) € ,, SOP -EEA // // NA // - // € . , SOP -EEA // // NA // - // € . , , Chris Sluys, EVP SOP -CLT // // NA // - // € . a) , b) € , SOP -P // // NA // - // € . , Barco Integrated report 2022 CGR 21 Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT Stock options Main provisions of the stock option plan Information related to the financial year Name Position Plan Identification Grant Date Vesting Date End of retention period Exercise period Exercise price Number of options at the beginning of the year a) Number of options granted b) value underlying shares @ grant date a) Number of options vested b) value @ exercise price Number of options exercised Number of options expired Kurt Verheggen, General Counsel SOP -CLT // // NA // - // € . a) , b) € ,. SOP -P // // NA // - // € . , SOP -P // // NA // - // € . , SOP -P // // NA // - // € . , a) , b) € , SOP -P // // NA // - // € . , , Kenneth Wang, EVP SOP -CLT // // NA // - // € . a) , b) € ,. SOP -P // // NA // - // € . , Barco Integrated report 2022 CGR 22 Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT Stock options Main provisions of the stock option plan Information related to the financial year Name Position Plan Identification Grant Date Vesting Date End of retention period Exercise period Exercise price Number of options at the beginning of the year a) Number of options granted b) value underlying shares @ grant date a) Number of options vested b) value @ exercise price Number of options exercised Number of options expired Xavier Bourgois, left December SOP -P // // NA // - // € . , a) , b) € ,. SOP -P // // NA // - // € . , , SOP -EEA // // NA // - // € . , SOP -EEA // // NA // - // € . , SOP -EEA // // NA // - // € . , Tet Jong Chang, retired March SOP -P // // NA // - // € . , SOP -P // // NA // - // € . , a) , b) € , SOP -P // // NA // - // € . , , SOP -ROW // // NA // - // € . , Olivier Croly, left June SOP -P // // NA // - // € . , , SOP -P // // NA // - // € . , SOP -P // // NA // - // € . , , SOP -P // // NA // - // € . , , An Dewaele, left December SOP -P // // NA // - // € . , a) , b) € , SOP -P // // NA // - // € . , , SOP -EEA // // NA // - // € . , The details on the stock options granted, vested and exercised by the CLT members who left Barco are provided in the table below. Barco Integrated report 2022 CGR 23 Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT Stock options Main provisions of the stock option plan Information related to the financial year Name Position Plan Identification Grant Date Vesting Date End of retention period Exercise period Exercise price Number of options at the beginning of the year a) Number of options granted b) value underlying shares @ grant date a) Number of options vested b) value @ exercise price Number of options exercised Number of options expired Jan De Witte, left August SOP -CEO // // NA // - // € . , SOP -CEO // // NA // - // € . , a) , b) € ,, SOP -CEO // // NA // - // € . , , Johan Heyman, left September SOP -P // // NA // - // € . , a) , b) €,. SOP -P // // NA // - // € . , , SOP -EEA // // NA // - // € . , , Filip Pintelon, left October SOP -P // // NA // - // € . , SOP -P // // NA // - // € . , a) , b) € , SOP -P // // NA // - // € . , , SOP -EEA // // NA // - // € . , SOP -EEA // // NA // - // € . , SOP -EEA // // NA // - // € . , SOP -EEA // // NA // - // € . , Marc Spenlé, left July SOP -P // // NA // - // € . , SOP -P // // NA // - // € . , Barco Integrated report 2022 CGR 24 Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT Stock options Main provisions of the stock option plan Information related to the financial year Name Position Plan Identification Grant Date Vesting Date End of retention period Exercise period Exercise price Number of options at the beginning of the year a) Number of options granted b) value underlying shares @ grant date a) Number of options vested b) value @ exercise price Number of options exercised Number of options expired George Stromeyer, left October SOP -P // // NA // - // € . , , SOP -US // // NA // - // € . , , Iain Urquhart, left April SOP -P // // NA // - // € . , , SOP -P // // NA // - // € . , , SOP -P // // NA // - // € . , , Nicolas Vanden Abeele, left October SOP -P // // NA // - // € . , SOP -P // // NA // - // € . , a) , b) € , SOP -P // // NA // - // € . , , Reference is made to page 71 in the Financial Statements for an overview of the stock options exercisable under the stock option plans. Barco Integrated report 2022 CGR 25 Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT Part 3: Redundancy payments CLT members operate under an employment contract, con- cluded with the entity of the Barco group in the country where they live. Their contracts are governed by the local legal provi- sions. If the employment of a CLT member is terminated, local rules and legislation governing the contract of employment, including those pertaining to notice periods and severance payments, apply. Upon proposal of the remuneration and nomination commit- tee, the Board agreed on the departure compensation for 2 people, and the basis for its calculation as set forward below. Iain Urquhart, former EVP Global Customer Success, resigned from the company on 29 April 2022. No severance or other compensation were due. Eective 30 April 2022, Marc Spenlé, Chief Digital & Information Ocer, left the company. In accordance with the employment law and the provisions of his employment contract, the sever- ance agreement included a notice period of 2,5 months and a prorated 2022 bonus based on the YTD KPI results. Eective 30 April 2022, Olivier Croly, former EVP Meeting & Learning Experience, left the company. In accordance with the provisions of his employment contract, the severance agree- ment included a termination indemnity based on 4,5 months of remuneration and a prorated 2022 bonus based on the YTD KPI results. Part 4: Use of the right to reclaim The company will use the legal options available for payback of variable remuneration in case fraud or other types of mis- conduct or irregularities in the results of the company would be discovered in a period of 2 years following its payment. There was no reason for the Board to reclaim any previously paid variable remuneration to the CEO or to any of the CLT members. Part 5: Deviations from the remuneration policy All of the above was determined and paid in line with the existing company reward policies. It also reflects the mea- sures taken by the Board of Directors at the initiative of the Remuneration and Nomination Committee as stated in Part 1 above. Barco Integrated report 2022 CGR 26 Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT Part 6: Evolution of remuneration and company performance As requested by the Belgian Company Law, Barco reports the pay ratio of the highest FTE CEO remuneration versus the lowest FTE employee remuneration in its legal entity Barco nv. The 2022 pay ratio is 21.10. Part 7: Vote of the shareholder Further to the leadership changes in 2021 and upon the Remuneration and Nomination Committee’s proposal, the Board of Directors agreed to introduce a more simple, trans- parent and ecient STI policy, based on clearly defined fi- nancial and sustainability targets. Subsequently, a revised remuneration policy has been submitted to the sharehold- ers’ approval at the annual general meeting of 28 April 2022. The new remuneration policy has been approved with a 56% majority. The remuneration report 2021 was approved with an 85% vote. As no comments were made to the previous remuneration report, there were no such comments to be considered for the remuneration paid or vested during 2022. In thousands of euro Remuneration of Non-Executive Directors () Total annual remuneration , , , , , , Year-on-year difference (%) % -% -% -% % -% Number of Non-Executive Directors under review Remuneration of CEOs Total annual remuneration of CEOs (EUR) ,, ,, ,, ,, ,, ,, Year-on-year difference (%) -% % % -% -% % Remuneration of CLT Total annual remuneration (EUR) ,, ,, ,, ,, ,, ,, Year-on-year difference (%) % % % -% -% % Number of CLT Members under review () Barco Group Performance NET SALES (M euro) ,, ,, ,, , , ,, Year-on-year difference (%) -% -% % -% % % EBITDA (M euro) , , , , , , Year-on-year difference (%) % % % -% % % Net income attributable (M euro) , , , -, , , Year-on-year difference (%) % % % -% % % Average remuneration per FTE employee () Average employee cost per FTE (EUR) () , , , , , , Year-on-year difference (%) .% -.% .% -.% .% . % (1) As indicated in Part 2.A of the Remuneration Report, the remuneration for Non-Executive Directors depends only on the number of meetings and is reported aggregated for this table. (2) As of 2022, we report CLT without the CEO. (3) Average remuneration of employees is calculated on the basis of “wages and direct social benefits”, including company cars, divided by the number of employees on a year-over-year basis. 4)) Employee cost 2022 increase due to (a) high inflation and COL increases versus 2021, and (b) higher attrition combined with recruiting in an overheated labor market. Barco Integrated report 2022 CGR 27 Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT Managing sustainabilityPolicies of conduct At Barco, we see sustainability as one of the drivers of our corporate strategy. We design and act towards sustainable outcomes for our planet, the community we operate in and our colleagues. Governance keeps our corporate sustainability strategy on track, ensuring that our strategy remains eective, and that accountability for our results sits right at the top of our company. A more detailed description of our sustainability governance is available in our Planet-People-Communities chapter and on Barco’s corporate website. Conflicts of interest The company has laid down the rules for conflicts of inter- est, applicable to its directors and executive managers, in its Corporate Governance Charter. These rules complement the procedures set by the Code of Companies and Associations for conflicts of interest of a financial nature and related party transactions (Article 7:96 and 7:97 CCA). In 2022, no conflicts of interest of a financial nature or related party transactions falling within the scope of these procedures arose. Statutory auditor Barco refers to note 22 'Related party transactions' in Financial Statements 2022. Transparency of transactions involving shares or other financial instruments of Barco The company has issued a Market Abuse Prevention Policy which is being enforced as part of its compliance management program, available for review on the company’s website. It meets the requirements of the EU Regulation of 16 April, 2014 n° 596/2014 on market abuse. Persons discharging managerial responsibilities and persons closely associated with them must notify the Financial Services Market Authority (“FSMA”) of any transactions involving shares or other financial instruments of Barco within three business days after the transaction. Such transactions are made public on the website of the FSMA (www.fsma.be) as well as the company’s website, the latter on an aggregate basis. Barco Integrated report 2022 CGR 28 Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT Risk management and control processes Barco CGR 03 ADDITIONAL RISK INFORMATION 29 CGR Integrated report 2022BarcoGovernance & Risk Report 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT Within the context of its business operations, Barco is exposed to a wide variety of risks that can aect its ability to achieve its business objectives and to execute its corporate strategy successfully. To anticipate, identify, prioritize, manage and monitor the risks that impact its organization, Barco has put a sound risk management and control system into place in accordance with the Code of Companies and Associations and the 2020 Corporate Governance Code. Our risk management and control processes are actively supported by the Board of Directors. They understand the risks that Barco faces and assure that these risks are eectively managed by requiring that the CEOs and the Core Leadership Team (CLT) are fully engaged in risk management. Risk mitigation and control is a core task of the executive management and all employees with managerial responsibilities. Barco’s risk management and control system was set up to achieve the following objectives: The risk management and control system is based on the prin- ciples of the COSO reference framework and the ISO 31000 risk management standard. Objectives Objectives Correct and timely financial reporting Compliance with all applicable laws and regulations Operational and strategic objectives Operational excellence Risk management and control system Control Environment Objectives Identification Risk response Control activities Information & communication Monitoring Analysis & evaluation Barco Integrated report 2022 CGR 30 Barco CGR Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT Barco strives for a strong compliance culture and risk aware- ness attitude by defining clear roles and responsibilities in all relevant domains. In this way, the company fosters an environ- ment in which it pursues its business objectives and corporate strategy in a controlled manner. This environment is created by implementing various company-wide policies and proce- dures, such as: • The Code of Ethics • Decision and signature authority rules • The Barco culture building blocks • Quality and other management systems • Risk profiling, reporting and mitigation processes Risk management is firmly embedded into Barco’s processes, at all levels. For every key management, assurance and sup- porting process, Barco has developed and implemented a sys- tematic risk management approach. It consists of five steps: identification, analysis, evaluation, response and monitoring. The CLT fully endorses this approach. Employees are regularly informed and trained on these subjects to ensure sucient risk management and control at all levels and in all areas of the organization. Every year in the fourth quarter, we perform a company-wide risk assessment and compliance gap analysis. This exercise, which involves the CLT members, the legal & compliance re- sponsible of the subsidiaries and other key employees, aims to strengthen and formalize risk awareness throughout Barco. It encourages the employees with managerial responsibilities to actively think about the risks that impact our business and provides them with a clear view on how their peers around the world perceive risk. The yearly risk assessment and compliance gap analysis is a joint eort of the Risk Manager, the Global Compliance Man- ager and Internal Audit. Identification The Barco risk universe is reviewed on a yearly basis, based on insights from interviews with the CLT members and a bench- marking against the risk reports published by the top global insurers and international organizations. In 2022, no new risks were defined in the Barco risk universe. Two risks were absorbed into existing risks. The ‘Digital trans- formation and new technologies’ risk became part of the ‘Product portfolio & innovation’ risk renamed as ‘the ‘Innova- tion, new technologies & product portfolio’ risks. The ‘Data governance & privacy’ risk was added to the ‘Information se- curity’ risk (Governance) and the ‘Innovation, new technolo- gies & product portfolio’ risk (Intellectual property). According- ly, these two risks have been slightly re-defined. Control environment Risk management process Barco Integrated report 2022 CGR 31 Barco CGR Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT * 'Nth' party risk: An order of magnitude broader than the traditional third-party risk. Every party that a company utilizes is likely to use a large number of other parties of its own. This then becomes a chain of downstream relationships with fourth, fifth parties and eventually Nth parties, introducing a new risk factor to the ecosystem. Barco Risk Universe The following risks are taken into consideration. Analysis Once identified, the risks are scored using inherent risk (‘likeli- hood’ and ‘impact) and control level scales. The scales for im- pact, likelihood and control level are based on the acceptable level of risk exposure determined by the Board of Directors and laid down in the Barco corporate risk evaluation system. This year, the improvement potential was also assessed for each top risk. The scoring of Barco’s risks was done via an online question- naire. All 15 CLT members and all 31 senior managers from dierent subsidiaries completed the questionnaire. Evaluation In the ‘evaluation’ phase, a risk matrix is drawn up, resulting in Barco’s inherent and residual risk profile. To set the right priorities, the risk is first evaluated in terms of impact and likelihood. The resulting inherent risk does not yet consider any management activities or control measures developed to mitigate it. The residual risk level is then determined by taking into ac- count the control level (control measures and their eective- ness) of each risk. The CLT then reviews the results. The top risks are identified and divided into risks to be accepted, monitored or improved. For each top risk, a risk sponsor is designated. Barco risk universe FREQUENT RARELY DESTRUCTIVE NEGLIGIBLE • Information security risk • Macroeconomic & geopolitics risk • Human capital & talent management • Product quality • Supply chain & 3rd / 'Nth' party risk • Contingency & resilience risk • Business ethics • Corporate governance & strategy • Financial & liquidity risk • Local compliance & regulatory change • Sustainability & climate risk • Innovation, new technologies & product portfolio Barco Integrated report 2022 CGR 32 Barco CGR Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT Risk response Management response to the top risks • ‘Risks to improve’ are contained by means of an enhanced mitigation plan next to the continuous improvement actions and existing control measures. This plan must minimize the eect of these risks on the organization’s ability to achieve its objectives and results. For these types of risks, if any, a CLT risk sponsor is appointed. • ‘Risks to monitor’ are contained by means of the ongoing continuous improvement actions and existing control mea- sures. These types of risks reside under the sponsorship of a CLT member who monitors them. • ‘Acceptable risks’ and ‘risks to optimize’ are recorded in the risk register of the related process. The outcome is summarized in a report that is presented to the Audit Committee and made available to the Board of Di- rectors. The Risk Manager supports the adoption of clear processes and procedures for a wide range of business operations. In addition to these control activities, an insurance program has been implemented for selected risk categories that cannot be absorbed without material impact on the company’s balance sheet. Monitoring Risk monitoring helps to ensure that mitigation plans and in- ternal controls continue to operate eectively. Progress of action plans and related status KPIs are tracked on a regular basis to remediate gaps in mitigation and monitoring activities. Risks in the ‘improve’ and ‘monitor’ quadrants are subject to a quarterly review by the CLT risk sponsor, the Risk Manager and a delegation of CLT members. INHERENT RISK ACCEPT MONITORIMPROVE OPTIMIZE 2 10 15 20 25 3 4 5CONTROL LEVEL RISK UNDER OBSERVATION UNACCEPTABLE RISK CRITICAL RISK Barco Integrated report 2022 CGR 33 Barco CGR Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT The continuity and the quality of Barco’s risk management and control system is assessed by following actors: • Internal Auditor – the tasks and responsibilities assigned to Internal Audit are recorded in the internal audit charter, which has been approved by the Audit Committee. The key mission of internal audit as defined in the internal au- dit charter is “to add value to the organization by applying a systematic, disciplined approach to evaluating the inter- nal control system and providing recommendations to improve it”. • External Auditor – in the context of the external audit review of the annual accounts and their assessment of key internal controls. • Compliance Ocer – within the framework of the compa- ny’s Corporate Governance charter. • Risk Manager – plays a pivotal role in the organization by en- suring appropriate coordination and follow-up of risk man- agement activities. • Global Compliance Manager – coordinates between dier- ent compliance roles, functionally and regionally. The com- pliance status and gaps are mapped on a regular basis in order to define compliance risks, priorities and mitigations as needed. • Audit Committee – the Board of Directors, assisted by its Audit Committee, has the final responsibility with respect to internal control and risk management. Control activities A timely, complete and accurate information flow – both top-down and bottom-up – is a cornerstone of eective risk management. In all operational domains, Barco has implemented a man- agement control and reporting system to support ecient management and reporting of business transactions and risks. This system enables the Barco management to cap- ture relevant information on particular areas of business op- erations at regular time intervals. The process enforces the clear assignment of roles and responsibilities, thus ensuring consis tent communication to all stakeholders regarding ex- ternal and internal changes or risks impacting their areas of responsibility. In addition to the management control and reporting sys- tem, the company has put several mea sures into place to en- sure the security of confidential information and to provide a communication channel for employees to report any (sus- pected) violation of laws, regulations, the company’s code of ethics or policies. Information and communication Barco Integrated report 2022 CGR 34 Barco CGR Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT On the right are the top risks, identified by the 2022 risk man- agement process, along with the trends and related material topic/strategic lever. Certain risks have been slightly regrouped and renamed compared to last year following the most recent risk identification process. We refer to the extra risk section 'Deep dive on the 2022 con- sequences and impact of the macroeconomic environment' and to the management discussion and analysis in the ‘Results’ section for an update on the impact of covid-19 and the impact of supply constraints on the full year 2022 results. Top risks Risk Trend Material topic Strategic lever Innovation, new technologies & product portfolio • Innovation management • Market reach • Product stewardship • Customer engagement • Innovate for impact • Capture profitable and efficient growth Supply chain & ‘Nth’ party risk • Responsible supply chain management • Sustainable profitable growth • Product quality, safety and security • Capture profitable and efficient growth • Go fo sustainable impact Human capital & talent management • Employee engagement • Learning and development • Employee health, safety and wellbeing • Diversity and inclusion • Capture profitable and efficient growth • Go fo sustainable impact Product quality • Product quality, safety and security • Customer engagement Brand • Innovate for impact • Capture profitable and efficient growth Macroeconomic & geopolitics risk • Market reach • Capture profitable and efficient growth Information security risk • Information security and data protection • Product quality, safety and security • Innovate for impact • Go fo sustainable impact Barco Integrated report 2022 CGR 35 Barco CGR Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT Risk description Barco’s revenue growth depends in large parts on the success of our innovation and technologies in established and new markets which increasingly see more rapid change in technol- ogies, consumer preferences, product introductions, business models and industry standards. Barco’s ability to outperform competitors and remain relevant in the market with new technologies, new business models, faster time-to-market, lower costs or enhanced product fea- tures is critical to the company’s future success. Technology and innovation are complex activities and require skilled per- sonnel and the ability to accurately predict market and tech- nology trends. We may not be able to achieve this which can result in missed business opportunities and thus eventually a decline in revenue. The inability to balance between core and transformational innovation with sudden breakthroughs may lead to an overall weaker product portfolio. Not being able to identify custom- er needs and to successfully convert these into value-adding products and solutions might impact market share and profit- ability of our business. An inability to safeguard and monetize our IP and loss of criti- cal IP knowledge would weaken our competitive power. Trend Lack of innovation speed, access to and control of new tech- nologies and a competitive product portfolio identified as a main risk in 2021 became the key risk in Barco in 2022 ranked as number 1. Innovation, new technologies & product portfolio Mitigation plan The revised, lighter organizational structure, with the regional sales folded into the company’s business units together with product management and research & development, allows for short decision paths and end-to-end accountability in each market. Separate innovation and investment budget is secured to grow the company in the future. An increasing fraction of that budget is reserved for breakthrough long-term innovation projects. Budgets are located based on pay back periods, op- portunity size, patentability, sustainability and strategic fit, and are reviewed 3 times a year. An innovation funnel, consisting of new ideas (funnel entry gate), seeds (shark tank gate), proof of concepts (incubators) and viable product/solutions (break even gate), is managed and reviewed on a quarterly basis. Accordingly, the product roadmaps are updated and aligned with market and customer needs. Derivate portfolios are prepared for adjacent markets. Strong focus is put on breakthrough innovation and concrete M&A opportunities are pursued. Throughout the company, new ideas both within and outside the scope of the business unit are stimulated and picked up on the seed board, an integral part of the innovation funnel process. Barco Integrated report 2022 CGR 36 Barco CGR Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT Risk description The dependency on suppliers, partners, integrators and dis- tributors creates a vulnerability that might impact our prod- uct portfolio in terms of quality, availability and cost. Next to the covid-19 pandemic, the global chip shortage has put high pressure on the global supply chain and caused an additional burden on Barco’s resources, inventory, manufacturing and delivery performance. Trend Supply chain and Nth party risks were identified as the main risk in 2021. In 2022, both the inherent risk and residual risk show an improvement as dependency is going down with our stronger multi-source strategy and supply shortage on semi- conductors is further decreasing. Supply chain & 'Nth' party risk Mitigation plan We maintained mitigation actions that we had defined in the past years and additionally have introduced 3 main actions fo- cusing on: • Proactively identify, analyse and mitigate all types of supply chain risks related to our supply base, using Risk methods TM • Improved supplier relation management to create a more balanced dependency and to reduce possible impact of a sole or single supplier. • Introduce alternative local supply base near our factories. More information can be found in “Supply chain responsibility”. Barco Integrated report 2022 CGR 37 Barco CGR Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT Risk description A skilled workforce and agile organization are essential for the continued success of our business. Diculties in attracting, retaining and developing employees could lead to continued vacancies in certain critical areas, higher employee dissatisfac- tion and turnover, lower performance and underutilization of existing skills. Insucient backups available could cause oper- ations to slow down or hold. Stang issues could result in a skillset not able to meet all competency requirements in view of rapidly moving technologies, changing business models and operational agility. Employee health & safety issues, lack of a healthy work/life balance and an environment of empathy and inclusion could lead to long inactivity, labor accidents and even legal claims and fines. Trend Human resources management has been identified as an im- portant risk in the last three years. In 2022, both the inherent risk and residual risk show a slight improvement. Mitigation plan The Human Resources team commits to investing in work- force strategy and organizational eectiveness as key focus domains, in addition to delivering professional Human Re- sources services to attract, develop, reward and engage a di- verse and global workforce, while ensuring timely and clear communication to employees. Yet, it remains the main re- sponsibility of each Business Unit leader and all people man- agers in the organization to take ownership as a leader and work on people topics in their daily activities, based on the tools, solutions and support that HR delivers: The HR-related priorities start from the Barco business objec- tives, translating these into main HR actions in the following domains: • Site & Workforce strategy: HR guides and partners with the business to translate the organizational strategy of the busi- ness units into a coherent people plan to develop proactive and strategic recruitment and training plans and ensuring we have a diverse and inclusive workforce at Barco. • Headcount management strategy: HR leads the recurrent review of headcount status and in-out-turnover, monitoring worldwide talent pools in the diverse regions we are active in, in order to measure and improve the impact of our retention and recruitment plan. Human capital & talent management • Culture, people & leadership development: HR provides employees and people leaders with the proper tools and solutions to work on performance management, employee and leadership development (through management enable- ment) an innovative and entrepreneurial mindset, employee engagement and wellbeing through an employee engage- ment measurement tool, a dedicated Barco University training oering (classroom, online, e-learning or hybrid) and continu- ing the culture journey with focus on a global, innovative and entrepreneurial culture. Read more in the Report on People. Barco Integrated report 2022 CGR 38 Barco CGR Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT Risk description Barco’s reputation as a business partner relies heavily on its abil- ity to supply high-quality products. Failure to comply with the internal quality processes and stage gate requirements can lead to the market introduction of immature products – resulting in loss of sales and market share, additional cost and reputational damage. Product quality issues and delivery issues such as the inability to fulfill orders in a timely way leading to reputational damage, customer dissatisfaction and loss of business. Trend Product quality was one of our main risks in 2021 and remains so in 2022. We noticed a slight increase in both the ranking and the risk level. Mitigation plan Product quality is guaranteed by rigorously executing and monitoring the Barco processes covering the complete prod- uct life cycle – from procurement, product planning, to design and development and sales, all the way to customer services. These processes are embedded in Barco’s quality manage- ment system, which is audited by independent external parties and customers. The product quality is monitored through a set of quality-related indicators covering the dierent interre- lated processes. In close collaboration with the dedicated quality teams, the business unit executive teams draw up a mitigation plan cen- tred around the following themes: • Key product responsibles put emphasis on product maturity, reliability and manufacturability during the design milestones to ensure the market release of high-quality products and solutions. • Business unit executives monthly review the product quality dashboards and key performance indicators (KPIs) to initiate corrective and preventive actions . • Product quality and corresponding controls in the whole prod- uct life cycle are part of each change program that might aect product quality. Product quality Barco Integrated report 2022 CGR 39 Barco CGR Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT Risk description Serious political and (macro) economic evolutions and fluc- tuations can heavily impact the investment climate and could even slow business in a country or region to a complete halt. Geopolitical tensions (E.g., a more united front against China among Western countries, not only the US, Iran/Israel tensions, political situation in Russia and Ukraine…), pandem- ics, worsening trade relations and trade policy uncertainties impact the global economic activity and could translate into constraints to Barco's operations (taris, IP, investment restric- tions, mobility restrictions through travel limitations but also quarantine restrictions impacting the company and its peo- ple.) Barco’s competitive position could also be impacted by prospects for additional government stimulus and any provi- sions that would benefit an organization or sector. Trend Macroeconomic and geopolitics risk retains its position in the ranking. We do see a slight improvement in the risk level. Mitigation plan • The company closely monitors the macroeconomic and geopolitical developments, in particular those aecting the countries in which it is active. The possible impact hereof on the company’s operations (geographical footprint, supply chain, operations, import and export activities, commercial and go-to-market strategy, cash management, etc.) and reme- dial actions are assessed in business review meetings for the short term, and in the strategic Management Plan and Profit Plan for the mid to long term respectively. The construction of so-called focused factories in dierent countries will create the ability to respond more flexibly to certain constraining geopolitical evolutions. • The wide spread of activities across dierent regions and industries contributes to absorbing the risk. Macroeconomic & geopolitics risk Barco Integrated report 2022 CGR 40 Barco CGR Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT Risk description Barco relies considerably on its IT systems: infrastructure, net- works, operating systems, applications and databases. Failure of an information technology system due to an internal or external event (terrorism, crime, violence, vandalism, theft or human error) could impact employees, sites, assets, critical information, or intellectual property and have negative conse- quences for the business (business interruption, reputational damage and/or liability claims). Ensuring information security includes, among others, pro- cesses that: • protect IT infrastructure, IT governance, prevention and reme- diation of IT failure and security awareness. • ensure the development and sale of secure products. • safeguarding sensitive, personal (GDPR) and critical data. Trend For Cyber risk, we noted a slight increase in both ranking and risk levels. Mitigation plan The roadmap on cyber security improvements is reviewed regularly and adjusted as necessary. The following two elements will be highlighted in particular for the future: • Continue focusing on people, process and technology to improve the overall security maturity in Barco. • Progress delivery of the defined security roadmap, and ex- tend in line with risk-based priorities (e.g. cloud security). Read more on Corporate security and data privacy and Product quality, safety & security. Information security Barco Integrated report 2022 CGR 41 Barco CGR Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT Deep dive on the 2022 consequences and impact of the macroeconomic environment In 2022, especially after the first quarter, the global covid-19 situation improved considerably, allowing operations to be carried out in normal conditions again and with demand for our products resuming in most geographies. The main ex- ception is China, where local lockdowns continued to aect the business and local operations throughout the full year. In the aftermath of the pandemic and as a result of geopolitical events, 2022 posed new macroeconomic challenges aect- ing businesses all over the world – including Barco. The main ones were: • The supply chain constraints and component shortages: as previously disclosed, Barco is not immune to compo- nent shortages and supply chain constraints which have impacted and continue to impact certain product lines. These impacts relate to shortages and delayed deliveries of components, higher broker costs and higher transport costs. • High inflation in most geographies, related to salaries, energy and component costs. • Remaining pandemic-related eects in China. Several lockdowns lead to lower production and sales in the China region (mainly but not limited to the Entertainment business). • Scarcity of human resources and talent. As Russia's invasion of Ukraine and sanctions towards Russia have a limited impact on Barco's business, there is no signifi- cant risk. Barco has reviewed the impact on Barco financials and concluded that there is no material impact. Approach In this section, Barco addresses its risk mitigation plan related to the main 2022 macroeconomic impacts. Operations and supply chain The worldwide shortages in dierent commodities in 2021 and 2022, tested Barco's supply chain resilience. Barco's strong, long-term supplier relationships and agile approach have proven to be key to find solutions to the shortages in many cases. Nevertheless, Barco is not immune to compo- nent shortages and supply chain constraints which have im- pacted and continue to impact certain product lines. While the team has largely mitigated these challenges, the impact was felt in the form of delayed sales and longer lead times, rather than cancelled orders. Barco experienced a de- lay in sales after the second quarter of the year of about 40 million euro, primarily in Entertainment for projector-line de- liveries. By the end of the third quarter this delay decreased to 20 million euro with further improvement towards the end of the year. Barco has addressed these challenges by intense collabora- tion with all suppliers and the temporary involvement of bro- kers for the sourcing of critical components. Furthermore, the redesign of products has been a significant mitigating factor and will continue to be. For certain components and subassemblies, inventory levels have been temporarily in- creased to lower the risk of shortages. Coping with inflation and high commodity prices The aftermath of the pandemic and the changes in geopo- litical situation have led to higher interest rates and a steep increase of the inflation in EMEA and Americas. As Barco has relatively low external debt, the direct cost eect of increased interest rates on 2022 financial costs is limited. The inflation aects mainly energy costs, salaries, and compo- nent sourcing. All these costs are being critically reviewed and optimized on a constant basis. Cross charges of these inflation eects were passed through where possible, reflecting the in- creased cost basis. Lifting of pandemic measures, with the exception of China The pandemic covid-19 situation has improved considerably in most regions throughout 2022, especially after the first quar- ter. This has allowed to return to normalized operations. It also has fueled the demand for our products, most notably in the Enterprise and Entertainment divisions. In China, the course of the pandemic has followed a dierent pattern, with quicker recovery in 2020 and 2021, but still significant local lockdowns in 2022, aecting the business operations and the customer demand. In our Chinese locations, the hygienic safety meas- ures (social distancing, ventilation, masks, homework policies) have therefore been continued throughout 2022. Despite all measures put in place, at times the Chinese operations have run at lower capacity than usual. Barco Integrated report 2022 CGR 42 Barco CGR Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT Retaining and attracting talent The end of the pandemic has put more pressure on the labor market in many geographies, with higher turnover of person- nel seen in many sectors, also aecting Barco. Barco has in- creased its hiring activity and employer branding campaigns to attract the right talent. Another consequence is an increase of the average labor cost, partly driven by salary indexations. We have cross charged the labor cost inflation eect on our products where possible to reflect this increased cost base. Strong funding and liquidity structure in place Barco has a strong balance sheet and ample liquidity. We refer to note 14 for more details on Barco’s net cash position. Barco has sucient headroom to enable it to conform to cov- enants on its existing borrowings. The Group complied with all requirements of the loan covenants on its available credit facilities throughout the reporting period. While the future may still bring some levels of headwind, Barco’s strong funding and liquidity structure in place should be more than sucient to ensure the going concern of the company. In addition, we refer to note 8 where we explain how we tested goodwill and all other non-current assets for impairment and concluded no impairment losses need to be recognized. Barco Integrated report 2022 CGR 43 Barco CGR Governance & Risk Report 03 ADDITIONAL RISK INFORMATION Additional risk information pursuant to the non-financial disclosure directive Barco Integrated report 2022 CGR 44 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT 03 ADDITIONAL RISK INFORMATION Governance & Risk Report Climate change and energy Risk description Climate transition and the environmental footprint in general holds a series of risks for Barco. The inability to meet (future) environmental legislation to limit CO 2 emissions and increase energy and material eciency could lead to regulatory fines (such as a carbon tax). More importantly, failure to adapt to changing customer behavior and address environmental concerns could negatively impact Barco’s reputation with customers and investors, thus leading to loss in sales or even shareholder value. Physical climate change risks include im- pacts of extreme weather events on production facilities, living areas of our employees and/or equipment and disruptions in the supply chain due to these events. Approach • (Upcoming) legislation and regulation: The Legal counsel, together with the environmental compliance oce (ECO oce) and the Environment, Health and Safety (EHS) depart- ment, closely follows the evolution of regional, national, EU and worldwide climate related guidelines, directives, standards and laws, and voluntary standards. We are closely monitoring the EU regulations that will be linked to the EU Green Deal. The ECO oce is in charge to avoid that non-compliant prod- ucts would be released to the market or are in violation ac- cording to market surveillance. After scope assessment and product impact validation, these requirements become part of design requirements, guidance and validation/test reports. For example, all products placed on the market are validated by the product validation group according to strict international standards. Requirements are set prior the design phase and locked into a follow up handshake tool between R&D and the validation group and part of ISO 9001 and ISO 14001 audit. All escalations are handled by the compliance steerco. • Physical climate change risks: Risk management, together with the insurance partner, regularly assesses how extreme weather events could impact our operations. Interruptions to our infrastructure could seriously impact our revenues and our brand reputation. Building and ensuring resilience of our products and services is and remains a top priority. The goal of Barco's business continuity plans is to keep the company up and running through interruptions such as natural disasters. For instance, when building new facilities or setting up busi- ness with new suppliers, risk assessment of extreme weather events in the region is included. Another example is the use of an alert tool: each member of the purchase team receives daily alerts on predefined (core) suppliers he/she is respon- sible for on amongst other extreme weather events such as floodings or earthquakes, or plans to close down production… This allows for active monitoring of these suppliers, immediate communication with them and if necessary, timely search for alternatives. • Transition climate risk: For Barco this mainly relates to cus- tomer behaviour: The awareness about environmental issues is increasing among customers. Barco takes into account cus- tomer and market demands, often received via tenders and purchase orders. Via the dierent departments and central service and strategic marketing these requests are captured and replied to. Market demands are mainly driven by require- ments of healthcare integrators, oil and gas industry operators andEuropean governments in line with green deal policies. On the supply side, sustainability risks are increasingly taken into account in the business review meetings with suppliers. In the ecodesign process, we evaluate the environmental impact of insourced components and promote the use of lower impact materials. Examples of how Barco addresses the energy and climate change aspect for its customers can be found in the ‘Report on planet, people and communities’, section Planet. Barco's risk management process is not only set up to safeguard the assets and financial strength but also to protect Barco’s rep- utation. In 2020 we communicated an ambitious Science Based climate target, which strengthens our reputation, also confirmed externally (read more in the 'Report on planet, people and com- munities', section Planet). As part of our risk assessment we have mapped all top risks to the material topics from the materiality assessment. The unmapped material topics are described here. Barco Integrated report 2022 CGR 45 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT 03 ADDITIONAL RISK INFORMATION Governance & Risk Report Risk description Insucient fair practice and business behavior (according to the ethical standards and principles set by the Barco Code of Ethics), including fraud, corruption, bribery, abuse and viola- tions of human rights leads to reputational damage, decrease of sales and legal investigations and prosecutions. Barco is directly exposed to risks in the area of human rights as an employer in the first place, but also through its operations in the regions where it conducts business. Barco may source raw materials from suppliers which may not respect their em- ployees’ human rights, such as the freedom of association. The increased pressure on management and employees could raise the temptation to deal with unscreened partners without any diligence procedures. The inability to foster an environment of equality and equal opportunities regardless of gender, race, ethnicity, age or sex could harm Barco’s repu- tation and could lead to noncompliance with applicable laws and regulations. Business ethics Approach Code of Ethics: • Barco’s Code of Ethics is fully endorsed and applies to everyone employed by Barco and its partners, regardless of position and level of responsibility. • The mandatory training on “Standards@Work” helps edu- cate our people and reminds them about the group’s ethical principles and values. • The ethics mailbox is available to everyone who wishes to report, even anonymously, any issue to the Ethics Commit- tee. Suppliers • Our suppliers must comply with the Responsible Business Alliance (RBA) code of Conduct, including labor, ethics and health and safety standards. Before engaging in a business relationship, we screen new suppliers, considering the risk profile and reputation of each partner as well as their adher- ence to ethical standards. Existing key partners are screened periodically. Key principles such as the four-eyes principles ensure segregation of duties in our procurement and buying processes. Human rights and anti-discrimination • Barco applies a human rights policy in line with the stand- ards and policies set by the Universal Declaration of Human Rights, the International Labor Organization (ILO), the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises. Our Human Rights pledge and our anti-discrimination policy are available on our intranet. • To oversee this pledge, we use the company-wide compli- ance management system.Adherence to the anti-discrimi- nation policy is monitored by the HR department. • Barco includes all its employees in collective bargaining agreements by complying with all necessary local work- force regulations in the countries where Barco operates. Barco handles specific workforce-related topics by closing o company-specific collective bargaining agreements. Where applicable, Barco organizes workers’ councils (both national and international). • We promote equal opportunity and do not discriminate against any employee, candidate, contractor or supplier based on nationality, race, age, physical disability, social, po- litical or religious preference or other personal characteris- tics. Barco encourages social and cultural diversity, and our recruitment, remuneration, evaluation and supplier tender processes are based solely on professional qualifications. Anti-corruption • In order to limit the risk of money laundering, a process to screen incoming payments is in place under the Payment Processing Policy. • Employees in sales functions and dedicated corporate functions across the world have to follow a mandatory anti-bribery course as part of the “Standards@Work” level 2 training. Read more on 'Ethics and compliance' and 'Supply chain responsibility'. Barco Integrated report 2022 CGR 46 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT 03 ADDITIONAL RISK INFORMATION Governance & Risk Report Financial risk management and internal control • A finance management process policy is in place explaining the Barco policy framework, describing the Barco finance organization and explaining the process for financial re- porting in order to provide management and Barco’s Audit Committee and Board accurately, completely, timely and consistently applied (across divisions and regions) financial statements and financial information in accordance with IFRS regulations in order to support Barco’s CEOs and Board in defining short term (forecast), mid-term (profit plan) and long-term targets (strategic management plan) and strategy. • Finance and accounting manuals, which are available for key accounting sections, ensure the accurate and consist- ent application of accounting rules throughout the compa- ny. • Specifically, within the financial domain, a quarterly bot- tom-up risk analysis is conducted to identify and document current risk factors (up-down sides reporting) that have po- tential impact on the forecasted results. Action plans are de- fined for all key risks. The results of the analysis are discussed with the statutory auditor at least every half year. • The accounting teams are responsible for producing the accounting figures (closing books, reconciliations, etc.), whereas the business partnering (controlling) teams check the validity of these figures. These checks include analytical reviews through comparison with historical and budget fig- ures as well as sample checks of transactions according to their materiality. • All material areas of the financial statements concerning critical accounting judgements and estimates are period- ically reported to the Audit Committee. • Specific internal control activities concerning financial re- porting are in place, as documented in the financial closing and reporting procedure. This procedure assures clear com- munication of timelines, completeness of tasks, and clear assignment of responsibilities. Specific identification proce- dures for financial risks are in place to assure the complete- ness of financial accruals. • Uniform reporting and a standard chart of accounts throughout the organization ensures a consistent flow of fi- nancial information, which allows the detection of potential anomalies. • To provide Barco’s investors and other (external) stake- holders with the information necessary for making sound business decisions, financial reporting is shared with the outside world. The external financial calendar is planned in consultation with the Board of Directors and the Core Lead- ership Team and then announced to external stakeholders. • Financial reporting and analyses are shared with Barco’s CEOs, the CLT and divisional and regional excoms in order to drive actions towards short-term (forecast), mid-term (budget) and long-term targets in accordance with the strategy set forward. Barco Integrated report 2022 CGR 47 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT 03 ADDITIONAL RISK INFORMATION Governance & Risk Report 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT barco.com Group management Beneluxpark 21 8500 Kortrijk – Belgium Tel.: +32 (0)56 23 32 11 Registered oce President Kennedypark 35 8500 Kortrijk – Belgium Tel.: +32 (0)56 23 32 11 VAT BE 0473.191.041 | RPR Gent, Section Kortrijk Stock exchange Euronext Brussels Financial information More information is available from the Group’s Investor Relations Department: Willem Fransoo Director Investor Relations Tel.: +32 (0)56 26 23 22 E-mail: [email protected] Copyright © 2023 Barco NV All rights reserved Realization Barco Corporate Marketing & Investor Relations Oce Focus Advertising Barco Beneluxpark 21 8500 Kortrijk – Belgium Barco Integrated report 2022 CGR 48 01 CORPORATE GOVERNANCE 02 RISK MANAGEMENT 03 ADDITIONAL RISK INFORMATION Governance & Risk Report Barco CGR Governance & Risk Report 03 ADDITIONAL RISK INFORMATION 2022 Integrated annual report Report on planet, people & communities Table of contents 01 Our sustainability ambition statement .............. 3 02 Our sustainability strategy . . . . . . . . . . . . . . . . . . . . . . . . . .4 Go for sustainable impact .............................5 How the UN Sustainability Development Goals and materiality assessment guide Barco’s strategy ........9 03 Our sustainability performance ....................10 Planet.............................................. 11 People.............................................24 Communities .......................................36 04 Reporting on EU taxonomy ........................55 05 Managing sustainability .......................... 63 Sustainability governance and responsibility ............64 Stakeholder engagement and materiality ...............65 External initiatives (platforms and commitments) ........65 Certifications .......................................65 External evaluations .................................65 06 Annex ........................................... 66 EU taxonomy reporting table .........................67 Scope and methodology of carbon footprint and of measurement of products with Barco ECO label . . . . . . 70 This is the planet - people - communities section of Barco’s 2022 Integrated annual report. Other sections are available via the download center at ir.barco.com/2022. CORE MORE • Governance & risk report • Report on planet - people - communities • Financial report ANNEX • Integrated Data Pack • Glossary • GRI Content index • Assurance report Barco Integrated report 2022 2 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX03 SUSTAINABILITY PERFORMANCE Sustainability is an integral part of Barco’s DNA. It is our ambi- tion to design and act towards sustainable outcomes for our planet, people and communities. 1. We will lower the environmental footprint of our customers by developing sustainable products and further reduce our own footprint. 2. We invest in sustainable employability by creating the right conditions for our employees to have an engaging, enriching and healthy career at Barco. We do this by encouraging our people to learn and develop themselves and by ensuring a healthy working environment – both physically and mentally. We engage in building an inclusive workplace that embraces the diversity of our people as this boosts our innovation capacity. 3. We will play an active role in the communities we operate in by upholding the highest ethical and quality standards and expecting the same from our business partners. We always aim to deliver added value to our customers through our solutions, services and capabilities. In addition, we help ensure more people can participate in and benefit from Barco’s innovation. Barco is ready to gear up and move forward towards a more sustainable future. An Steegen & Charles Beauduin CEOs Barco Our sustainability ambition statement Barco Integrated report 2022 3 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX Our sustainability strategy 06 ANNEX Barco Integrated report 2022 4 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY Our sustainability strategy ‘Go for Sustainable Impact’ is an integral part of our corporate strategy, ‘Visioneering a bright tomorrow’. Because we believe growing our company goes hand in hand with helping our people and the communities around us thrive, while safeguarding our planet. That’s why Barco’s sustainable impact strategy is focused on three pillars: planet, people and communities. For each pillar, we defined an overall ambition statement and linked it to the areas that matter most to our stakeholders and where we can achieve the greatest impact: our material topics. The material topics are defined in our materiality assessment, including the top 5 of material topics by stakeholder group. We translated our sustainability ambitions in measurable tar- gets, so we can track our progress year over year. An overview of all our measured KPIs can be found in the Integrated Data Pack MATERIAL TOPICS AMBITION Our sustainable impact pillars, ambitions and material topics We will lower the environmental footprint of our customers and further reduce our own footprint. • Climate change & energy • Product stewardship • Waste management We invest in sustainable employability by creating the right conditions for our employees to have an engaging, enriching and healthy career at Barco. We do this by encouraging our people to learn and develop themselves and by ensuring a healthy working envi- ronment – both physically and mentally. We engage in building an inclusive workplace that embraces the diversity of our people as this boosts our innovation capacity. • Employee engagement • Learning & development • Employee health, safety & wellbeing • Diversity & inclusion • Labor practices & human rights • Customer engagement • Product quality, safety & security • Information security & data protection • Business ethics • Responsible supply chain management • Corporate governance • Community engagement We will play an active role in the communities we operate in by upholding the highest ethical and quality standards and expecting the same from our business partners. We always aim to deliver added value to our custom- ers through our solutions, services and capabilities. In addition, we help ensure more people can participate in and benefit from Barco’s innovation. Planet People Communities * Highly material topics Go for sustainable impact Barco Integrated report 2022 5 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX Planet 0.73 0.70 0.73 2020 2021 2022 Energy efficiency index of sold products (relative vs base year) Tonnes CO e / mio € revenues By , reduce the energy footprint of our products by % (vs ) -% . Take science-based climate action 2020 -22% 34 2021 -12% 39 2022 -32% 30 Energy consumption in own operations MWh/mio € revenues % reduction vs By , reduce energy consumption in own operations by % (vs ) -% 31% 50% 26% . Enable our customers to lower their environmental footprint 2020 2021 2022 % revenues from products with Barco ECO label By , ensure that at least % of our revenues comes from products with the Barco ECO label % 53 54 40 2020 -34% -27% 2021 -33% -30% 2022 -51% -27% Greenhouse gas emissions of our own operations Tonnes CO e / mio € revenues % reduction vs % reduction vs By , reduce greenhouse gas emissions from own operations by % (vs ) -% 27 7, 335 281,874 330,424 2020 -65% 2021 -65% 2022 -59% Total greenhouse gas emissions Tonnes CO e % reduction vs By , reduce absolute greenhouse gas emissions by % (vs ) -% Our sustainable impact (primary) targets and progress * Target approved by Science Based Targets initiative, in line with the Intergovernmental panel on climate change (IPCC) 1.5°C scenario, covering Scope 1, 2 and 3 emissions. As SBTi requires targets to cover a minimum of 5 years from the date the target is submitted to the SBTi for validation, the target year has been set to 2025. Barco Integrated report 2022 6 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX Our sustainable impact (primary) targets and progress People Empower all our colleagues to have an engaging, enriching and healthy career 2022 16 Employee Net Promotor Score Each year, aim for an employee Net Promoter Score of at least 11.3 20 10.5 20 12.2 17 2020 20202021 20212022 2022 Average training hours/employee # hours Internal mobility % vacancies filled internally Invest in learning and development 28 17 27 16 29 19 2020 20202021 20212022 2022 % women overall % women in senior management Step up our efforts in diversity Barco Integrated report 2022 7 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX Our sustainable impact (primary) targets and progress Communities 44 47 + yearly 47 . Deliver great customer experience 20212020 2022 Customer Net Promoter Score Relationship NPS By , we aim to increase our global Net Promoter Score by points per year. All business units have set individual NPS targets to achieve that global target. . 2020 2 2021 2 2022 2 ISO certification (security) # of product lines in scope Each year, add at least one new product line to the scope of the ISO certificate . Proactively manage information security risks 2020 2021 2022 Average cybersecurity maturity score NIST CSF By , obtain an average cybersecurity maturity score of at least . % 44% 58% 71% % + yearly . Engage our suppliers in adopting sustainable business practices 2020 2021 2022 % of production spend covered by supplier sustainability score By , have suppliers covering at least % of our production spend scored on their sustainability performance . Always act lawfully, ethically and with integrity wherever we operate 2020 98% 2021 99% 2.19 2022 99% 2.23 2.66 % employees trained in Standards@Work % of heads (white collars) Each year, train all our employees in Standards@Work Barco Integrated report 2022 8 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX 1. Customer engagement 2. Product quality, safety & security 3. Information security & data protection 10. Financial resilience 11. Sustained profitable growth 18. Product stewardship 2. Product quality, safety & security 8. Innovation management 18. Product stewardship 3. Information security & data protection 4. Business ethics 13. Employee engagement 17. Diversity & inclusion 18. Product stewardship 19. Climate change & energy Capture profitable and ecient growth Innovate for impact Go for sustainable impact UN SDGs HIGHLY MATERIAL TOPICS How the UN Sustainable Development Goals and the materiality assessment guide Barco’s strategy We use the United Nations Sustainable Development Goals (SDGs) as a guideline to shape our strategy and ambitions. Defined in 2015, the SDGs consist of 17 global goals with a 2030 deadline. All 193 countries in the UN General Assembly adopted this resolution. We realize these goals cannot be met without support from the global business community. Our approach to supporting the SDGs is to focus on the goals where we can have the most impact, while screening and implementing actions that contribute to the other goals as well. To identify the SDGs where Barco can make the most impactful dierence, we start from Barco’s strategy and the material topics, that our main stakeholders determined in the 2020 materiality assessment. That led to the following six SDGs: • SDG 3: Good health & well-being: Ensure healthy lives and promote wellbeing for all at all ages • SDG 7: Aordable and clean energy: Ensure access to aordable, reliable, sustainable and modern energy for all • SDG 8: Decent work and economic growth: Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all • SDG 9: Industry, innovation and infrastructure: Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation • SDG 12: Responsible consumption and production: Ensure sustainable consumption and production patterns • SDG 13: Climate action: Take urgent action to combat climate change and its impacts Barco plans to update its materiality assessment in a compre- hensive way every three to four years, serving as input for the strategic levers. * A description of the material topics can be found on our website. Barco’s strategic levers, linked to highly material topics and the UN SDGs Barco Integrated report 2022 9 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX Our sustainability performance Barco Integrated report 2022 10 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX Planet Primary targets Supporting targets . Take science-based climate action By , reduce energy consumption in own operations by % (vs ) By , send zero waste from own operations to landfill By , reduce greenhouse gas emissions from own operations by % (vs ) By , recycle % of solid waste in own operations By , reduce absolute greenhouse gas emissions by % (vs ) . Enable our customers to lower their environmental footprint By , ensure that at least % of our revenues come from products with the Barco ECO label By , % of new products released have a Barco ECO label By , reduce the energy footprint of our products by % (vs ) Our targets Our ambition * The baseline of greenhouse gas emissions and energy footprint refer is 2015, as this is the year where we started measuring these indicators ** Absolute reduction of scope 1, 2, and 3 emissions. Target approved by Science Based Targets initiative, in line with the IPCC 1.5°C scenario. As SBTi requires targets to cover a minimum of 5 years from the date the target is submitted to the SBTi for validation, the target year has been set to 2025. The KPIs related to these targets were subject to a limited assurance exercise. This limited assurance exerecise on a selected number of Planet KPIs that we started in 2021, was continued and extended in 2022 (see assurance report). All KPIs related to CO 2 emissions have now been covered by this limited assurance exercise. The assurance opinion on the 2021 indicators subject to limited assurance can be found in the 2021 PPC report. We will lower the environment footprint of our customers and further reduce our own footprint. The full list of environmental KPIs can be found in the Integrated Data Pack. Scope and methodology can be found in ‘Scope and methodology of carbon footprint and of measurement of products with Barco ECO label’ Barco Integrated report 2022 11 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX 1.Take science-based climate action Companies are under more pressure than ever to deliver on their carbon emission pledges. At Barco, we set SBTi-aligned ambitions and we keep working hard to reduce our own carbon footprint and that of our customers. Thanks to these eorts, The Financial Times named us a 2022 FT-Statista Climate Leader - a big honor, as the list includes only four Belgian companies. Thomas Serbruyns VP Strategic Initiatives Our roadmap towards sustainable impact: key initiatives and action plans Total greenhouse gas emissions (absolute) Tonnes CO 2 e TARGET : % vs 281,874 277, 335 , 2020 2021 2022 360.1 350.5 312.2 65% 65% 59% Total greenhouse gas emissions (relative) Tonnes CO 2 e / mio € revenues Relative reduction compared to 2015 % As expected, the rebound of our activities in 2022 after the covid-19 crisis did result in an increase of absolute greenhouse gas emissions. However, the emissions are still 59% lower compared to 2015. We are still on course to exceed the 45% reduction target by 2023. In 2020, Barco committed to setting science-based targets to further solidify its ambitious climate action. We commit to aligning our business with the most ambitious goals of the Paris Agreement: to limit the global temperature rise to 1.5°C above pre-industrial levels. Our absolute target is to reduce scope 1, 2 and 3 greenhouse gas emissions by 45% by 2025 from a 2015 base year. This target was approved by the Science Based Targets initiative in March 2021. 100,000 200,000 300,000 400,000 500,000 Barco Integrated report 2022 12 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX 1.1 Lowering energy consumption in our own operations Energy (electricity and fuel) is consumed in our facilities. At the end of 2022, energy consumption amounted to 29.9 MWh/ mio € revenues – a 32% decrease against the 2015 baseline (44.2 MWh/mio € revenues). Covid-19 measures, such as extra ventilation, were no longer needed in 2022, which helped us decrease the 2022 results against 2021. Our target for 2023 is to reduce energy consumption by 15% compared to the 2015 base year, so we already realised this target in 2022. The main action to reduce energy consumption in our facilities is cutting the overall footprint of our facilities. After moving to a smaller campus in Sacramento (US) in 2021, we did the same in Karlsruhe (Germany) in 2022. This helped us to reduce energy use. In addition, we share tips on saving energy through our internal communication channels, to boost awareness among employees. Energy is also a topic in the mandatory Sustainability Standards@work training and the Compliance Challenge. When looking at Barco’s total energy consumption (electricity and fuel use), 57% is from renewable sources, mainly thanks to the worldwide switch to renewable electricity in all our main sites across the globe. We expect the share of renewables in our energy mix to further increase. In particular, the wind tur- bine that we want to install at our One Campus site in Kortrijk would help us deliver a large amount of renewable energy. With a projected annual production of 11,290 MWh, it would cover the power consumption of the entire Kortrijk campus, while the surpluses could be stored and shared. Energy consumption in own operations MWh / mio € revenues TARGET : . % vs 34.3 39.0 29.9 2020 2021 2022 54% 52% 57% Our wind turbine: waiting for the final green light For over a decade, Barco has been investigating the construction of a wind turbine to generate its own renewable electricity. On an annual basis, a turbine on the Barco One Campus in Kortrijk would cover the power consumption of the entire plant. However, getting the permission to build such an installation isn’t a walk in the park. As a frontrunner in cutting-edge engineering, it’s our responsibility to develop innovative systems to maximize the benefits of our renewable energy production. That’s what I call innovating for impact. Kurt Verheggen General Counsel 22% 12% 32% Relative reduction compared to 2015 % % renewable 5 5 10 15 20 25 30 45 40 35 Barco Integrated report 2022 13 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX Rotor diameter 139 meters Tip height 180 meters Exploding electricity need Wind energy is an important asset in the energy transition and will become even more crucial in the years to come as the demand for car- bon neutral electricity rises. That also applies to Barco’s power needs. Our fleet is being elec- trified exponentially, which means we’ll need a lot more charging stations, and thus a lot of electricity. And within five years, our warehouse will move from Kuurne to Kortrijk, reducing our carbon footprint in terms of transport, but fur- ther raising our electricity needs at the Campus. Our wind turbine in numbers Tip height: 180 meters (= highest point of the rotor blade) Rotor diameter: 139 meters Maximum capacity: 4.5 MW Projected annual production: 11.290 MWh (= 14.7 football fields full of solar panels) An engineering oce, specialized in the development of wind turbine projects, identified the south side of our parking lot as the perfect spot for our wind turbine. The location is situated in an industrial zone and is very windy. The wind turbine can be easily connected to the electricity grid and will not impact air trac, and eects on the neighborhood are limited. Elke Blondeel Facility Manager More info on barco.com/wind Contributing to regional sustainability goals Yet, obtaining the environmental permit takes quite some time. After more than a decade of preparatory work, the province of West-Flanders has now granted an environmental permit, which has been appealed. We’re hopeful that the appeal procedure will turn out favorably for Barco. Both local and regional governments understand that renewable energy is indis - pensable for realizing their sustainability goals. The Flemish government is looking to increase renewable energy production capacity by 150 MW a year, and the city of Kortrijk needs to reduce carbon emissions by 40% before 2030. Smart storing and sharing As a frontrunner in cutting-edge engineering, it’s our responsibility to develop innovative sys- tems to maximize the benefits of our renewable energy production. So, we intend to explore the possibility of sharing a portion of the renewable energy we produce with neighboring compa- nies such as ScioTeq (Barco’s former Defense & Avionics division), Decathlon, or the AZ Groeninge hospital. Another initiative to share the benefits of our wind turbine is the option to co-invest, which Barco granted to ‘Vlaskracht’, a local cooperative promoting sustainable energy that citizens can sign up for. As you’ve probably noticed, we’re not just standing still while we’re waiting for the green light… Barco Integrated report 2022 14 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX 1.2 Better waste management in our own operations The two main sources of solid waste at Barco are packaging materials (waste from operations) and waste from the reno- vation/refurbishment of our buildings. By the end of 2022, total solid waste was 1.20 tonnes/mio € revenues – a 15% decrease compared to last year which is largely due to eective waste volume reductions. First and foremost, we aim to keep waste from operations to a minimum, especially non-sorted waste. We reduce the amount of packaging waste of incoming components and products by guiding suppliers on how to reduce packaging. In addition, we aim to have 80% of solid waste recycled by 2023 by raising awareness amongst suppliers (use recyclable packaging materials) and employees (ecient and correct sorting of waste). Waste recycling is part of our 5S audit sys- tem, where the presence of the dierent waste recycling bins is checked. The recycling rate went up by 5%, partly thanks to the selection of better waste recycling partners in the US. While waste from operations is approaching the bare mini- mum, we did generate some extra construction waste in 2022. In our Atlanta oce, for example, we improved roof insulation in order to reduce energy consumption. While largely bene- ficial to improve our footprint, it did cause a one-o rise in solid waste production. Our next horizon is 2023, where we aim for zero waste sent to landfill. In 2022, we were at 10%. Solid waste generated in own operations Tonnes / mio € revenues 2.52 1.41 1.20 0.5 1 2.5 2 1.5 2020 2021 2022 52% 58% 63% 29% 15% 10% % recycled/composted waste TARGET : % % waste to landfill TARGET : % Barco Integrated report 2022 15 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX 1.3 Reducing greenhouse gas emissions from our own operations There are three main sources of greenhouse gas emissions in our own operations: logistics, mobility and infrastructure. The greenhouse gas emissions of our own operations amounted to 39.8 tonnes CO 2 e / mio € revenues – a 13.8 tonnes decrease compared to 2021. The relative reduction in greenhouse gas emissions from our own operations is -51% compared to the 2015 baseline (80.5 tonnes CO 2 e / mio € revenues) - an impressive achievement mainly driven by the hard work of our global logistics and supply chain community. Our target is to achieve -35% by 2023 vs 2015. 1. Logistics Logistics i.e. the transport of incoming goods and outgoing finished products, was responsible for 76% of Barco’s own CO 2 emissions in 2022. Overall logistics-related greenhouse gas emissions dropped by 42% between the 2015 base year (52.2 tonnes CO 2 e / mio € revenues) and 2022. Our target is to reduce emissions by 35% by 2023 vs 2015. Despite the component shortages that impacted our sector, the modal shift from air to sea freight picked up again in the second half of 2022. As a result, 57% of our total kms was transported via deep-sea shipping in 2022, which brings us beyond 2020 levels. We actively engaged with our partners and customers on the modal shift by, e.g., proposing alternatives for air shipments. As in the previous years, we continued working in 2022 on: • Re-designing packaging for logistics: when designing new products, we aim to design smaller and lighter packaging, in order to reduce the volume and/or the weight of high- running appliances. Packaging/logistics is one of the four domains in our ecodesign program. • Modular product design: as more new Barco products are built on existing platforms, only the final customization has to be done in a local warehouse. In this way, we can ship larger volumes to overseas destinations up front by sea. • Transport and warehousing tenders include a sustainability clause, articulating that logistics suppliers are expected to inform Barco about their sustainability plans and initiatives. This information is considered in the overall decision matrix and in our supplier selection procedure. In addition, we add sustainability clauses to contracts, driving our suppliers to advance their eorts to cut carbon emissions. Greenhouse gas emissions of our own operations tonnes CO 2 e / mio € revenues TARGET : . % vs 53.42020 2021 2022 Infrastructure Mobility Logistics 53.6 39.8 Greenhouse gas emissions of our own operations tonnes CO e / mio € revenues Infrastructure . . . Mobility . . . Logistics . . . Total . . . 34% 33% 51% Relative reduction compared to 2015 % 5 10 15 20 25 30 65 45 55 50 60 40 35 Barco Integrated report 2022 16 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX 2. Mobility The second-largest source of greenhouse gas emissions from our own operations is mobility: business travel, company cars and commuting. In 2022, the mobility’s share in Barco’s CO 2 emissions from own operations was 17%. Our target is to reduce emissions by 23% by 2023 vs 2015. Overall mobility-related greenhouse gas emissions dropped by 65% between the 2015 base year (19.1 tonnes CO 2 e / mio € revenues) and 2022. In the post-pandemic year 2022, work and travel behavior were dierent than in 2020 and 2021. The year was marked by the following trends: 1) Business travel increased again after a spectacular drop in 2020 and 2021 due to covid-19 restrictions. In 2022, we wanted to give our people the chance to reconnect with their colleagues and partners, but with the ‘Barco travel policy in mind’. 2) In 2022, more than 70% of all newly ordered cars were full electric – a shift that we had kicked o in 2020. Electrifying our fleet will further reduce mobility-related CO 2 emissions in the coming years. Our One Campus site in Kortrijk now features more than 100 charging stations. 3) Emissions from employee commuting remained lower than in pre-covid times, as many employees expressed the will to keep working remotely at least some of the time. Barco therefore updated the existing HR policies in many locations, allowing people to work from home for more days a week. Next to this, we continued investing in hybrid meeting rooms with ClickShare Conference, which enables us to ensure an inclusive and ecient meeting culture. 3. Infrastructure The third source of greenhouse gas emissions from our own operations is infrastructure: emissions from the use of elec- tricity, fossil fuels (excl. company cars), waste treatment and the leakage of refrigerant gases from cooling equipment. In 2022, the share of infrastructure in Barco’s own CO 2 emissions was 7%, which was mainly attributable to the use of fossil fuels. Overall infrastructure-related greenhouse gas emissions dropped by 68% between 2015 (9.2 tonnes CO 2 e/mio € rev- enues) and 2022 – largely thanks to the switch to renewable electricity in all our R&D and manufacturing sites in 2020. Our target is to achieve a 66% reduction by 2023 vs 2015. Barco Integrated report 2022 17 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX 1.4 Reducing greenhouse gas emissions from our products (product use emissions) Product use emissions, which are by far our largest source of emissions, are emissions resulting from the energy that Barco products use on our customers’ premises. Product use emissions decreased by 61% between 2015 and 2022. In 2022, total product use emissions amounted to 272 tonnes CO 2 e / mio € revenues - an 8% decrease against last year. That reduction was driven by the growth in turnover and our continuous focus on improving the ecoscore of our products, especially that of our high-brightness solutions that are in increasingly high demand among our customers. Greenhouse gas emissions of sold products (product use emissions) tonnes CO 2 e / mio € revenues 306.7 272.4 296.9 2020 2021 2022 -15% -3% -8% Year-on-year evolution Barco Integrated report 2022 18 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX 100 50 400 300 350 200 250 150 2. Lowering the environmental footprint of our customers 2.1 Refining our ecodesign approach Back in 2017, we released our ecoscoring tool, an objective tool to determine the environmental performance of our products. The tool assesses our products on four domains: energy performance, use of materials, packaging and end- of-life optimization (i.e., the way products can be maintained, refurbished, upgraded and eventually recycled). To improve the value and credibility of our tool towards exter- nal stakeholders, we submit it to an external audit under the framework of the ISO 14021:2006 standard (limited assurance) every year. The audit ensures that the methodology of our ecoscoring tool is clear, complete, reliable, objective and based on relevant product aspects. Most important updates in 2022 We keep improving our ecodesign approach by adapting the tool to new regulations and learning from our experiences using it. These are the main changes we carried out in 2022: • We started performing full Life Cycle Assessment (LCA) studies to go beyond the four domains that comprise our ecoscoring tool and calculate the environmental impact of our products. We aim to implement environmental impact in our ecoscoring system in the years to come. • We added more detailed data to our scoring process (e.g. data on recycled contents, long-time battery performance) to make our ecoscoring more precise. • We introduced a financial incentive: one of the key metrics in the employee bonus program is now on the proportion of ecolabelled revenues in the total revenues. • The ecoscoring tool and practices became an inherent part of the onboarding training for new employees. For other colleagues, such as procurement and R&D employees, we organize refresher courses several times a year. We also continued our online supplier trainings. E N E R G Y M A T E R I A L U S E P A C K A G I N G E N D - O F - L I F E & L O G I S T I C S O P T I M I Z A T I O N Find more about the ecoscoring tool on our website Barco’s Planet ambition is not only to reduce our own environmental footprint but also that of our customers, by embedding ecodesign in our new products, improving their energy eciency and oering circular solutions. Barco Integrated report 2022 19 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX Focusing on the sustainability of our best-selling products, we aim to draw 70% of our revenues from ECO labelled products by the end of 2023. It’s a strong target that we’ll dedicate a lot of eort to in 2023. In 2022, we increased our number from 31% to 50%. ClickShare’s A++ ECO label isn’t the finish line One of our bestselling products to improve its ECO label scoring is the ClickShare collab- oration system. “Both our CX-30 and CX-50 product ranges now boast an A++ label,” says New Product Introduction Project Manager Kristof Maes. “That improvement is mainly due to the enhanced use of post-consumer recycled material and the fact that our CX-50 range has become halogen-free. Keeping our firmware available online for a longer period to support our clients also extends the lifetime of our ClickShare products.” Madeleine Vandenabeele, Environmental Sustainability Engineer of Barco Labs, adds: “The ecoscoring tool is an essential asset in our New Product Introduction strategy. But even with our A++ labels in hand, we are still looking at what we can do to improve the sustainability of our products. Obtaining and improving our ECO labels is always a great achievement, but our real goal is to become a carbon-neutral company.” Kristof confirms: “Tools like our ecoscoring sys- tem and the Life Cycle Assessment are injecting sustainability into our DNA. I really see a change in mindset within our company walls. More than that, we also have a positive impact on our sup- pliers and clients. They rely on us to improve the sustainability of their activities. That’s something we can be really proud of.” % revenues from products with Barco ECO label TARGET : % 31% 26% 50% A look at our targets Although the strong engagement of our R&D and product teams in particular, 63% of the new hardware products released in 2022 had a Barco ECO label (ecoscore A or higher), a 2% decrease compared to 2021. Despite this slight decrease, we still believe to be on track to meet the 75% target in 2023. % of new products released with Barco ECO label (hardware) TARGET : % 65% 48% 63% 2020 2021 2022 2020 2021 2022 18% 35% 53% Relative increase compared to 2018 % 20 20 10 10 60 60 70 70 40 40 50 50 30 30 Barco Integrated report 2022 20 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX 2.2 Improving energy eciency of our products One of the four domains of Barco’s ecodesign program is energy eciency. As the energy our products consume on our customers’ premises has a major impact on the environ- ment, and more particularly on climate change via Greenhouse Gas (GHG) emissions, improving their energy eciency is a high-attention topic. At the same time, market trends and customer preferences are shifting towards ever-higher performance (brightness, resolution, etc.), which requires higher energy consumption. We therefore measure energy consumption relative to the delivered capability, i.e., brightness, resolution, luminance, etc., in “watt/delivered capability” and have set the target for 2023 to reduce the energy footprint of our products by 25% versus base year 2015. In 2022, the average energy footprint of sold products was 0.73, which is lower than the 0.75 target (i.e. a 25% reduction versus baseline 2015). The drop in energy footprint was mainly driven by the growing adoption of laser projectors, which consume far less power (-50% to -70%) than traditional lamp- based systems while producing more light, higher brightness levels and a better image quality. Smart and balanced inno- vation in both video wall and projection technology will be needed to further drive the reduction of energy consumption. Energy eciency index of sold products (relative vs 2015 base year) TARGET : . % vs 0.73 0.73 0.70 2020 2021 2022 * The energy eciency index of our products represents energy consumption/delivered capability of Barco’s major groups: projectors products in the Entertainment division and large video walls & LED products in the Enterprise divi- sion. The energy performance is defined as Watt/delivered capability. This indicator is weighted on revenues from the considered products and normalized to a 2015 baseline value (with default value 1,0). 27% 30% 27% Relative reduction compared to 2015 % 0.2 0.1 0.8 0.9 1.0 0.6 0.7 0.4 0.5 0.3 Barco Integrated report 2022 21 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX The circular economy is a focus area in Barco’s sustainabil- ity strategy. We want to help our customers with innovative products and services to provide an increasingly circular expe - rience. Through smart design and services, we aim to reduce waste and retain the highest utility and value of products and components. Circular product design To enable circular solutions for our customers, we engage in circular design. Our ecodesign program embeds several criteria to improve the circularity of our products: improving the upgradability and modularity of the devices, facilitating the repair and increasing the use of recyclable and recycled materials, both in the product and its packaging. In 2022, 12% of new product launches contained PCR plastics, down from last year when we were able to launch an exceptional number of new products with PCR plastics. We aim to boost that number further in the coming years. The ecodesign program also focuses on improving material eciency. We work to shift our portfolio toward more mate- rials-ecient products and packaging, for example by making our products more robust/long lasting, optimizing the pack- aging volumetric weight, reducing the number of accessories or digitizing our manuals. In 2022, material use intensity was 3,511kg/mio € revenues. Next to our internal circular design eorts, we fully support the development of clear, objective criteria that drive the industry toward more circular products. As an active mem- ber of the CEN-CENELEC Joint Technical Committee 10 on energy-related products, which aims to establish an objective measuring methodology for repairability and recyclability of products, we contribute to future standards that will improve the circularity performance of products. Product recycling services As e-waste is one of the fastest growing waste streams, it is crucial for our products to be recycled at end-of-life. This is the very basic first step in a circular economy. For every product, we provide a user manual that includes informa - tion for customers on how to handle the end-of-life stage, and a recycling passport that oers recycling information to recyclers. We allow customers to return used products to recycling part- ners free of charge. In 2022, 65% of our revenues were sold in countries where we participate in and oer product return and recycling programs. Where no structured program is in place yet, we oer ad-hoc recycling and collection services. We demand that all our recycling partners are ISO 14001 cer- tified and comply with legislation regarding the prohibition of e-waste export. As part of the Extended Producer Recyclability (EPR), Barco must pay upfront for the recycling of all electronic waste, bat- teries and packaging placed on the dierent markets. In 2022, we signed several additional contracts with waste compliance schemes around the globe in order to fulfill our obligations towards EPR compliance and duly monitor our waste streams. » Read more on our website 2.3 Oering circular solutions % of new products released with post-consumer recycled plastics 4% 35% 12% 2020 2021 2022 20 10 50 40 30 Barco Integrated report 2022 22 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX Keeping up our frontrunnner position To increase transparency into product composition and to improve waste treatment operations, the European Chemicals Agency (ECHA) has deployed a publicly accessible database. The SCIP database provides information on all the substances of very high concern present in articles placed on the EU mar- ket,. In this way, it ensures that the information on the articles is available throughout the entire lifecycle of products and materials, including at the waste stage - information which is particularly interesting for recyclers, amongst others. Since 2021 Barco has been registering all its active end-prod- ucts in the ECHA SCIP database. We were able to do that prior to the deadline thanks to our large coverage of Full Material Disclosures (FMDs) (83,6% of active components in 2022) and Restriction of Hazardous Substances (RoHS) certificates with the applicable exemptions. That makes us a pioneering com- pany when it comes to providing transparent and up-to-date information. Further regulatory outlooks have triggered Barco to start a program to roll out the digital passport as intended by the draft EU Ecodesign for Sustainable Products initiative. * Substances of Concern In articles as such or in complex objects (Products) How our Control Room team takes circularity to the next level Reuse, repair and upgrade Why buy new components for a rear-projection video wall – or buy an entirely new wall – if the existing parts can be refurbished or replaced by an update? Our Control Room team has been oering refurbishment and upgrading services for a while now… It all started with repairing worn-out lenses of rear-projection video walls in our labs. Now Barco engineers also travel to customers’ loca- tions to refurbish the lenses on-site, which is more cost-efficient and better for the envi - ronment. More than that, it’s become easy to replace the projection module of video wall installations by an updated version. Year after year, we extend the coverage of our upgrading services to include more rear-projection video wall types, both Barco and non-Barco branded. In 2023, we’ll oer upgrading for our modular UniSee video walls – a service that is unprece- dented in the world of LCD. 800+ 800 lenses were refurbished in 2022, 5x more than in 2021 Barco Integrated report 2022 23 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX Our ambition Our targets We invest in sustainable employability by creating the right conditions for our employees to have an engaging, enriching and healthy career at Barco. We do this by encouraging our people to learn and develop themselves and by ensuring a healthy working environment – both physically and mentally. We engage in building an inclusive workplace that embraces the diversity of our people, as this significantly boosts our innovation capacity. The people of Barco 71% male 29% female 12% The Americas 55% EMEA Number of employees Gender Geographical Per functional group 3,3032020 3,1412021 3,3022022 Figures reported are in heads (not FTE). For definitions on indicators: see glossary. We refer to note in the financial chapter for more information on the headcount evolution. 8% General & Administration 21% Sales & Marketing 30% Research & development 40% Operations 33% Asia-Pacific Empower all our colleagues to have an engaging, enriching and healthier career Primary targets Each year, aim for an employee Net Promoter Score of at least Step up our efforts in diversity Invest in learning and development Supporting targets Each year, aim for zero work accidents People The full list of employee related KPIs can be found in the Integrated Data Pack. Barco Integrated report 2022 24 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX After two challenging years, during which covid-19 impacted Barco and its employees, 2022 was the year of rebuilding and reconnecting with growth. More than our business, our organization grew too, in several aspects. We welcomed more new employees, took our organizational structure to the next level and supported our employees on their personal growth paths. The new organizational structure that our CEOs had intro- duced at the end of 2021 took root in 2022. By the end of the year, the Barco organization was fully aligned with our business strategies and with one of our core culture building blocks: we team up to win globally. Reconnecting with growth also meant growing our organiza- tion. Recruiting the people with the right competences was, and still is, high on our agenda. In 2022, we took major steps to build a globally structured and professional recruitment organization, with more focus on diversity than ever before. Another key action was the design and deployment of a man- ager development program to improve and strengthen the skills of all of our people managers. Kicked o in 2022, this program will continue to run over the next two years. We are convinced that it will increase the maturity of our people leaders, as well as the engagement of our employees. Our roadmap towards sustainable impact: focus points Stepping up our culture journey in 2022 In 2019, Barco kicked o a culture journey aimed at rejuvenating its core values . In 2022, we took the next step in this journey, further bridging the gap between the theory and practice in a three-step approach: • In the exploration phase, we dig deeper into the meaning of a specific building block . We do this in close cooperation with our CEOs, the management and employees, across the dierent business units, functions and regions. In addition, we bring in the external view of customers, other companies, etc., making sure to capture the outside-in perspective . • In the education phase, we seek to upskill our employees in specific competencies, through keynotes, training sessions, workshops, etc. • In the final phase, the energizing phase, we celebrate what we have learned and share success stories with each other . At the specific request of our employees, we kicked o this exercise with the culture building block ‘We team up to win globally’. In 2023, we will start working on the ‘We look for the better way’ building block, which addresses the need for entrepreneurship, con- tinuous improvement and a continuous focus on innovation. A corporate culture is a collection of values and beliefs that characterizes an organization. It is, however, only successful if everyone truly lives and breathes that culture in their daily activities. A focused approach helps us align on the initiatives and ensure implementation throughout the regions . Anthony Huyghebaert Chief HR Ocer Barco Integrated report 2022 25 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX 1. Employee engagement 1.1 Measuring employee engagement using the Employee Net Promotor Score (E-NPS) In 2022, Barco launched an enhanced employee survey, including a specific E-NPS (Employee Net Promotor Score) question. Due to the dierent methodology, this score cannot be compared with previous surveys. The E-NPS survey resulted in a score of 16, which breeds into the category “good engage- ment”. With continued focus and actions on our employee engagement, our target is to bring this score above 30 “great engagement”. Engaged employees are involved in, enthusiastic about and committed to their work and their workplace – which drives the success of a business. That’s why Barco has always made big investments in employee engagement. During the 2020 and 2021 pandemic, the mandatory working from home regime made engagement a challenge. When employees returned to the workplace in 2022, we were all facing a new workplace reality. 16 Employee Net Promoter Score in 2022 What is a good NPS score? -100 0 30 70 NEEDS IMPROVEMENT 100 0 GOOD (0 - 30) GREAT (30 - 70) EXCELLENT (70 - 100) Barco Integrated report 2022 26 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX 1.2 Increasing focus on top-down and bottom-up communications We were happy to read that most colleagues feel respected in their jobs and praise our learning and development approach. There was, however, room for improvement in the fields of communications and strategy. People explicitly stated they wanted a clearer view on where Barco is going. These insights immediately led to a series of actions taken to make sure strategic information is cascaded down through the organization and ensure that our leaders are more visible, at all levels: • The quarterly townhall meetings, which we had been organizing for a while, remain a great way to inform our employees. It provides a stage for people from dierent regions and business units to share their vision and strategy and tell their stories. • All BUs now set up quarterly hands-on meetings to share their strategic objectives, priorities, contract wins, etc. • Blue-collar workers are invited to local team meetings to get a view on what’s happening at Barco. • A lot of local initiatives crop up to discuss particular topics. From ‘lean coee sessions’ and ‘world cafés’ to ‘engagement focus groups’, they all have the same objective: to inform our people so that they feel involved. 1.3 Fostering recognition and development More than strengthening communications, we introduced online LinkedIn Learning courses in 2022, on explicit request of the survey respondents. In addition, the portfolio of leader- ship training courses was expanded to make sure every Barco people manager knows how to inspire engagement. In the meantime, we are upgrading our performance review ses- sions in order to meet employees’ needs for more frequent feedback on their work. Barco India named a Great Place to Work ® for the third time For the third time in five years, the Great Place to Work Institute gave Barco India the title of ‘A Great Place to Work’. Considered the gold stan- dard for great workplaces, the title is awarded to companies that nurture an attractive, trust- worthy, innovative, and rewarding culture. Obtaining the certificate requires quite a bit of eort. More than a thorough and independent audit and a meticulous assessment process, anonymous employee feedback is taken into account too. No less than 90% of Barco India’s employees participated in this survey. This prestigious certification is an acknowl- edgement of our commitment to cultivating an environment and culture of pride, respect, camaraderie, equality, and credibility among our employees. The title helps us level up our employer branding in the tech sector so that we can attract and retain the very best talent. Barco Integrated report 2022 27 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX Number of iGemba improvement suggestions per operator 5.5 4.1 6.3 2020 2021 2022 2 1 6 4 5 3 Engaging operators through iGemba: operator-focused initiatives In 2010, Barco introduced the iGemba program: a unique ini- tiative that encourages employees to suggest improvement ideas in many domains, from quality and safety through to ergonomics and the environment. More than highlighting our commitment to continuous improvement, iGemba is also a great way to spur employee engagement in our factories and oces. While the covid-19 pandemic had slowed the pace of new improvement suggestions and operator-focused initiatives in 2020 and 2021, we saw a strong rebound in all our plants in 2022. A short overview: • In Noida (India), we re-introduced the reward & recognition ceremony and the iGemba scholarship. By honoring the most valuable employee-driven improvements (EDIs) during a ceremony and oering our employees scholarships for their children to thank them for the EDIs they propose, we managed to considerably raise the number of new improvement ideas. In addition, we initiated a closed-loop feedback process with the employees about their EDIs, explaining why we reject or select a particular idea and communicating about the progress. This way of working, which has already been implemented at other Barco sites, leads to more transparency and accountability. • In Suzhou (China), we focused on operator training in 2022. Training programs were developed for both new and existing operators and the acquired competences were summarized in a competence matrix. Every month, operators are invited to a meeting where they learn improvement methods and are encouraged to share improvement ideas within the group. The groundwork was laid in 2022 and the first fruits will be reaped in 2023. • In Belgium, too, we focused on engaging and involving operators. Here, we launched a pilot project with MTM- UAS, a tool to improve the workflows in the factory and, as such, operator working conditions. After an initial training, operators were asked to use the tool in their daily work so that it could map the processes and the average time needed for every operation. The insights are discussed with the operators during Gemba walks and will lead to improved workstations and processes. Operator involvement will help boost adoption of the new workstations and, as such, engagement of the entire teams. Barco Integrated report 2022 28 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX 2. Employee safety, health & wellbeing 2.1 Continuously improving employee safety As covid-19 was still around in most countries where we are active, we continued to mitigate its impact during 2022. In addition, each of the larger sites made an action plan to improve safety and employee wellbeing. A selection of key actions in 2022: • Standards@Work mandatory e-learning safety training, followed by 99% of all employees. • In our new site in Suzhou (China), June was safety month: throughout the month we organized activities on safety and hazard prevention: firefighting training, first-aid training, lectures on safety laws and regulations, etc.; • More safety audits in our Duluth site; • In-depth training for the emergency response teams in our Noida and Kortrijk sites. At Barco, we care about people. That’s why employee health, safety and wellbeing are part of our daily priorities and something we want to propagate on every level and at every site of our company. The Environment, Health, Safety and Security Pledge, which we launched many years ago and is signed by each of our VPs, is our guide on our journey towards a safer and healthier workspace. Beijing team pioneers with ISO 45001 certificate Our Beijing (China) team took a major ‘safety’ step forward by achieving ISO 45001 certifica- tion. Beijing Tai Yang Gong and Beijing Chang Ping are the very first Barco sites ever to achieve certification to the Occupational Health and Safety management system of ISO. The road to get there was long, yet successful. The team kicked o the preparations early 2022 and the entire organization worked diligently to get ready for the audit in July 2022. Their eorts paid o: the auditors found zero major non-conformances, confirming that the health and safety procedures and work instructions are fully in line with the ISO 45001 standard. Barco Integrated report 2022 29 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX Lost-time injury frequency rate explained Thanks to our continued focus on safety in the workplace, we managed to further reduce the lost-time injury frequency and severity rate in 2022. 2.2 Mental health and wellbeing The mental health of our employees is getting increasing atten- tion, and rightly so. We took various actions to promote mental health and wellbeing around the globe in 2022. Barco Noida (India) organized two sessions on stress manage- ment and a session on the impact of orthopedic problems on a person’s wellbeing. In Belgium, employees now have access to a psychosocial consult through our external medical oce. Every Barco employee can make use of this new service, on site and during working hours. In this way, we want to further reduce the threshold to discussing psychosocial problems with a professionally trained person (for both work-related and personal topics). 0.5 1.0 1.5 2.5 2.0 2020 2021 1.59 1.44 0.03 0.070.07 2.44 2022 Lost time injury frequency rate Lost time injury severity rate Lost time injury frequency rate Per 1,000,000 hours worked Lost time injury severity rate Per 1,000 hours worked Barco Integrated report 2022 30 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX 3.1 Preparing for the future: L&D Governance Board Barco has six dierent learning and development (L&D) gov- ernance boards: the Standards@work, Product Management & Marketing Excellence, Commercial Excellence, Innovation Excellence, Leadership & Organizational Development and Operational Excellence boards. Each board consists of several key Barco stakeholders and an executive sponsor. Together, they identify our business’ key strategic learning needs, translate these to relevant L&D programs and follow up on the progress. At Barco, we are dedicated to promoting and supporting employee development. Every year, we critically review our oering of training programs and development opportunities to continuously improve these. 3. Employee learning & development 3.2 Training in 2022: sessions to meet every role Throughout 2022, we organized general as well as more specific training sessions. In total, we provided 12,3 hours of training to 91% of our people, back to pre-pandemic levels. Specific training sessions included, amongst other: • While our business development managers were trained in consultative selling and solution selling approaches and skills, segment marketing and product managers received pragmatic marketing training sessions. • In Noida, we organized a local mentoring program to support our software developers to take ownership of their own development and maximize their potential. • In Taiwan, we trained colleagues on the principles of Lean and Agile. • We kept training our worldwide Sales & Services teams by giving them regular updates on key products as well on new products we launched into the market. Average training hours per employee # hours 11.3 10.5 12.3 2020 2021 2022 Barco Integrated report 2022 31 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX 3 4 1 2 6 5 8 7 10 11 12 13 9 3.3 Introducing new training formats: online and gamification In our April Employee Engagement survey, employees indicated that they want more online self-paced learning opportunities. To enable our colleagues to learn anytime, anywhere, and on any device, we launched LinkedIn Learning in May 2022. Everyone can now learn on the fly, whenever and wherever it suits them best, which greatly helps foster a culture of continuous learning. In September 2022, we launched the first module of a new series of Standards@work e-learning courses on safety in the form of a ‘gamified learning experience’. The goal is to fur- ther train our employees about all the Barco standards (ethics, cybersecurity, etc.) in a more animated, game-like environ- ment. In 2023, new courses will be added. 3.4 Leadership development At Barco, we believe that good leaders ensure engaged, moti- vated employees, good work and, as a result, good business. That’s why we invest big in leadership development. Global programs • The Barco Leadership Compass provides the worldwide framework of what we expect from our leaders in three domains: thought, people and results leadership. In 2022, we added one more domain: self-leadership, which is the core of our Leadership Compass. • Also in 2022, we redesigned the Business Leader Program which targets senior leadership. The program now includes three learning modules: leading self, leading others and leading change. 30+ global leaders participated in this program via our weConnnect learning platform. • Last but not least, a new global leadership development program kicked o in November 2022. Using a blended learning approach, the Management Enablement program aims at strengthening the people management skills of our people leaders. In a first phase, we covered the foundation, providing the participants with all the ins and outs of Barco as an organization, the ‘Barco story’, the Leadership Compass (people leader, thought leader and result leader) and the competences that go with it. Local programs In addition to the global programs, we also set up local or team-specific programs. STEP (Strategic Talent Empowerment Program), for example, is a China-specific talent development program for local management in the healthcare business units. In 2022, it helped 18 high-potential Chinese colleagues develop self-awareness, strategic thinking as well as leader- ship skills. During the STEP program, I learnt more about the Barco Leadership Compass and culture and how we can improve on working together towards a more collaborative and result-oriented team. Zoe Zhou Industrialization Project Leader Barco Integrated report 2022 32 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX 4. Diversity & inclusion Our Board of Directors set diversity and inclusion (D&I) as a priority in their meeting of September 2021. Next to the moral and social imperative to embrace diversity and inclusion, research clearly demonstrates the positive impact of D&I on a company’s financial performance, innovation and talent attraction and retention. 4.1 Integral part of our strategy In 2022, a dedicated workstream took up the assignment to work on D&I. They conducted extensive research on the topic with internal and external stakeholders, benchmarked data and organized several workshops with an ambassador team consisting of members from dierent leadership roles throughout the organization. The insights were analyzed and discussed and then summarized in a clear strategy and road- map with actionable and pragmatic initiatives. As a starting point, it was decided to embed D&I in our organi- zational DNA as part of our culture, rather than introduce it as a separate program. In this way, it will become fully integrated into the way we work together on a daily basis. An integrated strategy will help us achieve this objective. 4.2 Focus areas: gender, age and nationality The research clearly indicated the wish to concentrate our strategy on three diversity dimensions: gender, age and nationality. These three areas will be the focus of our initia- tives and actions, and the areas that we will closely monitor in the coming years. We will, of course, keep approaching diversity and inclusion in a broad sense, making sure to be as inclusive as possible from the start. Yet, a dedicated focus on specific dimensions helps to set out a pragmatic strategy. The strategic framework itself consists of three pillars repre- senting the employee experience and two enablers. In total, we have identified 10 leading targets and concrete initiatives to progress towards those targets between 2022 and 2025. Diversity by gender % of heads Diversity by age in 2022 % of heads Diversity by nationality in 2022 % women overall % women in senior management % women in Board 10% under 30 years 61% between 30 and 50 29% above 50 years 48 19%2022 16%2021 17%2020 50%2022 50%2021 29%2020 29%2022 27%2021 28%2020 Number of nationalities in the global workforce Barco Integrated report 2022 33 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX 4.3 D&I governance In order to implement our strategy and roll out D&I initiatives, we appointed a dedicated workstream lead, a workstream project manager and a CLT sponsor. Next to that, the ambassador group that helped us shape our strategy owns several initiatives and ensures that these get implemented. In addition, each leadership team includes diversity and inclusion champions to help us drive the agenda in the several BUs and functions. These champions are the D&I spokespeople. They develop specific BU or regional initiatives and follow up on the metrics. 4.4 Raising awareness as a first step In 2022, we launched the first initiatives, which mainly aim at raising awareness. Via an expert keynote, for example, col- leagues learned about unconscious bias and how to sensitize our teams to the need for an inclusive mindset and culture. A learning session taught us how to reinforce team collaboration across the regions. We now have a clear action plan outlined for the next three years that aims to push the needle forward to become more diverse and more inclusive at Barco. At Barco, we want to welcome dierences and embrace everyone’s uniqueness. It is when we start to recognize, accept and celebrate our dierences that we can truly grow and thrive. Lien Meuleman Program Lead D&I 4.5 Equal pay monitoring Barco values equality between men and women and believes this should be reflected in rewards. Our Job Grading Policy dictates that the salaries be based on a functional level and not assigned individually, ensuring that there is no material wage gap between women and men. Furthermore, promotions and new hires are a shared responsibility between the HR department and the managers. This extra pair of eyes watching over all processes is another sanity check for equal payment. Barco Integrated report 2022 34 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX 5. Labor practices & human rights Respect for human rights has always been a fundamental value for Barco. That is why we approach this topic in a structured and elaborate way. 5.1 Our commitments Human rights are the fundamental rights, freedoms and standards of treatment to which all people are entitled. Barco commits to manage and respect human rights in its own operations as well as in the value chain in accordance with the internationally recognized human rights contained in the following standards and conventions: 1. The Universal Declaration of Human Rights 2. The International Labor Organization’s (ILO) Declaration on Fundamental Principles and Rights at Work, and the ILO eight fundamental labor conventions 3. The UN Guiding Principles on Business and Human Rights 4. The OECD Guidelines for Multinational Enterprises The full text of our human rights pledge is available on our website 5.2 Identifying salient risks in our own operations In 2021, Barco identified three salient human right risks in its own operations: discrimination, protection of identity and non-retaliation, and emergency preparedness. In 2022, we continued working on this, adding performance indicators and assigning ownership for following up on these indicators. Discrimination In line with Barco’s Code of Ethics, we aim to provide chal- lenging, meaningful, and rewarding opportunities for personal and professional growth to everyone regardless of gender, race, ethnicity, religion, sexual orientation, age, pregnancy, national origin, marital status or disability or any other char- acteristic unrelated to Barco’s legitimate business interests. The Compliance function is accountable for following up and reporting on the number of discrimination cases reported in the new whistleblower tool for all ourstakeholders (as of 2023). Protection of identity and non-retaliation Employees can report requests for ethical guidance and reports of violations or suspected violations to the Ethics Committee via the Ethics Point: [email protected], knowing that all enquiries and reporting will be handled confidentially. The person who receives the report or request is responsible for keeping the identity of the reporter or requester confi- dential at all stages of the process. Barco will not retaliate against anyone who, in good faith, notifies us of a violation or potential violation of Barco’s Ethics Code, nor will we tolerate any intimidation of anybody who reports such a violation. The Legal Council (or delegate) is accountable for following up the number of retaliation cases reported in the new whistleblower tool and reporting. Emergency preparedness We are committed to providing a safe and healthy work envi- ronment wherever we do business. In addition, we provide our employees with the appropriate resources (time, tools, processes, training programs) to carry out their responsibilities in a safe and healthy way – both on company premises and on the premises of business partners, as explicitly stated in our Code of Ethics. Performance is checked in the yearly evalua- tion as part of the site profile risk scan done by the Corporate Risk Manager. In 2022, 87% of the sites has performed an emergency evacuation exercise. 5.3 Grievance mechanism Our employees can report any case of human rights violation to [email protected]. Every case is investigated diligently. A remediation procedure in line with national legislation is fore- seen, if applicable. The grievance mechanism will be adjusted to ensure compliance with the EU directive nr. 2019/1937 on the protection of persons who report breaches of Union law (‘Whistleblowers Directive’) upon its implementation in the EU member states. Read the Ethics & compliance chapter of this report for more information. Barco Integrated report 2022 35 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX Our targets Our ambition We will play an active role in the communities we operate in by upholding the highest ethical and quality standards and expecting the same from our business partners. We always aim to deliver added value to our customers through our solutions, services and capabilities. In addition, we help ensure more people can participate in and benefit from Barco’s innovation. Primary targets Supporting targets . Always act lawfully, ethically and with integrity wherever we operate Each year, train all our employees in Standards@Work . Deliver great customer experience By , we aim to increase our global Net Promoter Score by points per year. 3. Proactively manage information security risks By , obtain an average cybersecurity maturity (NIST CSF) score of at least . Each year, add at least one new product line to the scope of the ISO certificate 4. Engage our suppliers in adopting sus- tainable business practices By , have suppliers covering at least % of our production spend scored on their sustainability performance By , enroll all suppliers with sustainability score < % in improvement plan Each year, at least % of our production spend is covered by suppliers undersigning Barco’s supplier Code of Conduct Each year, % of new production suppliers are screened on sustainability by self-assessment Communities The full list of community related KPIs can be found in the Integrated Data Pack. Barco Integrated report 2022 36 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX Our roadmap towards sustainable impact: key initiatives and action plans 1. Customer engagement At Barco, “We think with the customer”. In order to become a truly customer-centric organization, we switched to an omni-channel listening approach in 2022: we gather feedback in every step of the customer journey, via a multitude of channels. This feedback enables us to improve our operations continuously, in a pragmatic and proactive way. 1.1 Customer focus: solid foundations Since the first customer satisfaction measurements in 2018, Barco has been moving forward to reach a mature customer experience management model. Our core customer journey programs have enabled us to develop a series of initiatives to track customer experience: • In our customer journey dashboard, we monitor a number of KPIs on a monthly basis. These are both internal and external ones, such as response time of our support teams, order confirmation lead times, and satisfaction of the Barco website. • On a quarterly basis, we calculate our relational Net Promoter Score (NPS). This survey tracks how healthy the relationship with our customers and partners is, and drives strategic improvement actions. • Since 2021, we have been mapping specific digital touchpoints. Through this exercise, we can create digital journeys that are easy to navigate for our customers. 1.2 Customer focus at Barco keeps growing: 2022 and 2023 initiatives In 2022, we took the next step in our customer engagement initiatives: • We launched a new omni-channel listening program, which enables us to gather customer feedback along the entire customer journey, via every possible channel. With this approach, we can track the customer experience directly as it evolves after each interaction with Barco, so we can take the necessary actions at the right time and place, by the right person and in the right way. • The feedback from our website satisfaction measurement is extremely useful for a second big initiative in 2022: building our new corporate website to improve communications with (potential) customers. We actively involved customers and partners to test the concept of our new website. Their voice drove the decisions we made regarding the new website’s architecture. As a result, we are looking forward to a very performant website with a user-centric, simple and clear navigation. Coming soon, in the spring of 2023. • Our after-sales service organization launched several projects to improve the overall service process flows at Barco: - In 2022, we launched a new service portal and conducted a pilot with a chatbot, which will provide ready answers to our website visitors. We organized trainings for customers and partners on the use of the new e-portal as well. - The service team worked out a series of new workflows. Their goal was to efficiently handle the number of incoming calls, ensure more first-time-right installations and follow up logistics more closely with customers. In 2023, we will continue the initiatives started in 2022, with a focus on digital transformation and automation of our processes: • Further expand our digital and oine listening points; • Shorten the time between interaction and customer feedback; • Shorten the time between feedback and action planning; • Clearly map who is responsible for solving specific issues. Barco Integrated report 2022 37 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX 1.3 How employee engagement plays a key role in customer satisfaction Each instance of feedback we receive through our surveys helps us to improve our operations. But we don’t leave the people that sent this feedback to us unanswered either, and developed a consistent ‘closing the loop’ process. When dissatisfied customers (detractors) reply to our survey, we investigate the situation and reach out with a communication to clarify and solve the situation. We also inform them that their message has resulted in improvement actions from our side. In this way, we strive to convert dissatisfied customers and partners into promotors again. of detractors were turned into promo- tors in Q4 of 2022, against 3% in Q4 2021 The success of this flow is dependent on employee engage- ment. Therefore, we actively build awareness of the impact that the ‘customer-first’ approach has. We regularly and repeat- edly train our teams across Barco on how to eectively close the loop, communicate with customers and appreciate their input as the essential factor of our growth. In 2022, we also actively praised and celebrated teams and individuals that contributed to successful customer stories. In 2022, Barco achieved an NPS score of 44, a decline of 3 points versus the previous year. This is mainly related to the component shortages in the market which Barco has been fac- ing throughout the year, with longer lead times and impacting post-sales service. The NPS scores were mostly flat versus last year in Europe and China, while Americas and the rest of Asia showed a decrease. A score above 50 is considered excellent and that is also where we want to steer the company’s rating. Besides our high product quality and strong brand, our cus- tomers and partners describe our employees and their friendly, professional approach as one of Barco’s strengths. 11% Customer Net Promoter Score (relationship NPS) 47 47 44 2020 2021 2022 20 10 40 50 30 Improving the customer experience of Barco’s leads The earliest stages of a collaboration with new cus- tomers cannot be neglected/underestimated. In fact, a customer’s first impression is a key moment of brand satisfaction. That’s why our Inside Sales team enhances engagement of brand-new custom- ers thanks to automated feedback flows. By integrating our marketing technologies and bringing automated listening channels to life in 2022, our Inside Sales team now gets outside-in information from our leads at the right time, so they can immediately act on the findings. By gaining feedback in the inquiry phase already, we make sure that our end users are satisfied with how our teams and partners handle their interest in Barco products. In many cases, the first human interaction with our customers is through Inside Sales. Being able to measure the customer journey through satisfaction scores allows us to finetune our processes and strengthen our customer relationships in an ever-shifting business environment. Erik Forrez Inside Sales Manager, Global Marketing Barco Integrated report 2022 38 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX 1.4 Barco business units cherish customer engagement In addition to the global initiatives, various projects in each of our business units also encouraged customer engagement in 2022. The Meeting Experience team, for example, took customer engagement to the next level for their ClickShare as well as weConnect solutions: • The ClickShare team invited customers to the beta testing of their ‘smart meeting flows’. In addition, they organized consultant councils to capture and discuss market insights. The ClickShare app includes a ‘star rating feature’, which provides us with immediate feedback from ClickShare users, and shows us where in the journey users experienced problems. • 2022 was a breakthrough year for the weConnect experience approach. To meet – or exceed – customer expectations, the team completely rethought the customer journey for the weConnect SaaS solution. From the initial awareness presentation through to the entire sales process, site preparation, installation, tech support, training, adoption, quarterly review outreach, and most importantly, securing of ongoing renewals. Moreover, the weConnect team reviewed their customer success management structure, in order to secure eective customer onboarding and provide guidance for leveraging weConnect features to our existing customers. Feedback from product users is now regularly fed into the weConnect prod- uct development roadmap. All customers who have ideas on how to improve the weConnect experience can join the weConnect early feedback program and participate in future developments. In 2022, Barco and our customer iMEP/Nipro won an LTEN award for “enabling remote learning and interactivity for med- ical training”. Putting the customer at the center of everything we do, in product development, marketing, sales, etc. is essential for being successful in any business, but even more in the software business. We must go beyond just selling our products and provide customers with solutions to their problems. Rethinking the customer journey from scratch and working on the customers’ KPIs (rather than Barco’s KPIs) was and still is a dicult exercise that has to get embedded in our Barco DNA... Yet, I am convinced that we are on the right track. Simone Hammer Global Head of Marketing, weConnect Barco Integrated report 2022 39 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX 2.1 Product quality Barco aims to oer products and solutions that ensure top quality over their entire lifetimes. While Barco has always been considered an A brand that delivers quality, we want to continuously raise the bar in order to consistently meet and even exceed customers’ quality expectations. That commit- ment is strongly expressed in our global quality policy. Quality management system The drive to realize our quality policy and ensure that every product – hardware and software – that we launch is of the highest quality, is ingrained in a company-wide quality man- agement system. This system defines the standard Barco processes – from product planning, design and development, manufacturing and sales all the way to customer service. One of the key aspects of the system is the definition of clear roles and responsibilities and the authority of those responsible for product quality throughout the entire product life cycle. 2. Product quality, safety & security Barco’s quality management system is audited annually and certified according to international certification standards: • ISO 9001 quality management system (for Barco sites in US, Germany, India, Italy, China, Norway, Taiwan, Melbourne and Belgium); • ISO 13485 quality management system specifically for the medical device industry (for Barco sites in US, China, Belgium, Italy and South Korea). Quality organization Our commitment to quality and customer satisfaction is also reflected in our quality organizational structure. Each busi- ness unit has dedicated quality assurance responsibles who supervise process and product quality. In close collaboration with the business unit management teams, they monitor qual- ity-related indicators and spearhead improvement initiatives. Together with the quality responsibles assigned to each manu- facturing plant and the supplier quality responsibles, they form a team that is committed to continuously improving product quality for all our customers. In addition, a dedicated Quality Management System team ensures that our processes remain compliant with the ISO9001 and ISO13485 requirements. Quality by design The sustained product quality levels are a result of Barco’s standardized product design processes, focusing on: • Compliance with the applicable standards, laws and regulations, even exceeding them; • ‘Security by design principle’ to ensure protection against the rising number of cyberattacks; • Agile software development principles to ensure that high- quality software is delivered at the right cadence; • Close monitoring of key product quality indicators during the dierent design stages; • Early and automated product integration and validation; • Reliable and mature supplier management and manu- facturing processes. Read more on our innovation and product development approach in the Core section of this report As a high-tech company, we have a duty to ensure our customers that the products we develop and bring into the world are high-quality, safe and secure. Barco Integrated report 2022 40 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX Closing the loop The quality journey continues after product launch through a set of dierent processes and initiatives to integrate feedback into existing and new products, including: • iGemba initiatives initiated by employees to raise product quality; • The monitoring of customer feedback and satisfaction by the divisional and regional service team; • Regular cross-functional quality meetings between quality, R&D, procurement and service to monitor and assess product quality indicators. When needed, improvement activities are initiated in response to quality-related issues; • Process execution monitoring through a yearly internal audit program; • A monthly quality dashboard visualizing overall quality performance and customer feedback. Main achievements of 2022 • Successfully passing a global multisite ISO9001 recertification; • Successfully completing the transfer of the US, Belgian, Korean and Chinese sites to our first ISO13485 multisite certificate; • Further transition of the medical devices to the new EU medical device regulation (MDR); • Launch of quality improvement programs to strengthen the early focus on product quality during the design phase, harmonize product certification and speed up the customer feedback loop. 2.2 Product safety A continued focus on product safety In the past few years, Barco set up a major program to ensure that our complete active product database complies with the hazard-based safety standard, which covers an integrated way of assessing joint functionalities and risks of existing and innovative technologies. Various countries in the far East and near East regions are now transitioning to this product safety standard. Testing and recertification for those regions is done to provide our overseas customers with the required coun- try-specific product safety marks. At the same time, the EU is adopting an upgrade of this safety standard. Again, Barco has set up a re-certification program to reflect compliance with the update. The Brexit has impacted Barco’s certification scope as the CE marking will no longer be accepted in the UK. Although the UK announced a delay from 31.12.2022 to 31.12.2024, we are ready to ship all our products in scope of the UKCA marking with this required certification mark from 2023 onward. Interference as a safety issue Any product that functions thanks to electrical currents, emits and is susceptible to electromagnetic interference. While radio frequency signals that are surrounding us go up in frequency range, so is the need for our products to be immune to sus- ceptibility in these higher frequency ranges. Proper functioning of the product and its safeguards needs to be ensured and propagation of unwanted signals should be blocked. Barco therefore started testing its newly developed products accord- ing to the relevant international immunity standard before the implementation date and we finished testing the active product list accordingly. None of the products showed susceptibility for the higher test limits of EN 55035. Safety throughout the product lifecycle As early as the concept and prototyping phase, we review the applicable safety standards. The result of this review is a list of requirements for critical components, suppliers, product design, use cases, manufacturing, obsolescence and compo- nent change management. Throughout all product lifecycle stages, our product safety engineers provide necessary input and execute tests against the applicable standards in our company lab, according to the ISO17025 standard for test laboratories. The assessment is successful only when the product passes each requirement and the test reports are approved by our external certification partners. Therefore, we CE-label our products with the support of a third-party certification mark such as CEBEC 1 or DEMKO. 2 As long as our products are manufactured and/or sold, we ensure compliance with updated and applicable standards and requirements. During that time, reports and certification marks serve as proof that our products adhere to the latest iterations of continuously evolving safety standards. 1 CEBEC: The CEBEC-mark is a Belgian safety certification mark for low voltage electrical products. 2 DEMKO, initially established as Denmark’s Electrical Equipment Control and one of the founding members of the CENELEC Certification Agreement (CCA) Scheme, for the mutual acceptance of test results between European countries. Barco Integrated report 2022 41 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX Production process safety The activities of our in-house safety lab also support product safety protocols regarding production processes. Procedures concerning the control of nonconformity and corrective and preventive actions are in place, thus meeting one of the requirements of the ISO9001 certification that we hold. Our employees are continuously trained on safety aspects of the new technologies that Barco uses in its products, as well as on changing regulatory requirements. Market surveillance activities from governments Market surveillance is the activity carried out by government agencies to ensure that products placed on their markets comply with their regulations – and are sure not to endan- ger consumers and/or workers. The representatives of these agencies ask for proof of compliance with the applicable reg- ulations by means of review checks (on the TCF (Technical Construction File) in general: certificates, manuals, product and box labels, test reports, ...). Non-compliance may result in actions such as product withdrawals, recalls and bans of products in a specific country or region. Barco products were selected for surveillance in three countries (Germany, China & Mexico) during 2022. None of the surveillance checks showed any non-conformities. 2.3 Product security Cybercrime continues to increase, which forces organizations to implement strict information security governance processes. Barco has a clear commitment to delivering secure products and services to its customers. Our product security architects and engineers manage product security. In 2022, they took the following actions to strengthen the security of our products and services: • Maintain a product security roadmap In close cooperation with Barco’s Security Oce, product security architects and engineers updated Barco’s product security roadmap in line with new external factors like market requirements and cybersecurity regulations. The roadmap governs dierent domains where security is crucial: compliance and regulation, the development lifecycle, operational security, sales support, tooling, training, … This roadmap is Barco’s internal compass to ensuring that product security focuses on the right domains. • ISO27001 certification The current ISO27001 certification scope, which includes ClickShare and XMS, its cloud management platform, is properly maintained, which guarantees continuous improvement. Extensions to other product lines have been prepared with the aim of extending the scope in 2023, as Covid-19 caused a delay in the certification process. This demonstrates a clear commitment to continuously extending the scope of Barco’s ISO27001 certification throughout the next years. • Secure development Barco continues to focus on maturing the secure software development lifecycle (SDLC). Measuring the adoption maturity of the SDLC provides insights that help identify opportunities for improvement. • Training The full R&D community followed technical cybersecurity training tailored to their day-to-day job content and domains of expertise. • Public Key Infrastructure (PKI) for Barco devices Barco devices installed on customers’ premises get more and more connected. To ensure that all these devices receive a maintainable Barco identity, we updated and extended the PKI infrastructure for device certificates to enable renewal and revocation capabilities in the future. • Cloud infrastructure The cloud infrastructure in which Barco’s product-related services are run was strengthened to improve application- level filtering and patching. Our corporate website includes a responsible disclosure policy, which provides customers and security researchers with clear guidelines on how to reach out to us about security vulner- abilities detected in our products. The feedback is carefully handled using a risk-based approach by our product security incident response team (PSIRT). In 2022, we received 289 noti- fications about potential vulnerabilities (including duplicates) in products or services, reported by customers, ethical hackers and third-party pen-testers contracted by Barco. Number of incidents of non-compliance regarding the health and safety impacts of products and services Barco Integrated report 2022 42 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX In order to meet our customers’ expectations for high-quality, innovative products, we rely on service and manufacturing partners from around the world. Sustainability is an inherent part of our global procurement mission and strategy: together with our partners, we continue to drive responsible and ethical behavior and high standards across our supply chain. 3.1 Procurement sustainability policy Barco has outlined its sustainability commitments in a pro- curement sustainability policy, which describes how we want to collaborate with our suppliers in a responsible way: respect international Human Rights and Labor regulations, meet prod- uct compliance requirements, select and evaluate suppliers in a fair way, raising awareness on the importance of sustain- ability,... The policy will be made available on our website and shared with all our suppliers in 2023. 3. Supply chain responsibility 3.2 Barco’s supply base At Barco, we buy a wide range of components, from plas- tics, optical parts and assemblies, electronic components and sheet metal to finished products, from many dierent suppliers located in many dierent countries. As we deal with many suppliers, we have categorized them into four categories (key, key+, core and other) based upon supply risk and cost relevance to Barco. The categorization enables us to define a targeted scope and supplier management activities. For each category, we have established dierent levels of engagement. “Major suppliers” cover the key, key+ and core categories. 2022: an ongoing eort to increase supply chain resilience Barco continues to strengthen supplier resilience, given the current dynamics in geopolitical and economic circumstances, including ongoing lockdowns. We keep mitigating these impacts in close cooperation with our suppliers through an agile and proactive approach. In 2022, we invested in an online, real-time risk management tool that will increase the transparency of risks in our supply chain and allow us to proactively mitigate these risks. In 2022 Barco had 159 major suppliers, covering 87% of our total production spend compared to 144 major suppliers with a 84% coverage in 2021. The regional spread of that spend was 61% in APAC, 30% in EU and 9% in the rest of the world. 87% 159 suppliers APAC: 61% EU: 30% Rest of the world: 9% Barco Integrated report 2022 43 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX 83% 83% 84% 2020 2021 2022 Responsible Minerals Sourcing policy Managing conflict minerals is part of Barco’s corporate respon- sibility. Just like many of our stakeholders, we are concerned about human rights violations in dierent forms (child labor, human-tracking, forced labor etc.) as well as armed conflicts causing extreme violence across so-called ‘Conflict-Aected and High-Risk Areas’ (CAHRAs). We recognize the risk related to illegal extraction and trade of materials such as tin, tungsten, tantalum, gold and cobalt. 3.3 Setting clear standards for our suppliers The key to a high-standard supply chain is ensuring that our suppliers know our expectations, including those in the field of sustainability. We adhere to three important sustain- ability standards: the Barco Code of Conduct for suppliers, the Product Compliance requirements and the Responsible Minerals Sourcing policy. Barco Code of Conduct for suppliers We require all our suppliers to comply with the Responsible Business Alliance (RBA) code of Conduct, including labor, eth- ics and health and safety standards. The share of major suppliers who have committed to the Barco Code of Conduct for suppliers or have a similar code, is tracked as a monthly KPI in the Global Procurement dashboard. At the end of 2022, 84% of our production spend was covered by a signed declaration of compliance with the Barco Code of Conduct for suppliers. Product Compliance requirements Every component that our suppliers deliver must comply with the Barco Product Compliance requirements, which includes compliance with dierent worldwide regulations (such as RoHS10 and REACH, ecodesign requirements, WEEE, SCIP), industry standards and additional criteria that we defined. Within the Barco product compliance requirements, we also demand compliance with the Barco substance list, in which we restrict the use of specific chemicals or require declaration of specific substances. With the implementation of this list, we go beyond current legislation. We urge our suppliers to provide Full Material Disclosures (FMDs) of chemical substances contained in products. In 2022, 83.6% of active components were covered by FMDs. Our Responsible Minerals Sourcing policy is aligned with the ‘OECD Due Diligence Guidance for Responsible Chains of Minerals from Conflict-Aected and High-Risk Areas’. Our in-scope suppliers (i.e. suppliers of products containing tin, tungsten, tantalum, gold or cobalt) are expected to complete the Conflict Minerals Reporting Template (CMRT) and submit it to Barco. In 2022, 100% of in-scope suppliers responded to the CMRT. We perform a detailed responsible minerals risk analysis on the data received through cross referencing and close collabora- tion with members of the Responsible Minerals Initiative (RMI). % of production spend covered by signed Code of Conduct for suppliers YEARLY TARGET: % 75 100 25 50 * Restriction of Hazardous Substances (RoHS); Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH), Waste of Electric and Electrical Equipment (WEEE), Secure Communications Interoperability Performance (SCIP) 100% 100% of in-scope suppliers responded to the CMRT Barco Integrated report 2022 44 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX 3.4 Embedding sustainability in the procurement process We encourage our suppliers to share our values and expect them to meet our mandatory ethical, labor and environmental standards. In order to ensure the level of engagement required, we have integrated sustainability into every step of the pro- curement process. A. Supplier scouting The supplier self-assessment document includes sustainabil- ity-related questions, which are reviewed and form the basis for open discussions when a gap between supplier behavior and our expectations is detected at first glance. Also in 2022, 100% of new production suppliers were screened using the supplier self-assessment. B. Supplier onboarding In 2020, more sustainability criteria were added to the new supplier selection report for new component suppliers. We continued to use these criteria to increase awareness on sus- tainability during the onboarding process. All potential production suppliers All key+ & core suppliers All major suppliers Supplier self assessment document including sustainability questions Supplier Performance Review including sustainability score Webinars and e-learnings Supplier innovation days SCOUTING ONBOARDING PURCHASE CAPACITY BUILDING PERFORMANCE MONITORING Embedding sustainability in the procurement process New critical production suppliers All suppliers New supplier selection report including mandatory sustainability criteria Terms & conditions of purchase including sustainability clause (all purchase orders) Contract including sustainability clause (for important spends) SCOPETOOLS C. Purchase contracts Sustainability clauses are part of Barco’s terms and conditions (T&Cs) for purchase as well as our master supply agreements (MSAs) (i.e. contracts with major suppliers). In 2022, 84% of production spend was covered by signed contracts with a sustainability clause, i.e. signed MSAs or T&Cs. Barco Integrated report 2022 45 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX D. Supplier performance monitoring In the annual performance review, suppliers are scored on their performance in sustainability domains such as prod- uct compliance requirements, adherence to Barco’s Code of Conduct and transparency (the provision of CMRTs and FMDs). Suppliers are encouraged to proactively share their progress regarding sustainability in their operations and supply chains, and to share innovations that could help us improve the sustainability impact of our products. In 2022, suppliers covering 71% of our production spend were scored on their sustainability performance. It ‘s a big step for - ward and is head start to achieve the target of 70% we set for 2023. Barco also performs audits at existing as well as new suppli- ers. These audits currently focus on quality, checking quality compliance and assessing process risks that could result in quality defects. In 2022, 37 supplier audits were performed. There were less onsite audits performed compared to 2021 as we were forced to push a number of the audits due to Covid- 19 restrictions set by local governments or by management of the suppliers as most audits are conducted in Asia. These audits are rescheduled to early 2023. E. Supplier training and awareness To ensure that our suppliers understand our sustainability standards and learn how to act upon them, we train them and inform them about developments in several sustainability domains, such as environmental compliance, ecodesign and conflict minerals. % of production spend covered by supplier sustainability score TARGET : % 44% 58% 71% 2021 2020 2022 60 20 40 Number of supplier quality audits # 35 41 37 2020 2021 2022 20 30 10 40 3.5 Training our sta Just like in 2021, we organized a dedicated training course for all commodity procurement executives worldwide in 2022. The training focused on how to coach suppliers in improving environmental compliance data and providing IPC/FMD data. 3.6 Plans for 2023 and beyond In 2023, we will continue our journey from awareness to cooperative improvement of our suppliers’ sustainability performance. Our ambition is to upgrade our supplier sustainability pro- gram to an advanced level, as defined in our sustainability roadmap. We will also tune our actions in order to be compli- ant with the European Due Diligence Act and provide further information to our suppliers. Barco Integrated report 2022 46 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX Getting ready for the Corporate Sustainability Due Diligence process Keeping up with sustainability laws and regulations is all about anticipating. That’s why Barco participated in a learning network organized by employer federation Agoria and set up its own pilot project to prepare for the Corporate Sustainability Due Diligence (CSDD) process, which is expected to take place in 2025. Sophie De Smul, Supplier Quality Assurance at Barco, elaborates on our approach. What is a Corporate Sustainability Due Diligence? In February 2022, the European Commission adopted a proposal for a Directive on Corporate Sustainability Due Diligence. Companies will be obliged to identify, end, prevent, mitigate and account for violations of human rights and environmental impacts in their own opera- tions, but also in those of their subsidiaries and suppliers. Whether the entire value chain or just the supply chain will be taken into account is still being discussed, but it’s obvious that the new legislation will have a serious impact on how companies shape their sustainability strategies and implement actions to reach their goals. Valuable workshops To map the consequences of the CSDD, Belgian employer federation Agoria invited a dozen of leading technology companies to a learning network. “In a cou- ple of workshops, we explored which place the new legislation will take in companies’ ecosystems of sustain- ability initiatives,” explains Sophie De Smul. “We looked at what we’re already doing to comply to the CSDD and identified the gaps in our procedures. Barco is certainly not lagging behind compared to other companies, but there’s definitely room for improvement to be entirely ready for CSDD introduction.” Enlightening pilot project “After the workshops, we decided to take further action by setting up our own pilot project in cooperation with the University of Leuven,” Sophie continues. “We went through the entire due diligence cycle of identifying, addressing, monitoring and reporting risks in our supply chain. One thing we learned is that the parameter set we used isn’t reliable yet: high-risk suppliers identified by the test all operate in the same market and sector. That means we’ll have to add more parameters to the mix to get a more comprehensive view of our suppliers and perform on-site audits to see if a supplier really poses a threat.” Concrete next steps The learning network and pilot project left us with some concrete next steps for 2023. Sophie: “We’ll gather and integrate a larger amount of data in our enterprise secu- rity risk management tool to analyze and visualize our supply chain risks. Another challenge is deciding how to deal with high-risk suppliers. Regarding the quality of our suppliers’ products, we have fixed escalation scores which are linked to pre-defined measures. We’ll have to develop a similar approach for sustainability risks. Defining KPIs and deciding on how to report them is another question we’re facing. And the list goes on. It will be an uphill task, but we’re doing everything to succeed.” Talking with other companies about their sustainability strategies and actions was a real eye-opener. Our challenges, such as gathering fragmented data, are quite similar. The CSDD pilot project will help Barco approach these challenges in the most eective way. Sophie De Smul Supplier Quality Assurance Barco Integrated report 2022 47 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX 4.1 Corporate security Barco adopted a security organization that operates along three lines of defense. The first line of defense is operational security (e.g. own and manage operational risk). The second line of defense is managed by Barco’s Security Oce (e.g. the cybersecurity program) and the third line of defense is the cybersecurity audit (e.g. risk assurance). Highlights in 2022 included: 1. Continuously increasing our security maturity level in accordance with the cybersecurity roadmap by focusing on people, process and technology; 2. Embedding security-by-design into new projects and initiatives; 3. Providing additional cybersecurity awareness training among employees, with new e-learnings and phishing simulations; 4. Further maturing the security and privacy evaluation framework for third parties in close collaboration with the DPO oce; 5. Contributing to the Product Security Roadmap in collaboration with the first line of defense; 6. Preparing ISO 27001 scope extension, adding one more product line to the scope. 4. Corporate security and data protection Number of product lines in scope of ISO 27001 TARGET: + YEARLY 2 2 2 2020 2021 2022 3 4 1 2 5 Average cybersecurity maturity score NIST CSF TARGET : . 2020 2021 2022 2.19 2.23 2.66 2.66 Our security maturity score increased from 2.23 to 2.66 in 2022 (NIST CSF), thanks to all the initiatives described above. By the end of 2025 we aim to improve that score to 3.4. * NIST: National Institute of Standards and Technology ; CSF: Cybersecurity Framework As the world faces an ever-changing threat landscape, Barco continues its focus on corporate security. 0.5 1 1.5 2 2.5 3 Barco Integrated report 2022 48 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX 4.2 Data governance and data protection Barco prioritizes the protection and management of personal data in accordance with GDPR and similar data privacy and data protection legislations outside the EU; e.g., the US HIPAA, the UK General Data Protection Regulation, the California Consumer Privacy Act. Our intragroup data transfer agree- ment sets the standards and principles that Barco legal entities must apply when processing personal data about individuals subject to GDPR. Our data protection ocer (DPO) is in charge of managing our data protection compliance program, which is governed by several guidelines, instructions and templates. A team of privacy liaison ocers (the legal & compliance responsibles, security & privacy champions and regional knowledge owners) support the DPO by overseeing and ensuring compliance with the GDPR on a day-to-day basis at a local level. In 2022, Barco installed a DPO oce, which works in close cooperation with our Security Oce. Our internal audit department supports the DPO to facilitate GDPR compliance with independent assessments and reporting on the eective- ness of implemented measures through the testing of controls as defined in the internal audit plan. Number of data / GDPR / privacy incidents reported to data protection authorities Highlights in 2022 included: • Further implementation of our retention policy; • Updating our personal data breach handling; • Kick-o of an internal workflow system to deal with data subject right’s requests; • Conducting security and privacy assessments of new third- party cloud service providers and making sure to have data processing agreements in place with third-party cloud service providers that are involved in the processing of personal data on behalf of Barco; • Creating and giving a ‘data protection by design training’ to Barco employees involved in product and software development. * US HIPAA: is the Health Insurance Portability and Accountability Act of 1996 Barco Integrated report 2022 49 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX Good financial performance does not conflict with high ethical standards. Barco’s reputation and continued success depend on the conduct of our employees as well as our business partners. That’s why we put great emphasis on building a company culture in which ethical conduct and compliance with Barco’s policies and the applicable regulations are at the core of how we do business. 5.1 Building a true ethics and compliance culture We have deployed a structured, company-wide compliance program, based on our Code of Ethics, which outlines the basic principles of compliant and ethical behavior when dealing with colleagues, business partners, company assets, information, infrastructure, etc. Every manager is required to sign o on the Code of Ethics annually. In addition, every Barco site worldwide has a ‘local legal & compliance responsible’ who is in charge of overlooking compliance in the country where the site is situated. Every year, the local legal and compliance responsible completes a risk and compliance assessment, which is an integral part of our compliance program. 5. Ethics and compliance 5.2 Compliance awareness actions To raise awareness about the Code of Ethics, we undertake several initiatives. For example, almost half of our white-col- lar workers participate in the Compliance Challenge, a live quiz organized in all our sites across the world. Every year, the compliance ocer updates all Barco employees on rele- vant compliance topics. To target a broad audience, the 2022 update was distributed as a video message instead of a letter. The topic of compliance is part of the monthly onboarding sessions for new employees. After two consecutive silver medals, Cinionic was happy to claim the cup of the 7 th Compliance Challenge.. Data Protection Quality Ethics Safety Sustainability Cybersecurity Continuous improvement Data Protection Quality Ethics Safety Sustainability Cybersecurity Continuous improvement Barco Integrated report 2022 50 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX 5.3 Global compliance team In 2022, the compliance team welcomed a risk & compli- ance ocer who assists the global compliance manager with monitoring the company’s compliance program. Due to the Ukrainian-Russian conflict, much of the team’s focus was on implementing the trade sanctions imposed by various coun- tries, including a rigid product and end-use screening system to ensure compliance therewith. 5.4 Company-wide Standards@Work training To boost awareness and know-how on compliance-related issues among Barco employees, we set up Standards@Work, a company-wide training program hosted by Barco University, our in-house training and development center. The program includes e-learning courses covering cybersecurity, data protection, sustainability, quality, safety, ethics and contin- uous improvement. In addition, we organize more in-depth Standards@Work trainings on topics like anti-corruption, com- petition, data protection by design and healthcare regulatory compliance for designated employees. In 2022, a course on confidentiality was added to the basic Standards&Work program. The format of the trainings changed too: to make the courses more appealing, we restructured them as games centered around the dierent stages of our product cycle (‘Design & Development’, ‘Manufacturing’, ‘Go-to-Market’, and ‘Customer Care’). We hope this gamified learning experience will further raise participation levels – as we aim to achieve a 100% participation rate. Barco actively follows up on employees with overdue learning assignments. % employees trained in Standards@Work (white collars) YEARLY TARGET: % 98% 99% 99% 2020 2021 2022 60 80 20 40 100 Barco Integrated report 2022 51 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX 5.6 Governmental investigations Since Barco conducts business across the world, our opera- tions are scrutinized by governmental authorities in dierent countries from time to time. Below we indicate pending and ongoing investigations to the best of our knowledge. • In India, the Directorate of Revenue Intelligence investigated the export of components from our factory, allegedly within the scope of the Indian SCOMET export regulations that make an export license mandatory. In the spring of 2022, the Principal Commissioner of Noida Customs Commissionerate imposed a fine on Barco Electronic Systems Pvt Ltd. and four of its employees for failing to comply with the export regulations. Barco Electronic Systems Pvt Ltd. and the employees involved have appealed this decision before the Customs, Excise & Service Tax Appellate Tribunal. The appeal is pending before the tribunal. • In China, Barco Visual (Beijing) Electronics Co., Ltd. was fined by the Changping Market Supervision Bureau for a social media post that highlights the supply of four projectors to the Beijing 2022 Winter Olympics. 5.5 Promoting a ‘speak up’ culture Barco wants to actively promote a genuine ‘speak up’ culture where ethical questions or dilemmas can be raised without fear of retaliation. Employees who have questions or want to raise concerns or issues can do so via several channels. Their direct supervisor or HR business partner is the first line of con- tact. In addition, any employee can reach out to a member of the Legal, Audit, Risk & Compliance team. Questions and/or concerns can also be communicated via the Ethics mailbox ([email protected]), to then be reviewed and followed up by the Ethics Committee. With the transposition of the EU Whistleblower’s Directive into Belgian law end of December 2022, we are now ready to deploy the software tool that will enable fully anonymous ethical issue reporting in dierent languages. Overview and breakdown of the matters addressed via the Ethics mailbox in 2022 Conflict of interest Discrimination Gifts Harassment Total 5.7 Membership of associations Barco is strongly integrated into local and professional initia- tives as well as communities that are relevant for its activities. We support these initiatives and communities in various ways – as a founding partner, through directorship, delegation of employees to work groups, membership fees, etc. Below is a non-exhaustive list of the various organizations and associa- tions we are a member of: • Industry and trade associations and professional networks: Agoria, Belgisch Elektrotechnisch Comité (BEC), COCIR, Laser Illuminated Projector Association (LIPA), BELIR, Belrim, Beltug, IBJ, VONK, Executive Global Network, Communication Community, Vlaams Economisch Verbond (VEV), EIT Health,... • Non-profit organizations supporting - local entrepreneurship, like Hangar K, a joint initiative of education institutions and the city of Kortrijk that supports start-ups and young entrepreneurs in the educational and gaming technology domains; - innovative research within the technology or sustainability sectors, such as Flanders Make, Flanders.healthTech and The Shift; - international exchange and trade including Belgian American Chambers of Commerce. • Advocacy organizations, like Voka The annual membership fees for most of the above organi- zation and associations range from 250 to 5,000 euro, with only a few exceeding this range. Barco does not make donations or other contributions of any kind to political parties. Resolved: 5 Unresolved: 2 Closed: 2 Barco Integrated report 2022 52 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX 6. Community engagement At Barco, we want to help ensure more people can participate in and benefit from a prospering society, regardless of their backgrounds. Focusing on the areas of education and entrepreneurship, we partner with non-profits and leverage the engagement of our employees to make long-lasting impact in the communities where we live and work. 6.1 Closing the education gap around the world Education is one of the keys to escaping poverty. Over the past decade, Barco took several initiatives to increase access to education and school enrollment rates around the globe. • After two challenging years, when the pandemic put the education of many children on hold, we were happy to relaunch the ‘iGemba Scholarship Scheme’ in India, paying for the education of 23 children of Barco India employees. The concept: for each improvement suggestion that operators make through our iGemba program, Barco donates money, which is collected in a scholarship fund. Since the start of the program, 75 children have received scholarships. The program not only supports our sustainability eorts, but also reinforces the Barco value ‘we care’ . • We continued to support the Indian NGO Sakshi, which founded the Barco Sakshi Education Center for underprivileged children in Noida, where our site is located. After supporting the construction in 2017, we keep helping the school through various initiatives. • For our emerging leadership program, Barco kept partnering with StreetwiZe, a unique talent development provider that develops high-impact learning products to companies, inspired by the complex and competitive reality of street communities. StreetwiZe invests 100% of their profits in Mobile School, an organization that provides non-formal education to street youth and helps them grow into positive contributors to society. • For several years now, we have been partnering with Close the Gap – a social enterprise that aims to bridge the digital divide in developing countries by oering IT devices donated by companies to projects. In 2022, we donated 643 devices to Digital for Youth, a Close the Gap organization that collects laptops from companies, refurbishes them and distributes them to vulnerable young people in Belgium. iGemba scholarship is an excellent example of living the Barco Value “we care, we grow” really on ground & engaging employees in an authentic way to “look for a better way”. Using a part of the savings coming from improvement ideas from our employees for supporting the education of their children which are future of any society is immensely satisfying for me personally Rajeeva Lochan Sharma VP Operations & Special Projects, Barco India Barco Integrated report 2022 53 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX 6.2 Ensuring healthy lives and promoting well-being “Ensure the best possible health outcomes to as much people as possible” is the mission of our Healthcare division. More than developing solutions to achieve that aim, we also sup- port organizations that provide access to good healthcare services around the world and we promote the importance of healthcare. Like in previous years, we again supported Breast Cancer Awareness Month in October 2022. Next to selling Pink rib- bons and encouraging employees to ‘wear pink’, we arranged a sponsored ‘Breast Cancer ride’ with the Barco Belgium cycling team and duck fishing. With these actions, we raised EUR 2,425 for Think Pink, Belgium’s breast cancer organization. And there’s more. In November we raised awareness for men’s health – specifically prostate cancer and mental health –, encouraging men around the world to grow their moustaches. 6.3 Promoting a world free of bias, stereotypes and discrimination Barco put the topic of diversity and inclusion higher on the agenda in 2022, as we believe that a diverse workforce inspires creativity and innovation. To ensure diversity and inclusion among the world’s workforce, we actively promote a gender equal world, where everyone gets equal opportunities. Only 20% women students in engineering, computer sciences and physics at a university level (US) (source: NGCP) In 2022, Barco celebrated International Womens Day with the #BreakTheBias social media campaign. In the US, we hosted the AVIXA Women’s Council charity event, which supports an initiative for engaging girls in STEM education. 6.4 Smaller, including employee-driven charity initiatives The ‘we care’ value so typical of the Barco culture is also reflected in the charity initiatives set up by our own people. Just a few examples: • Barco Duluth (US) donated and helped to pack 230 kg of food for distribution to 425 local families. • In Australia, we donated a ClickShare Conference solution to the Ronald Mc Donald House Program, which provides a temporary safe haven to families with a sick child who needs treatment far away from home. • Our colleagues in Taiwan collected shoes for Step 30, an NGO helping children in Kenya who need to walk barefoot for hours to go to school. Barco Integrated report 2022 54 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX Reporting on EU taxonomy 06 ANNEX Barco Integrated report 2021 55 PPC Planet - People - Communities 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 1. Background A key objective of the European Commission’s (‘Commission’) action plan on financing sustainable growth is to reorient cap- ital flows towards sustainable investment and ensure market transparency. To achieve this objective, the Commission called for the creation of a EU classification system for sustainable activities, i.e. the EU Taxonomy. The regulation relates to 6 environmental objectives, namely Climate change mitigation, Climate change adaptation, Circular economy, Sustainable use of water and marine resources, Pollution prevention and Healthy ecosystems. Regulation (EU) 2020/852 (the ‘Taxonomy Regulation’) was published in the Ocial Journal of the European Union on 22 June 2020 and entered into force on 12 July 2020. It is supported by several FAQs published (and forthcoming) by the EU Commission to clarify the content of the Disclosure Delegated Acts, as well as to specify the structure and content of the information to be disclosed. The EU Taxonomy aims to define and classify environmentally sustainable activities. It is an important piece of legislation for enabling and scaling up sustainable investment and thus implementing the European Green Deal, including an econ- omy that works for people and ensures a fair transition that creates employment and leaves nobody behind. Notably, by providing companies, investors and policymakers with the definitions of which economic activities can be considered as environmentally sustainable, it is expected to help shift invest- ments where they are most needed. Article 8(2) of Regulation (EU) 2020/852 requires non-financial undertakings to disclose information on the key perfor- mance indicators (KPIs) related to the proportion in their turnover of environmentally sustainable economic activities (‘Taxonomy-aligned activities’), and the proportion of their capital expenditure (‘CapEx’) and their operating expenditure (‘OpEx’) related to assets or processes associated with envi- ronmentally sustainable economic activities. As indicated in the Delegated Regulation of (EU) 2021/2178, non-financial undertakings shall disclose the proportion of Taxonomy-eligible and alignment of economic activities in their total turnover, capital and operational expenditure and the qualitative information for reporting year 2022, including comparative figures for eligibility. Barco considers its economic activities to have the potential to significantly contribute to the Environmental objective (Eligible) Climate change mitigation, as stated in the EU Taxonomy and Climate Delegated Act. Barco’s turnover is linked to most of the high-impact economic sectors listed in the initial Technical Expert Group on Sustainable Finance (TEG) technical report. We are committed to communicating in a transparent manner on the potential impact Barco has on these sectors. Evaluating the Barco scope 3 Carbon Disclosure Project (CDP) emissions reporting (mainly representing the scope 2 emis- sions of our customers) and Barco SBTi commitment, further supported by discussions with customers, peers and industry associations, led to the following conclusion: Barco’s aligned products have the potential to substantially contribute to one of the environmental objectives by support- ing the carbon reduction in specific economic activities e.g. building, entertainment, transport and ICT sector. For example, supported by our (laser) cinema projectors, we play an import- ant role in making buildings and permanent installations more energy ecient, and our ClickShare product range enables remote collaboration, hence less travel. Applying the NACE codes, and the freedom provided in the dedicated Technical Screening Criteria (TSC) and Do No Significant Harm (DNSH) criteria to compare product Life Cycle Assessment (LCA) performance to the market benchmarks (‘Best performing alternative’) both support this conclusion. At this moment of writing, no delegated act is available defin- ing the rules and requirements on the reporting obligations of the 4 remaining environmental objectives. This leads us to the conclusion that only reporting obligations on the initial two climate objectives are applicable for reporting year 2022. Further elaboration on the economic sectors and technical criteria supporting those sectors in the future might change our current proportion eligibility/alignment over several activities. Barco Integrated report 2022 56 PPC Planet - People - Communities 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 06 ANNEX 2.1 Turnover to eligible activities Article 1 of the EU Taxonomy Regulation defines a taxono- my-eligible economic activity as an economic activity that is listed under the applicable TSC, irrespective of whether that economic activity meets any or all the TSC. Article 10 in the EU Taxonomy Regulation qualifies an eco- nomic activity as contributing to Climate change mitigation if that activity contributes substantially to the stabilization of greenhouse gas concentrations consistent with the long-term temperature goal of the Paris Agreement, through the avoid- ance or reduction of greenhouse gas emissions or the increase of greenhouse gas removals, including through process inno- vations or product innovations, for instance, in low-carbon technologies. Barco oers products that have the potential to qualify as substantially contributing to Climate change mitigation 1 , where these products support the transition to a climate-neutral economy consistent with the IPCC pathway to limit the temperature increase to 1.5°C above pre-industrial levels, by reducing the greenhouse gas emissions during the use phase of our devices, through an enhanced energy e- ciency, at our customers. Likewise, EU Taxonomy Regulation Article 10 qualifies an eco- nomic activity as contributing to Climate change adaptation if that activity contributes substantially to reducing or pre- venting the adverse impact of the current or expected future climate, or the risk of such adverse impact, whether on that activity itself or on people, nature or assets. Based on the former definition, Barco does not yet oer products that have the possibility to substantially contribute to Climate change adaptation, as our products cannot yet be seen as solutions to reduce the most important physical climate risks that are material to the activity. Therefore, eligible activities related to the Climate acts will be directed towards the Climate change mitigation objective. Determination of Barco relevant economical activities is based on NACE code registration and validation of the economic activity. The following applicable economic activity as defined in the delegated act applies: C – Manufacturing: C26 Manufacture of computer, electronic and optical products and C27 Manufacture of electrical equip- ment, qualifying under 3.6 ‘Manufacture of other low-carbon technologies’ in the Climate Delegated Act on climate change mitigation. 2. Taxonomy-eligible 1 EU Taxonomy Regulation defining substantial contribution to Climate change adaptation is currently not applicable to Barco solution portfolio 2 Projects are system installations that consist of multiple hardware products and related system installation, technical support based on end-customer specifications. All project sales are hardware-product related. For turnover reporting purposes, the following parameters were applied: 1. Turnover in accordance with International Financial Reporting Standards (IFRS), as adopted for use by the EU. We refer to note ‘Significant accounting principles 1.11. Revenue recognition’ for the accounting principles applied. 2. Turnover-related eligible activities: turnover linked to Barco solutions that have a direct carbon footprint impact during the usage stage and are covered by NACE code C26 or C27. These are defined as: turnover generated by hardware products consuming electricity and project 2 revenues (see note 3 of the financial report). Turnover-related non-eligible activities: turnover linked to Barco solutions that have no direct carbon footprint impact during the usage stage as defined in the Climate Delegated Act. These solutions are turnover from software, licences, or services. Barco Integrated report 2022 57 PPC Planet - People - Communities 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 06 ANNEX 2.2 CapEx and OpEx related to eligible activities CapEx The definition of KPI CapEx is available in Annex I 1.1.2 of DA C(2021) 4987 and is fully in line with the reporting framework defined in the financial note on Significant accounting princi- ples ‘5. Property, plant and equipment’ and ‘6. Leases’. The total amount of CapEx is reported in note 9 ‘Other intan- gible assets and tangible fixed assets’. The total amount equals the eligible CapEx, as the total amount of CapEx relates solely to assets or processes associated with Barco economic activ- ities defined in section “Taxonomy-eligible economic activity - Turnover” 3 . OpEx The definition of KPI OpEx is available in Annex I 1.1.3 of DA C(2021) 4987. At this moment in time, there is no clear defini- tion of OpEx under the IFRS framework, hence the definition referred to in the EU taxonomy is applied. For eligibility reporting, OpEx shall be considered to cover direct non-capitalised costs that relate to research and devel- opment, building renovation measures, short-term lease, maintenance and repair, and any other direct expenditures relating to the day-to-day servicing of assets of property, plant and equipment by the undertaking or third party to whom activities are outsourced that are necessary to ensure the con- tinued and eective functioning of such assets. Translated to Barco expenses, only the cost related to research and devel- opment (R&D) is considered material and therefore included as eligible OpEx. R&D expenses include all internal and external costs related to research and development projects, and investments linked to the Company’s product roadmap. The roadmap can be fully linked to specific economic activities. We refer to note 3. (a) ‘Research and development expenses’. 3 In contradiction with financial reporting year 2021 note 9 is defined as relevant eligible activities not note 9.2 which limits the eligible activities incorrectly. Barco Integrated report 2022 58 PPC Planet - People - Communities 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 06 ANNEX 3. Towards taxonomy alignment reporting EU Taxonomy expects alignment with the TSC, DNSH and compliance with the minimum safeguards. Only if these three items are met can an economic activity be labelled “aligned”. The following sections aim to disclose what process and methodology Barco employs for alignment determination covering the Climate change mitigation objective. 3.1 Turnover For Barco economic activities C26 and C27, the relevant alignment TSC are defined under the economic activity 3.6 ‘Manufacture of other low-carbon technologies’: “The eco- nomic activity manufactures technologies that are aimed at and demonstrate substantial lifecycle GHG emission savings compared to the best performing alternative technology/prod- uct/solution available on the market.” However, the regulation does not contain specific guidance or requirements on how to identify the best-performing alter- native technology/product/solution or how to avoid creating a moving target/benchmark. In addition, the lifecycle GHG emission savings of alternative technology/product/solution available on the market are unknown to the reporting entity. For this reason, the following interpretation is made to define aligned turnover for economic activity 3.6. The following product conditions shall be met when considering a product aligned for reporting over financial year 2022: • Provide supporting LCA 4 evidence to claim the product is supporting GHG reduction according to the IPCC1,5°C pathway. Translated for scope 3 GHG emissions, this requires a minimum GHG 2.5% annual reduction compared to the previous generation of the product placed on the market, as defined by the SBTI Net Zero Standard 5 table 6A. • Product does not violate the applicable DNSH criteria • Comply with minimum social safeguards Product scope 3 emission is dominantly driven by energy con- sumption during the product usage phase. Therefore, the GHG emission reduction is directly linked to the relative improved energy eciency. All revenue-related products with an ecolabel according to an older version of the ecoscore tool have been assessed case by case. This in order to confirm, as defined above, that the product is supporting GHG reduction according to the IPCC1.5°C pathway. This assessment is validating if the product represents 2.5% annual reduction compared to the relevant internal benchmark. For example, a new generation of projec- tors benchmarked to the previous generation, made available on the market 11 years ago, shall be at least 25% more energy ecient for the same delivered capabilities. The source data for this assessment has undergone the limited assurance Scope 3 emissions and revenue from ecolabel products audit. We have proactively adjusted the ecoscore framework to assess the turnover alignment of Barco products. This eco- score framework is annually updated to keep pace with evolving regulatory requirements. In fact, the latest version of the ecoscore tool (version 6.0 and 6.1) incorporates the TSC related to the Climate mitigation objective. Next to this, the corresponding DNSH criteria validation are also fully embedded in the ecoscore framework. The future circularity objective TSC and DNSH will also be implemented in Barco’s ecoscore framework once the criteria are approved and pub - lished by the European Commission. One important part of the ecoscore assessment is to calcu- late full LCA results of the product, i.e. environmental impacts caused by the product during its entire lifecycle. The LCA studies are performed according to the Product Environmental Footprint (PEF) method, which is a general methodology to assess and communicate lifecycle environmental impacts of a product. 4 LCA assessment shall comply with the ISO 14040 and 14044 standards. 5 Net-Zero-Standard.pdf (sciencebasedtargets.org) Barco Integrated report 2022 59 PPC Planet - People - Communities 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 06 ANNEX Overall, revenues generated from products that have been assessed as ecolabelled in the latest version of the Barco ecoscore framework under the economic activity 3.6, can be considered aligned. Products that have been assessed by the ecoscore frame- work (regardless of the version) are also checked not violate the DNSH criteria. The described benchmark approach (2.5% GHG annual reduction) has been integrated both in the new ecoscore framework and the turnover alignment assessment of legacy ecoscored products. Hence the dierence between the turnover generated by ecolabelled products and the turnover alignment share. Legacy ecoscoring is a static interpretation at a certain moment in time (for some of them even before Taxonomy criteria were defined). This discrepancy will disap- pear over time as more new products will be assessed under the new framework. The benchmark approach is a strict prudent interpretation and reflects a moving target that annually increases, due to the lack of predefined external benchmark; we are looking forward to receiving more clear guidance in due course on how to perform external benchmarking. This results in the following quantitative data: Economic activity Activity description Proportion turnover eligible Proportion aligned turnover KPI Manufacture of other low-carbon technologies eg. Hardware products .% % KPI Other out-of-scope solutions eg. Software, service .% Total % 6 Activity that places hardware products on the market that has specific climate impact throughout the product lifetime (GHG footprint). 7 https://ec.europa.eu/finance/docs/level-2-measures/taxonomy-regulation-delegated-act-2021-2800-annex-1_en.pdf 3.2 CapEx Aligned CapEx as defined in the Annex I 1.1.2 of DA C(2021) 4987 can be any of the following: 1. Related to assets or processes that are associated with Taxonomy-aligned economic activities; 2. Part of a plan to expand Taxonomy-aligned economic activities or to allow Taxonomy-eligible economic activities to become Taxonomy-aligned; 3. Related to the purchase of output from Taxonomy-aligned economic activities and individual measures enabling the target activities to become low-carbon or to lead to greenhouse gas reductions. Barco has assessed the investments made in CapEx eligi- ble activities and made the corresponding link to dedicated economic activities, covering both acquisition of products/ services and measures that indirectly lead to the reduction of GHG impact of Barco’s activities. As a result, we identified several CapEx investments that fulfil the alignment definition (e.g. infrastructure in green mobility, renewable energy). For these individual measures, we have positively assessed the applicable TSC and DNSH. Examples of potentially aligned individual activities (Climate change mitigation), mentioned in the Annex I of the Climate Delegated Act and that Barco invested in, concern the cate- gory ‘6. Transport’ ‘7. Construction and real-estate activities’ 7 (i.e. 7.6, 6.5). For instance, we are little by little switching to electric lease cars for our own employees. Recently, more than 100 charging stations have been installed in the car park We refer to note 3. ‘Income from operations (EBIT)’ for a breakdown of Barco’s sales per type: product sales, project sales and service sales. Barco Integrated report 2022 60 PPC Planet - People - Communities 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 06 ANNEX at Barco Kortrijk to allow employees to charge their electric vehicles. In addition to the solar panels already in place, Barco has been investigating the possibility to install a wind turbine to make more use of renewable energy and reduce the GHG emissions of our activities. At this point of time, no assets/processes can be linked unam- biguously to aligned turnover activities in our reporting system. Hence why we have allocated all CapEx to eligible activities although this might not be the case and have limited the cur- rent year reporting on alignment to individual measures. This results in the following quantitative data: 3.3 OpEx Aligned OpEx as defined in the Annex I 1.1.2 of DA C(2021) 4987 can be any of the following: 1. Related to assets or processes associated with Taxonomy- aligned economic activities, including training and other human resources adaptation needs, and direct non- capitalised costs that represent research and development; 2. Operating expenditure included as part of the CapEx plan to expand Taxonomy-aligned economic activities or allow Taxonomy-eligible economic activities to become Taxonomy-aligned; 3. Related to the purchase of output from Taxonomy-aligned economic activities and to individual measures enabling the target activities to become low carbon, or to lead to GHG reductions as well as individual building renovation measures. Aligned OpEx reflects the development eort into sustainable product design. OpEx (R&D) should remain at a high level if a company has continuous sustainability improvement integrated in the innovation process and wants to achieve improvement KPIs. Supported by the Barco ecoscoring process and managed by dedicated short-term KPIs (new products and revenue-based) Barco has a dedicated strategy in place to ensure expansion of Taxonomy-aligned economic activities, or to enable tar- get activities to be conducted in a low-carbon manner or reduce emissions of greenhouse gases. This strategy covers all product development, both hardware and corresponding software. In other words, applied to Barco the aligned OpEx corresponds to the investments made in R&D to develop (future) turnover-aligned products (ecolabelled). If R&D OpEx eort cannot directly be linked to an aligned activity or future aligned products, this eort is not accounted for as aligned. In case R&D eort is linked to both aligned and unaligned product, a pro-rata aligned revenue is applied. Examples of aligned R&D activities: the development of the new generation CX ClickShare and corresponding software, the new Series IV digital cinema projectors, the development of new healthcare display. Examples of pro-rata aligned activities: software running on the Nexxis platform, development of laser source share over dierent end products, WeConnect. The proportion non-eligible OpEx has been determined based on the pro rata of eligible vs non-eligible turnover to reflect the share of OpEx related to service activities as the current reporting does not allow an allocation of R&D to respectively eligible vs non-eligible activities. KPI Proportion eligible Proportion aligned KPI related to capital expenditure (CapEx) % . % KPI Proportion eligible Proportion aligned KPI related to oper- ating expenditure (OpEx) – limited to R&D expenses .% . % Please find the full EU Taxonomy reporting here Barco Integrated report 2022 61 PPC Planet - People - Communities 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 06 ANNEX Barco carries out economic activities across the globe in a responsible and respectful way. In doing so, it is committed to complying with the minimum safeguards referred to in Article 18 of the Taxonomy Regulation. To ensure compliance with these standards, companies sub- ject to the Taxonomy Regulation are required to implement procedures to ensure the alignment of their activities with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights, includ- ing the principles and rights set out in the eight fundamental conventions identified in the Declaration of the International Labour Organisation on Fundamental Principles and Rights at Work and the International Bill of Human Rights. The EU Commission has asked the Platform on Sustainable Finance, an independent advisory body, for advice on the functioning of the minimum safeguards. In October 2022, this advisory body released its Final Report on Minimum Safeguards. This report identifies in the OECD Guidelines and UN Guiding Principles 4 substantive topics, pertinent to the minimum safeguards, notably human rights (including labor and consumer rights), bribery, bribe solicitation and extortion, taxation, and fair competition. Moreover, it proposes two cri- teria to determine compliance with the minimum safeguards, i.e.; the implementation of adequate due diligence processes and the absence of certain negative impacts or events. The Annual Report, and particularly the PPC Report describes in various sections the policies, procedures and practices which Barco has implemented to ensure alignment with the OECD Guidelines and UN Guiding Principles in the domains of human rights, bribery, taxation and fair competition. Finally, Barco has not had any interactions with an OECD National Contact Point or a Business and Human Rights Contact Center. It has not been found in violation of labor or human rights, anti-corruption, tax or competitions laws. 4. Minimum safeguards Barco Integrated report 2022 62 PPC Planet - People - Communities 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 06 ANNEX Managing sustainability Barco Integrated report 2022 63 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX Governance keeps our corporate sustainability strategy on track. It ensures that our strategy remains eective, and that accountability for our results sits right at the top of our com- pany. Our sustainability governance model is explained on the Barco website. Sustainability at Barco is managed by a permanent execu- tive sustainability steering committee, which consists of one of our co-CEOs, the Chief HR ocer, CFO, Senior Vice President of Operations and the group Sustainability Oce. Depending on the topic, other executive members are invited (e.g., business unit heads). Under the leadership of the group Sustainability Oce, a network of sustainability ambassadors across Barco always prepares the meeting topics based upon the local execution of the sustainability plans. Just like in 2021, the committee met six times in 2022. Representing the committee, the CFO presented the progress made towards sustainability targets to the Board. 1. Sustainability governance and responsibility SUSTAINABILITY WORKSTREAMS & AMBASSADORS GROUPS SUSTAINABILITY OFFICE BOARD OF DIRECTORS AUDIT COMMITTEE CORE LEADERSHIP TEAM SUSTAINABILITY WORKSTREAMS & AMBASSADOR GROUPS SUSTAINABILITY OFFICE SUSTAINABILITY OFFICE EXECUTIVE SUSTAINABILITY STEERING COMMITTEE Barco Integrated report 2022 64 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX 2. Stakeholder engagement and materiality Barco attaches great importance to stakeholder engagement: outside views help us identify and prioritize emerging issues and better align our strategy, actions and policies with the interests of our key stakeholder groups. The outcome of the most recent stakeholder engagement up to the level of each stakeholder group and the consolidated view in terms of the materiality matrix can be found on our website. 3. External initiatives (platforms and commitments) We believe collaboration across the private sector and multi-stakeholder engagement is required to catalyze society’s transition to a more sustainable future. Barco actively partici- pates in several external initiatives that promote sustainability, such as the Science Based Targets initiative, The Shift and others. A description of the main initiatives and associations that we currently participate in is available on our website. 4. Certifications In order to assure our stakeholders that our management systems meet international industry-specific standards, they are audited annually and certified according to international certification standards: • ISO 9001 quality management system (for Barco sites in US, Germany, India, Italy, China, Norway, Taiwan and Belgium) • ISO 13485 quality management system specifically for the medical device industry (for Barco sites in US, China, Belgium, Italy and South Korea) • ISO 14001 environmental management system (for Barco sites in Belgium, China, India and Italy) • ISO 27001 information security management system (for Barco sites in Belgium, India and Taiwan) 5. External evaluations Barco is rated by several independent organizations on its sustainability performance. We actively participate in several initiatives such as CDP, Ecovadis, MSCI, ISS ESG, Sustainalytics, Vigeo Eiris (Moody’s) and S&P Global. A description and up-to- date status and evolution of the detailed results can be found on the Barco website. Barco Integrated report 2022 65 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX Annex Barco Integrated report 2022 66 PPC Planet - People - Communities 06 ANNEX01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY EU taxonomy reporting table Barco Integrated report 2022 67 PPC Planet - People - Communities 06 ANNEX01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY Economic activities () Substantial contribution criteria DNSH criteria ('Does Not Significantly Harm' criteria) Code () Absolute value () Proportion () Climate change mitigation () Climate change adaptation () Climate change mitigation () Climate change adaptation () Water and marine resources () Circular economy () Pollution () Biodiversity and eco- systems () Minimum safeguards () Taxonomy- aligned proportion of turnover, year () Enabling activity () Transitional activity () in thous- ands EUR % % % Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T Turnover Taxonomy-eligible activities Environmentally sustainable activities (Taxonomy-aligned) . , . % . % .% - Y Y Y Y Y Y . % E - Turnover of environmentally sustainable activities (Taxonomy-aligned) , .% . % .% - Y Y Y Y Y Y . % - - Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) . , .% - - - - - - - - - - - - Turnover of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) , .% - - - - - - - - - - - - Total turnover of Taxonomy-eligible activities , .% - - - - - - - - - - - - Taxonomy-non-eligible activities Turnover of Taxonomy-non-eligible activities , .% - - - - - - - - - - - - Total turnover of Taxonomy-non-eligible activities , .% - - - - - - - - - - - - Total turnover of Taxonomy-eligible and non-eligible activities ,, % - - - - - - - - - - - - () Compliance with minimum safeguards, as further clarified by the Platform on Sustainable Finance (see 'Minimum Safeguards'). (#) Refers to the reference as included in the mandatory reporting table for non-financial undertakings as required in accordance with the reporting delegated regulation. Barco Integrated report 2022 68 PPC Planet - People - Communities 06 ANNEX01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY Economic activities () Substantial contribution criteria DNSH criteria ('Does Not Significantly Harm' criteria) Code () Absolute value () Proportion () Climate change mitigation () Climate change adaptation () Climate change mitigation () Climate change adaptation () Water and marine resources () Circular economy () Pollution () Biodiversity and eco- systems () Minimum safeguards () Taxonomy- aligned proportion of CapEx, year () Enabling activity () Transitional activity () in thous- ands EUR % % % Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T CapEx Taxonomy-eligible activities Environmentally sustainable activities (Taxonomy-aligned) Activity : Installation, maintenance and repair of renewable energy technologies . .% .% .% - Y Y Y Y Y Y .% E - Activity : Transport by motorbikes, passenger cars and commercial vehicles . , .% .% .% - Y Y Y Y Y Y .% E - CapEx of environmentally sustainable activities (Taxonomy-aligned) , .% .% .% - Y Y Y Y Y Y .% - - Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) , .% - - - - - - - - - - - - CapEx of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) , .% - - - - - - - - - - - - Total CapEx of Taxonomy-eligible activities , % - - - - - - - - - - - - Taxonomy-non-eligible activities CapEx of Taxonomy-non-eligible activities .% - - - - - - - - - - - - Total CapEx of Taxonomy-non-eligible activities .% - - - - - - - - - - - - Total CapEx of Taxonomy-eligible and non-eligible activities , % - - - - - - - - - - - - () Compliance with minimum safeguards, as further clarified by the Platform on Sustainable Finance (see 'Minimum Safeguards'). (#) Refers to the reference as included in the mandatory reporting table for non-financial undertakings as required in accordance with the reporting delegated regulation. Barco Integrated report 2022 69 PPC Planet - People - Communities 06 ANNEX01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY Economic activities () Substantial contribution criteria DNSH criteria ('Does Not Significantly Harm' criteria) Code () Absolute value () Proportion () Climate change mitigation () Climate change adaptation () Climate change mitigation () Climate change adaptation () Water and marine resources () Circular economy () Pollution () Biodiversity and eco- systems () Minimum safeguards () Taxonomy- aligned proportion of OpEx, year () Enabling activity () Transitional activity () in thous- ands EUR % % % Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T OpEx Taxonomy-eligible activities Environmentally sustainable activities (Taxonomy-aligned) , . % . % .% - Y Y Y Y Y Y . % E - OpEx of environmentally sustainable activities (Taxonomy-aligned) , . % . % .% - Y Y Y Y Y Y .% - - Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) , .% - - - - - - - - - - - - OpEx of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) , .% - - - - - - - - - - - - Total OpEx of Taxonomy-eligible activities , .% - - - - - - - - - - - - Taxonomy-non-eligible activities OpEx of Taxonomy-non-eligible activities , .% - - - - - - - - - - - - Total OpEx of Taxonomy-non-eligible activities , .% - - - - - - - - - - - - Total OpEx of Taxonomy-eligible and non-eligible activities , % - - - - - - - - - - - - () Compliance with minimum safeguards, as further clarified by the Platform on Sustainable Finance (see 'Minimum Safeguards'). (#) Refers to the reference as included in the mandatory reporting table for non-financial undertakings as required in accordance with the reporting delegated regulation. Scope and methodology of carbon footprint and of measurement of products with Barco ECO label MEASURING CARBON FOOTPRINT OF OUR OWN OPERATIONS Methodology • Greenhouse Gas Protocol Methodology • Compliant with ISO standard • Sources of emission factors: emission factors from internationally recognized emission factor databases, ADEME, GHG Protocol, IEA, suppliers specific for electricity, DEFRA Scope • Technical: all greenhouse gases such as carbon dioxide (CO ), methane (CH), nitrous oxide (NO), refrigerants (HFCs, PFCs, CFCs) are converted into CO equivalents using Intergovernmental Panel on Climate Change (IPCC) -year global warming potential (GWP) coefficients. This covers all Kyoto gases which are to be reported according to the Greenhouse Gas Protocol • Boundaries: operational (vs. equity) approach, as it better defines the boundaries of influence • Geographical scope: all manufacturing and research & development sites (in Belgium, China, Italy, Germany, India, Norway, Taiwan and US) covering in total minimum % of the group’s total FTEs Calculation assumptions • CO e emissions are calculated by the external party COLogic • Extrapolation of October and November data was applied to the main components of infrastructure & logistics CO e emissions calculation of full year results • CO e emissions from logistics are only covering Barco paid transport • Emissions from own vehicles only cover Belgium and Germany as the other sites in scope have very few own vehicles and are therefore immaterial in view of the full scope Baseline • For targets and performance comparison, Barco selects FY as a baseline MEASURING OUR CARBON FOOTPRINT RELATED TO PRODUCT USE EMISSIONS Methodology • Greenhouse Gas Protocol Methodology Formula to be used: ∑ (total lifetime expected uses of product × number sold in reporting period × electric- ity consumed per use (kWh) × emission factor for electricity (kg CO e/kWh)) Scope • Emissions based solely on the energy consumption of the product (excluding the embodied energy of components, end-of-life emissions, etc.) • Approx. % of the products covered (in terms of sales volume) Barco Integrated report 2022 70 PPC Planet - People - Communities 06 ANNEX01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY MEASURING OUR CARBON FOOTPRINT RELATED TO PRODUCT USE EMISSIONS (cont’d) Use case data collection Use case data for Medical Displays • Average power on (W), typically measured at calibrated luminance value. • Suspend = standby (W) • Hibernate = Deep Sleep Power = off (W), internal processor active and communication with control software possible. As defined in the public product specification sheet. If no data is in the product specification sheet electrical safety reporting is used to define the applicable number. • Use case on (hrs) • Use case standby (hrs) • Use case deep sleep (hrs) Are defined based on feedback of the product manager. • Guaranteed lifetime (per hrs), linked to the backlight lifetime perfor- mance or the device MTBF performance. • Relative increase in nominal power per year (%), power compensation to maintain calibrated luminace value. Delivered capability specifications: • Max Luminance (cd/m) • Mpixels • Size (Inch) • DPI (#MP/Inch diagonal) For Diagnostic imaging devices the following is applicable: h On mode, h Standby and h Deep sleep/Off mode over a usage time as defined in the public product sheet and % of relative increase. For Surgical and modality devices the use cases and expected lifetime, relative increase but ranges between -h On mode - h Standby and -h Deep sleep/Off mode. This variation relates to the specific end user or end system setup. Use case data for Cinema and Immersive Experience • Power consumption (W), as defined in the public product specification sheet. If no data is in the product specifi- cation sheet electrical safety reporting is used to define the applicable number. Delivered capability specifications: • Center lumens (lm), Native brightness as defined in the public product specification sheet. Several end user application cases have been defined that have an impact on the energy consumption calcula- tion. The following generic use cases have been defined by the product managers based on field knowledge and industry feedback: None-Cinema product can be sold into the different markets, a specific share is taken into account. This is per default /%, but can vary from -% assigned to one single market. use cases Cinema Events Proav fix install Proav simulation HER Image Processors Usage time per year . . . total product use time . . . . . power used % % % % % % Number of years , , , , , , Barco Integrated report 2022 71 PPC Planet - People - Communities 06 ANNEX01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY MEASURING OUR CARBON FOOTPRINT RELATED TO PRODUCT USE EMISSIONS (cont’d) Use case data collection Use case data for Meeting Experience and Learning Experience • Average power on (W) • Suspend = standby (W) • Deep sleep power = off (W) As defined in the public product specification sheet. If no data is in the product specification sheet electrical safety reporting is used to define the applicable number. • Use case on (hrs) • Use case standby (hrs) • Use case deep sleep (hrs) • Guaranteed lifetime (hrs) Are defined based on feedback of the product manager. For ClickShare product the following is applicable: h On mode, h Standby and h Off mode over a usage time of h Connected media devices are per default assesses h On mode, Standby and h Off mode is considered over a lifetime of h Use case data Large Video Wall EXperience • Average power on (W) • Suspend = standby (W) • Deep Sleep Power = off (W) • Use case deep sleep (hrs) As defined in the public product specification sheet. If no data is in the product specification sheet electrical safety reporting is used to define the applicable number. Delivered capability specifications: • Center lumens (lm) • Typical power consumption at consumer side @ NIT wall brightness (W) • Display area (m²) Products sold into the LVW market are considered to be active /. The following expected usage times are considered: Year LED and LCD, Year Laser RPC, Year for LED/LAMP RPC, Server products Year. MEASURING PRODUCTS WITH BARCO ECO LABEL Methodology • Barco’s ecoscoring methodology, find more on our corporate website. Subject to external audit under the framework of ISO : standard – see limited assurance report Scope • All newly introduced hardware products, a “newly introduced hardware product” is a commercial launch of first member of product family covered by one dedicated hardware development project. Options or modules are not in scope of this definition. Barco Integrated report 2022 72 PPC Planet - People - Communities 06 ANNEX01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 03 SUSTAINABILITY PERFORMANCE 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY barco.com Group management Beneluxpark 21 8500 Kortrijk – Belgium Tel.: +32 (0)56 23 32 11 Registered oce President Kennedypark 35 8500 Kortrijk – Belgium Tel.: +32 (0)56 23 32 11 VAT BE 0473.191.041 | RPR Gent, Section Kortrijk Stock exchange Euronext Brussels Financial information More information is available from the Group’s Investor Relations Department: Willem Fransoo Director Investor Relations Tel.: +32 (0)56 26 23 22 E-mail: [email protected] Copyright © 2023 Barco NV All rights reserved Realization Barco Corporate Marketing & Investor Relations Oce Focus Advertising Barco Beneluxpark 21 8500 Kortrijk – Belgium Barco Integrated report 2022 73 PPC Planet - People - Communities 01 SUSTAINABILITY AMBITION STATEMENT 02 SUSTAINABILITY STRATEGY 04 REPORTING ON EU TAXONOMY 05 MANAGING SUSTAINABILITY 06 ANNEX03 SUSTAINABILITY PERFORMANCE 2022 Integrated annual report Financial report Table of contents 01 Barco consolidated .................................6 Notes to the consolidated financial statements..........23 Supplementary statements ...........................89 Barco NV...........................................91 02 Information about the share ...................... 95 Key figures for the shareholder ........................96 Shareholder structure...............................100 Barco’s investment case.............................102 This is the Financial section of Barco’s 2022 Integrated annual report. Other sections are available via the download center at ir.barco.com/2022. CORE MORE • Governance & risk report • Report on planet - people - communities • Financial report ANNEX • Integrated Data Pack • Glossary • GRI Content index • Assurance report Barco Integrated report 2022 2 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE 14 18 19 20 21 1 2 3 5 6 7 8 9 10 12 13 15 17 16 4 11 MATERIAL TOPICS IFRS Financial Statements Introduction This chapter of the Annual Report contains the IFRS audited consolidated financial statements including the notes thereon, prepared in accordance with the International Financial Reporting Standards as adopted by the European Union. The chapter ‘Our results’ provides an analysis of trends and results of the 2022 financial year, and is based on the IFRS consolidated financial statements and should be read in con- junction with these statements. Barco Integrated report 2022 3 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE Table of contents Barco Consolidated Consolidated statement of income .............................................................................6 Statement of comprehensive income ...........................................................................7 Consolidated balance sheet....................................................................................8 Consolidated statement of cash flow............................................................................9 Consolidated statement of changes in equity ...................................................................10 Significant IFRS accounting principles ..........................................................................12 IFRS accounting standards adopted as of 2022 ..................................................................19 IFRS accounting standards issued but not yet effective as of 2022..................................................19 Critical accounting judgments and key sources of estimation uncertainty...........................................20 Notes to the consolidated financial statements 1. Consolidated companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 2. Operating Segments information ........................................................................27 3. Income from operations (EBIT) ..........................................................................35 4. Revenues and expenses by nature .......................................................................41 5. Restructuring and impairment costs .....................................................................43 6. Income taxes .........................................................................................44 7. Earnings per share .....................................................................................45 8. Goodwill .............................................................................................46 9. Other intangible and tangible fixed assets.................................................................49 10. Deferred tax assets – deferred tax liabilities................................................................55 11. Investments and interest in associates ...................................................................57 12. Inventory .............................................................................................60 13. Amounts receivable and other non-current assets .........................................................62 14. Net financial cash/debt.................................................................................64 15. Other long-term liabilities...............................................................................68 16. Equity attributable to equity holders of the parent..........................................................69 Barco Integrated report 2022 4 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE 17. Non-controlling interest ................................................................................72 18. Trade payables and advances received from customers ....................................................75 19. Provisions ............................................................................................76 20. Risk management - derivative financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 21. Rights and commitments not reflected in the balance sheet ................................................87 22. Related party transactions ..............................................................................87 23. Cash flow statement: effect of acquisitions and disposals ...................................................88 24. Events subsequent to the balance sheet date..............................................................88 Supplementary statements .....................................................................................89 Free Cash Flow ...........................................................................................89 Return on Operating Capital Employed ..................................................................... 90 Supplementary information..................................................................................... 91 Ba rco N V ...................................................................................................91 Balance sheet after appropriation..........................................................................92 Incom e s tatement .......................................................................................93 Proposed appropriation of Barco NV result..................................................................94 Barco Integrated report 2022 5 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE In thousands of euro Note 2022 2021 2020 Sales 2, 3 1,058,291 804,288 770,083 Cost of goods sold 3 -645,538 -516,803 -486,300 Gross profit 3 412,753 287,485 283,783 Research and development expenses 3(a) -120,493 -101,338 -102,610 Sales and marketing expenses 3(b) -142,740 -116,240 -112,329 General and administration expenses 3(c) -57,714 -47,858 -50,362 Other operating income (expense) - net 3(d) -1,663 -2,676 -8,302 Adjusted EBIT (a) 3 90,143 19,373 10,180 Restructuring and impairments 5 -2,500 -6,420 -14,513 EBIT 3 87,643 12,953 -4,332 Interest income 2,773 713 1,845 Interest expense -1,930 -1,823 -1,965 Income before taxes 6 88,486 11,843 -4,453 Income taxes 6 -15,927 -2,132 - Result after taxes 72,559 9,711 -4,453 Share in the result of joint ventures and associates 11 3,337 48 -276 Net income 75,896 9,759 -4,729 Net income attributable to non-controlling interest 17 677 878 -335 Net income attributable to the equity holder of the parent 7 75,219 8,881 -4,393 Earnings per share (in euro) 7 0.84 0.10 -0.05 Diluted earnings per share (in euro) 7 0.83 0.10 -0.05 Consolidated Statement of Income The accompanying notes are an integral part of this income statement. (a) Management considers adjusted EBIT to be a relevant performance measure in order to compare results over the period 2020 to 2022, as it excludes adjusting items. Adjusting items include restructuring costs and impairments. We refer to note 5 restructuring and impairment costs. Barco Integrated report 2022 6 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE In thousands of euro Note 2022 2021 2020 Net income 75,896 9,759 -4,729 Exchange differences on translation of foreign operations (a) 11,967 28,894 -29,625 Cash flow hedges Net gain/(loss) on cash flow hedges 1,259 485 62 Income tax -227 -87 -15 Net gain/(loss) on cash flow hedges, net of tax 1,032 398 46 Other comprehensive income/(loss) to be recycled through profit and loss in subsequent periods 12,999 29,292 -29,579 Remeasurement gains/(losses) on defined benefit plans 19 18,395 10,000 37 Deferred tax on remeasurement gains/(losses) on defined benefit plans 10 -4,599 -2,500 -9 Actuarial gains/(losses), net of tax 13,796 7,500 28 Changes in the fair value of equity investments through other comprehensive income 11 -23,004 9,945 18,331 Other comprehensive income/(loss) not to be reclassified to profit or loss in subsequent periods -9,208 17,445 18,358 Other comprehensive income/(loss) for the period, net of tax effect 3,791 46,737 -11,221 Attributable to equity holder of the parent 1,287 44,382 -8,764 Attributable to non-controlling interest 2,504 2,355 -2,457 Total comprehensive income/(loss) for the year, net of tax 79,687 56,496 -15,950 Attributable to equity holder of the parent 76,506 53,263 -13,157 Attributable to non-controlling interest 3,181 3,233 -2,793 Statement of comprehensive income The accompanying notes are an integral part of this income statement. (a) Translation exposure gives rise to non-cash exchange gains/losses.Examples are foreign equity and other long-term investments abroad. These long-term investments give rise to periodic translation gains/losses that are non-cash in nature until the investment is realized or liquidated. The comprehensive income line commonly shows a positive result in case the foreign currency appreciates versus the Euro in countries where investments were made and a negative result in case the foreign currency depreciates. In 2022, the positive exchange differences in the comprehensive income line were mainly booked on foreign operations held in Hong Kong Dollar and US Dollar (see note 16.4). In 2021, the positive exchange differences in the comprehensive income line were mainly booked on foreign operations held in Hong Kong Dollar, US Dollar, Chinese Yuan and Indian Rupee. In 2020, the negative exchange differences in the comprehensive income line were mainly booked on foreign operations held in Hong Kong Dollar, US Dollar, Indian Rupee and Norwegian Krone. Barco Integrated report 2022 7 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE Consolidated balance sheet In thousands of euro Note 31 Dec 2022 31 Dec 2021 31 Dec 2020 Assets Goodwill 8 105,612 105,612 105,612 Other intangible assets 9.1 19,251 17,427 28,952 Land and buildings 9.2 69,677 78,602 74,220 Other tangible assets 9.2 53,181 48,285 49,254 Investments and interest in associates 11 64,811 68,008 106,942 Deferred tax assets 10 55,239 64,155 62,811 Other non-current assets 13 5,819 6,849 5,870 Non-current assets 373,590 388,938 433,662 Inventory 12 245,714 175,496 175,390 Trade debtors 13 194,643 156,977 146,138 Other amounts receivable 13 14,509 16,211 17,789 Short term investments 14 1,651 2,763 3,175 Cash and cash equivalents 14 305,915 351,571 235,402 Prepaid expenses and accrued income 11,383 12,293 6,646 Current assets 773,815 715,311 584,542 Total assets 1,147,405 1,104,249 1,018,203 In thousands of euro Note 31 Dec 2022 31 Dec 2021 31 Dec 2020 Equity and liabilities Equity attributable to equityholders of the parent 16 759,189 693,783 659,309 Non-controlling interests 17 19,792 41,031 37,798 Equity 778,981 734,814 697,107 Long-term debts 14 32,335 34,366 35,854 Deferred tax liabilities 10 3,229 3,823 4,745 Other long-term liabilities 15 44,524 48,860 43,286 Long-term provisions 19 14,998 31,175 40,156 Non-current liabilities 95,086 118,224 124,042 Current portion of long-term debts 14 11,217 10,218 9,187 Short-term debts 14 - - 86 Trade payables 18 121,920 113,979 70,299 Advances received from customers 18 51,183 54,105 42,375 Tax payables 9,639 4,963 7,478 Employee benefit liabilities (a) (a) 53,487 39,550 32,284 Other current liabilities 5,412 5,036 8,980 Accrued charges and deferred income 11,155 14,823 12,646 Short-term provisions 19 9,325 8,537 13,720 Current liabilities 273,338 251,211 197,054 Total equity and liabilities 1,147,405 1,104,249 1,018,203 The accompanying notes are an integral part of this statement. (a) Employee benefit liabilities are short term obligations and consist mainly of salaries, bonuses and holiday payments. In 2022 employee benefit liabilities include a bonus provision on the 2022 results, whereas in 2021 bonus provision was limited and in 2020 minimum criteria for bonus were not met. The remaining increase in 2022 is caused by inflation and increase in headcount. Barco Integrated report 2022 8 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE Consolidated statement of cash flow In thousands of euro Note 2022 2021 2020 Cash flow from operating activities Adjusted EBIT 90,143 19,373 10,180 Restructuring 5 -1,211 -8,204 -9,536 Depreciations of tangible and intangible fixed assets 3, 9 36,331 39,136 43,383 (Gain)/Loss on tangible fixed assets -1,621 196 170 Share options recognized as cost 3(d), 16 1,548 3,067 2,907 Share in the profit/(loss) of joint ventures and associates 11 3,337 48 -276 Gross operating cash flow 128,527 53,616 46,829 Changes in trade receivables -35,615 -4,918 41,391 Changes in inventory -70,161 4,432 -12,260 Changes in trade payables 7,425 42,825 -59,936 Other changes in net working capital 2,823 13,195 -23,960 Change in net working capital -95,528 55,534 -54,764 Net operating cash flow 32,999 109,150 -7,936 Net operating cash flow Interest received 2,773 713 1,845 Interest paid -1,930 -1,823 -1,965 Income taxes -6,042 -8,386 -10,398 Cash flow from operating activities 27,800 99,654 -18,454 In thousands of euro Note 2022 2021 2020 Cash flow from investing activities Purchases of tangible and intangible fixed assets -21,218 -18,787 -14,980 Proceeds on disposals of tangible and intangible fixed assets 8,038 183 488 Proceeds from (+), payments for (-) short term investments 14 1,112 412 21,573 Acquisition of Group companies, net of acquired cash 1.3, 24 -3,763 - - Other investing activities (a) -41,634 51,969 -55,530 Dividends from joint ventures and associates - 3,859 2,492 Cash flow from investing activities (including acquisitions and divestments) -57,465 37,636 -45,958 Cash flow from financing activities Dividends paid -21,065 -20,560 -33,354 Capital increase 1,737 1,676 482 Sale/(purchase) of own shares 16 5,992 -4,472 2,371 Payments (-) of long-term liabilities 20 -12,390 -12,758 -11,235 Proceeds from (+), payments of (-) short-term liabilities 20 999 614 2,103 Cash flow from financing activities -24,727 -35,500 -39,634 Net increase/(decrease) in cash and cash equivalents -54,392 101,790 -104,045 Cash and cash equivalents at beginning of period 351,571 235,402 357,035 Cash and cash equivalents (CTA) 8,736 14,379 -17,588 Cash and cash equivalents at end of period 305,915 351,571 235,402 The accompanying notes are an integral part of this statement. (a) Other investing activities’ in 2022 reflect 23.6 million euro paid to the minority shareholders of Cinionic, increasing Barco’s ownership interest in the joint venture to 80%, as well as the movement in investments. In 2021 and 2020 it reflects the movement in investments in entities in which Barco owns less than 20% of the shares. Barco Integrated report 2022 9 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE Consolidated statement of changes in equity In thousands of euro Note Share capital and premium Retained earnings Share-based payments Cumulative translation adjustment Cash flow hedge reserve Own shares Equity attributable to equityholders of the parent Non- Controlling Interest Equity Balance on 1 January 2020 202,401 554,479 11,193 -37,522 -1,157 -29,334 700,060 40,590 740,650 Net income - -4,393 - - - - -4,393 -335 -4,729 Dividend 16 - -33,354 - - - - -33,354 - -33,354 Capital and share premium increase 16 482 - - - - - 482 - 482 Other comprehensive income (loss) for the period, net of tax - 18,361 - -27,171 46 - -8,764 -2,457 -11,221 Share-based payment 16 - - 2,907 - - - 2,907 - 2,907 Exercise of options 16 - - - - - 2,371 2,371 - 2,371 Balance on 31 December 2020 202,883 535,093 14,100 -64,693 -1,111 -26,963 659,309 37,798 697,107 Balance on 1 January 2021 202,883 535,093 14,100 -64,693 -1,111 -26,963 659,309 37,798 697,107 Net income - 8,881 - - - - 8,881 878 9,759 Dividend 16 - -33,388 - - - - -33,388 - -33,388 Capital and share premium increase 16 14,504 - - - - - 14,504 - 14,504 Other comprehensive income (loss) for the period, net of tax - 17,197 - 26,787 398 - 44,382 2,355 46,737 Share-based payment 16 - - 4,567 - - - 4,567 - 4,567 Exercise of options 16 - - - - - 6,714 6,714 - 6,714 Share buy-back 16 - - - - - -11,186 -11,186 - -11,186 Balance on 31 December 2021 217,387 527,783 18,667 -37,906 -713 -31,435 693,783 41,031 734,814 Barco Integrated report 2022 10 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE In thousands of euro Note Share capital and premium Retained earnings Share-based payments Cumulative translation adjustment Cash flow hedge reserve Own shares Equity attributable to equityholders of the parent Non- Controlling Interest Equity Balance on 1 January 2022 217,387 527,783 18,667 -37,906 -713 -31,435 693,783 41,031 734,814 Net income - 75,219 - - - - 75,219 677 75,896 Dividend 16 - -35,695 - - - - -35,695 - -35,695 Capital and share premium increase 16 16,284 - - - - - 16,284 - 16,284 Other comprehensive income (loss) for the period, net of tax - -9,301 - 9,556 1,032 - 1,287 2,504 3,791 Share-based payment 16 - - 1,548 - - - 1,548 - 1,548 Exercise of options 16 - - - - - 5,992 5,992 - 5,992 Increase in ownership interest, without change in control (a) 17 - 771 - - - - 771 -24,420 -23,649 Balance on 31 December 2022 233,671 558,777 20,215 -28,350 319 -25,443 759,189 19,792 778,981 The accompanying notes are an integral part of this statement. (a) Per 20 April 2022, Barco agreed to buy the shares held by Appotronics and CITICPE in Cinionic, increasing Barco’s ownership interest in the joint venture from 55% to 80%. Barco paid 23.6 million euro for the shares. The gain realized on the transaction of 0.7 million euro is recognized in equity as the increase in ownership percentage did not result in a change in control. Barco Integrated report 2022 11 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE Significant IFRS accounting principles 1. Accounting principles 1.1. Statement of compliance and basis of presentation The consolidated financial statements of the Barco Group have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted for use by the EU. All standards and interpretations issued by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) effec- tive year-end 2022 and adopted by the European Union are applied by Barco. The financial statements are also prepared on the basis of going concern. The consolidated financial statements are presented in thou- sands of euro and are prepared under the historical cost convention, except for the measurement at fair value of invest- ments, pension estimates and derivative financial instruments. The financial statements were authorized for issue by the board of directors on 6 February 2023. The chairman has the power to amend the financial statements until the shareholders’ meet- ing of 27 April 2023. 1.2. Principles of consolidation General The consolidated financial statements comprise the financial statements of the parent company, Barco NV (registered office: 35 President Kennedypark, 8500, Kortrijk, Belgium), and its controlled subsidiaries and joint ventures, after the elimination of all intercompany transactions. Subsidiaries Subsidiaries are consolidated from the date the parent obtains control until the date control ceases. Acquisitions of subsidiaries are accounted for using the purchase method of accounting. Control exists when Barco is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The financial statements of subsidiaries are prepared according to the parent’s company reporting schedule, using consistent IFRS accounting policies. Non-controlling interests Non-controlling interests represent the portion of profit or loss and net assets not held by the Group and are presented separately in the income statement and within equity in the consolidated balance sheet, separately from shareholder’s equity. Investments in associated companies and joint ventures The company has investment in joint ventures when it shares joint control with other investments, and it has rights to the net assets of these joint ventures. Investments in associated companies over which the company has significant influence (typically those that are 20-50% owned) and joint ventures are accounted for under the equity method of accounting and are initially recognized at cost. Thereafter the carrying amount of the investment is adjusted to recognize changes in the Group’s share of net assets of the associate since the acquisition date. The statement of profit or loss reflects the Group’s share of the results of operations of the associate, in ‘other operating income’ for associated companies and joint ventures with closely related business and in the line ‘share in the result of joint ventures and associates’ for all other associ- ated companies and joint ventures. Investments in associated companies and joint ventures are presented as non-current asset on the face of the balance sheet on the line ‘investments and interest in associates’. 2. Goodwill Goodwill represents the excess of the cost of the acquisition over the fair value of identifiable net assets and contingent liabilities of a subsidiary or associated company at the date of acquisition. Goodwill is carried at cost less any accumulated impairment losses. 3. Research and development costs Research and development costs are expensed as incurred, except for development costs, which relate to the design and testing of new or improved materials, products or technol- ogies, which are capitalized to the extent that it is expected that such assets will generate future economic benefits and the recognition criteria of IAS38 are met. Shorter life cycles, unpredictability of which development projects will be suc- cessful, and the volatility of technologies and the markets in which Barco operates led the Board of Directors to conclude that Barco’s development expenses since 2015 no longer meet the criteria of IAS38.57. As the criteria of IAS38.57 are no longer fulfilled, capitalization of development expenses as of 2015 was not allowed. Barco Integrated report 2022 12 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE 4. Other intangible assets Intangible assets acquired separately are capitalized at cost. Intangible assets acquired as part of a business combination are capitalized at fair value separately from goodwill if the fair value can be measured reliably upon initial recognition and are amortized over their economic lifetimes. Other intangible assets are amortized on a straight-line basis not exceeding 7 years. 5. Property, plant and equipment Property, plant and equipment are stated at cost less accu- mulated depreciation and accumulated impairment losses. Generally, depreciation is computed on a straight-line basis over the estimated useful life of the asset. When there is an indication that the item of property, plant and equipment is impaired, the carrying amounts are reviewed to assess whether they are recorded in excess of their recoverable amounts, and where carrying values exceed this estimated recoverable amount, assets are written down to their recoverable amount. Estimated useful life is: - buildings 20 years - installations 10 years - production machinery 5 years - measurement equipment 4 years - tools and models 3 years - furniture 10 years - office equipment 5 years - computer equipment 3 years - vehicles 5 years - demo material 1 to 3 years - leasehold improvements and finance leases: cfr underlying asset, limited to outstanding period of lease contract A property, plant or equipment item is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recog- nition of the asset is included in profit or loss in the year the asset is derecognized. 6. Leases Assets, representing the right to use the underlying leased asset, are capitalized as property, plant and equipment at cost, comprising the amount of the initial measurement of lease liability, any lease payments made at or before the commence- ment date less any lease incentives received, any initial direct costs and restoration costs. The corresponding lease liabilities, representing the net present value of the lease payments, are recognized as long-term or current liabilities depending on the period in which they are due. Leased assets and liabilities are recognized for all leases with a term of more than 12 months, unless the underlying asset is of low value. The lease payments are discounted using the lessee’s incre- mental borrowing rate, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions. The interest rate implicit in the lease could not be determined. Lease interest is charged to the income statement as an inter- est expense. Leased assets are depreciated, using straight-line depreciation over the lease term, including the period of renewable options, in case it is probable that the option will be exercised. 7. Investments - financial assets at fair value through profit and loss or other comprehensive income Investments are treated as financial assets at fair value through profit and loss or other comprehensive income and are initially recognized at cost, being the fair value of the consideration given. Subsequent fair value recognition through profit and loss or other comprehensive is determined at moment of initial recog- nition. For investments quoted in an active market, the quoted market price is the best measure of fair value. For investments not quoted in an active market, the carrying amount is the historical cost, if a reliable estimate of the fair value cannot be made. An impairment loss is recorded when the carrying amount exceeds the estimated recoverable amount. These investments are presented on the balance sheet on the line ‘Investments and interest in associates’. Short-term investments are cash deposits with a maturity at inception in excess of 3 months and are intended to be held to maturity less than one year (solely payment of principle and interest). They are recognized at cost, with the associated revenue in interest income. Barco Integrated report 2022 13 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE 8. Other non-current assets Other non-current assets include long-term interest-bearing receivables and cash guarantees. Such long-term receivables are accounted for as loans and receivables originated by the company and are carried at amortized cost. An impairment loss is recorded when the carrying amount exceeds the estimated recoverable amount. 9. Financial assets The Group classifies its financial assets in the following cat- egories: financial assets at fair value and financial assets at amortized cost. The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows. Management determines the classification of its financial assets at initial recognition. Regular purchases and sales of financial assets are recognized on the trade date – the date on which the Group commits to purchase or sell an asset. At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss. Financial assets (such as loans, trade and other receivables, cash and cash equivalents) are subsequently measured at amortized cost using the effective interest method, less any impairment if they are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest. Trade and other receivables after and within one year are recognized initially at fair value and subsequently measured at amortized cost, i.e. at the net present value of the receiv- able amount, using the effective interest rate method, less allowances for impairment. The Group assesses on a for- ward-looking basis the expected credit loss associated with its financial assets carried at amortized cost. For trade receivables, the Group applies the simplified approach permitted by IFRS 9 Financial instruments, which requires expected lifetime losses to be recognized from initial recognition of the receivables. The amount of the allowance is deducted from the carrying amount of the asset and is recognized in the income statement within other operating income. 10. Inventories Inventories are stated at the lower of cost or net realiz- able value. Cost is determined on a first in first out (FIFO) or weighted average basis. Net realizable value is the esti - mated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs of completing the sale. In addition to the cost of materials and direct labor, the rel- evant proportion of production overhead is included in the inventory values. Write offs on inventories are applied on slow-moving inven- tory. The calculation of the allowance is based on consistently applied write off rules, which depend on both historical and future demand, of which the latter is subject to uncertainty due to rapid technological changes. 11. Revenue recognition We apply the five-step model to account for revenue arising from contracts with customers. Revenue is recognised at an amount that reflects the consideration to which we expect to be entitled in exchange for transferring goods or services to a customer. (a) Sale of goods Contracts with customers to sell equipment has only 1 perfor- mance obligation. Revenue recognition occurs at a point in time, when control of the asset is transferred to the customer, generally on delivery of the goods. The Group has following warranty options: the Group provides warranties for general repairs of which the Group determined that such warranties are assurance-type warranties which are accounted for under IAS 37 Provisions, Contingent Liabilities and Contingent Assets. (b) Rendering of services The Group provides services within all segments. These services are sold either on their own in contracts with the customers or bundled together with the sale of equipment to a customer. The Group accounts for the equipment and service as separate deliverables of bundled sales and allocates consideration between these deliverables using the relative stand-alone selling prices. The Group recognises service rev- enue by reference to the stage of completion. The Group recognises the services over time given that the customer simultaneously receives and consumes the benefits provided by the Group. Consequently, the Group recognises revenue for these service contracts/service components of bundled contracts over time rather than at a point of time. Barco Integrated report 2022 14 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE (c) Projects For revenue out of projects, the percentage of completion method is used, provided that the outcome of the project can be assessed with reasonable certainty. These projects generally have a lifetime of less than one year. 12. Government grants Government grants related to research and development proj- ects and other forms of government assistance are recognized as income upon irreversible achievement and by reference to the relevant expenses incurred. 13. Trade debtors and other amounts receivable Trade debtors and other amounts receivable are shown on the balance sheet at amortized cost (in general, the original amount invoiced) less an allowance for doubtful debts and less an amount for expected credit losses. The allowance for doubtful debts is recorded in operating income when it is prob- able that the company will not be able to collect all amounts due. Allowances are calculated on an individual basis, based on an aging analysis of the trade debtors. For the determination of the expected credit loss, the Group has applied the simplified approach and records lifetime expected losses on all trade receivables. This amount is determined on a portfolio basis. 14. Cash and cash equivalents Cash and cash equivalents consist of cash on hand and bal- ances with banks and short-term investments with an original maturity date or notice period of three months or less. It is the Group’s policy to hold investments to maturity. All invest- ments are initially recognized at fair value, which is the cost at recognition date. 15. Provisions Provisions are recorded when the Group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made to the amount of the obligation. The Group recognizes the estimated liability to repair or replace products still under warranty at the balance sheet date. The provision is calculated based on historical experience of the level of repairs and replacements. A provision for restructuring is only recognized when the Group has approved a detailed and formal restructuring plan, and the restructuring has either commenced or has been announced to those affected by the plan before the balance sheet date. On the line item ‘Long-term provisions’, the company pres - ents the net liability relating to the post-retirement benefit obligations which includes the Belgian defined-contribution pension plans that are by law subject to minimum guaranteed rates of return. Pension legislation was amended at the end of 2015 and defines the minimum guaranteed rate of return as a variable percentage linked to government bond yields observed in the market as from 1 January 2016 onwards. For 2022 the minimum guaranteed rate of return remains the same as in 2021 and 2020, i.e. 1.75% on employer contributions and employee contributions. We refer to note 19 for more detailed information. As a consequence, the defined contribution plans have been accounted for as defined benefit plan. 16. Equity – costs of an equity transaction The transaction costs of an equity transaction are accounted for as a deduction from equity, net of any related income tax benefit. 17. Interest-bearing loans and borrowings All loans and borrowings are initially recognized at cost, being the fair value of the consideration received net of issue costs associated with the loan/borrowing. Subsequent to initial rec- ognition, interest-bearing loans and borrowings are stated at amortized cost using the effective interest rate method. Amortized cost is calculated by taking into account any issue costs and any discount or premium on settlement. The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition. Barco Integrated report 2022 15 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE When a financial liability measured at amortized cost is mod- ified without this resulting in derecognition, a gain or loss is recognized in profit or loss. The gain or loss is calculated as the difference between the original contractual cash flows and the modified cash flows discounted at the original effective interest rate. The measurement of a written put option liability When the risks and rewards of ownership transfer to the parent, a financial liability is recognized for the fair value of the put option. The fair value is the present value of the estimated redemption amount and depends on a management estimate of a number of assumptions (i.e. the expected market value, the estimated probability that the exercise conditions are met and the expected WACC). Subsequently, the liability is revalued to fair value at each reporting period through the income statement, including the effect of unwinding the discount and other changes in the estimated redemption amount due to changes in management's assumptions. 18. Trade and other payables Trade and other payables are stated at amortized cost, which is the cost at recognition date. This is an approximation of the fair value. 19. Employee benefits Employee benefits are recognized as an expense when the Group consumes the economic benefit arising from service provided by an employee in exchange for employee benefits, and as a liability when an employee has provided service in exchange for employee benefits to be paid in the future. 20. Transactions in foreign currencies Transactions in foreign currencies are recorded at the rates of exchange prevailing at the date of transaction or at the end of the month before the date of the transaction. At the end of the accounting period the unsettled balances on for- eign currency receivables and liabilities are valued at the rates of exchange prevailing at the end of the accounting period. Foreign exchange gains and losses are recognized in the income statement in the period in which they arise. 21. Foreign Group companies In the consolidated accounts, all items in the profit and loss accounts of foreign subsidiaries are translated into euro at the average exchange rates for the accounting period. The balance sheets of foreign group companies are translated into euro at the rates of exchange ruling at the year-end. The resulting exchange differences are classified in a separate component of ‘other comprehensive income’, until disposal of the investment. Foreign currency rates Currency December 31, 2022 December 31, 2021 December 31, 2020 Closing rate Average rate Closing rate Average rate Closing rate Average rate CNY 7. 36 7.08 7.19 7.63 8.02 7.88 INR 88.17 82.69 84.23 87.45 89.66 84.74 USD 1.07 1.05 1.13 1.18 1.23 1.14 22. Derivative financial instruments Derivative financial instruments are recognized initially at cost, which is the fair value of the consideration given (in the case of an asset) or received (in the case of a liability) for it. Subsequent to initial recognition, derivative financial instruments are stated at fair value. The fair values of derivative interest contracts are estimated by discounting expected future cash flows using current market interest rates and yield curve over the remaining term of the instrument. The fair value of forward exchange contracts is estimated using valuation techniques which include forward pricing and swap models at the balance sheet date. Derivative financial instruments that are either hedging instru- ments that are not designated or do not qualify as hedges are carried at fair value with changes in value included in the income statement. Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognized asset or liability, or a highly probable forecasted transaction, the effective part of any gain or loss on the derivative financial instrument is recognized directly in ‘other comprehensive income’ with the ineffective part recognized directly in profit and loss. Barco Integrated report 2022 16 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE Financial assets and liabilities are offset and the net amount is reported in the balance sheet when there is a legally enforce- able right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. 23. Income taxes Current taxes are based on the results of the Group companies and are calculated according to local tax rules. Deferred tax assets and liabilities are determined, using the liability method, for all temporary differences arising between the tax basis of assets and liabilities and their carrying values for financial reporting purposes. Tax rates used are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantially enacted at the balance sheet date. Deferred tax assets are recognized for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary dif- ferences, carry-forward of unused tax credits and tax losses can be utilized. The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient tax- able profit will be available to allow all or part of the deferred income tax asset to be utilized. Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority. The Group reviews their tax positions taken in the financial statements and in the tax filings and how these are supported. In addition, the Group assesses how the taxation authorities might make their examinations and how issues that might arise from examinations could be resolved. Based on this assess- ment, a deferred tax liability is determined in line with IFRIC 23. 24. Impairment of assets Goodwill is reviewed for impairment at least annually. For other tangible and intangible assets, at each balance sheet date, an assessment is made as to whether any indication exists that assets may be impaired. If any such indication exists, an impairment test is carried out in order to determine if and to what extent an impairment is necessary to reduce the asset to its recoverable amount (which is the higher of (i) value in use and (ii) fair value less costs to sell). The fair value less costs to sell is determined as (i) the fair value (that is the price that would be received to sell an asset in an orderly transaction in the principal market at the measurement date under current market conditions) less (ii) the costs to sell while value in use is the present value of the future cash flows expected to be derived from an asset. Recoverable amounts are estimated for individual assets or, if this is not possible, for the cash-gener- ating unit (CGU) to which the assets belong. An impairment loss is recognized whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognized in the income statement. Reversal of impairment losses recognized in prior years is included as income when there is an indication that the impair- ment losses recognized for the asset are no longer needed or the need has decreased, except for impairment losses on goodwill, which are never reversed. 25. Share-based payment Barco created warrants and stock options for staff and directors as well as for individuals who play an important role in the company. According to the publication of IFRS2, the cost of share-based payment transactions is reflected in the income statement. The warrants and stock options are measured at grant date, based on the share price at grant date, exercise price, expected volatility, dividend estimates, and interest rates. Warrant cost is taken into result on a straight-line basis from the grant date until the end of the vesting period. 26. Earnings per share The Group calculates both basic and diluted earnings per share in accordance with IAS 33, Earnings per share. Under IAS 33, basic earnings per share are computed using the weighted average number of shares outstanding during the period. Diluted earnings per share are computed using the weighted average number of shares outstanding during the period plus the dilutive effect of warrants outstanding during the period. As diluted earnings per share cannot be higher than basic earnings per share, diluted earnings per share are kept equal to basic earnings per share in case of negative net earnings. Barco Integrated report 2022 17 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE 27. Discontinued operations and non-current assets held for sale A discontinued operation is a component of the Group that either has been disposed of, or is classified as held for sale and represents a separate major line of business and is part of a single coordinated plan to dispose of a separate major line of business or is a subsidiary acquired exclusively with a view to resale. The Group classifies a non-current asset (or disposal group) as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use. The criteria for held for sale classification is regarded as met only when the sale is highly probable and the asset or disposal group is available for immediate sale in its present condition. Management must be committed to the sale expected within one year from the date of the classification. Property, plant and equipment and intangible assets are not depreciated or amortized once classified as held for sale. Immediately before classification as held for sale, the Group measures the carrying amount of the asset (or all the assets and liabilities in the disposal group) in accordance with appli- cable IFRS. Then, on initial classification as held for sale, non-current assets and disposal groups are recognized at the lower of their carrying amounts and fair value less costs to sell. Impairment losses are recognized for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. Barco Integrated report 2022 18 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE IFRS accounting standards adopted as of 2022 IFRS accounting standards issued but not yet effective as of 2022 The Group applied for the first-time certain standards and amendments, which are effective for annual periods beginning on or after 1 January 2022. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective. • Amendments to IFRS 3 Business Combinations; IAS 16 Property, Plant and Equipment; IAS 37 Provisions, Contingent Liabilities and Contingent Assets as well as Annual Improvements, effective 1 January 2022 • Amendment to IFRS 16 Leases Covid 19-Related Rent Concessions beyond 30 June 2021 (effective 01/04/2021, with early application permitted) None of these IFRS standards issued have an impact on Barco’s financials. Standards issued but not yet effective The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group’s financial statements are disclosed below. The Group intends to adopt these standards and interpretations, if applicable, when they become effective. • Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies, effective 1 January 2023 • IFRS 17 ‘Insurance contracts’, effective 1 January 2023 • Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates, effective 1 January 2023 • Amendments to IAS 1 ‘Presentation of Financial Statements 1 : Classification of Liabilities as current or non-current’, effec- tive 1 January 2023 • Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction, effective 1 January 2023 • Amendments to IFRS 17 Insurance contracts: Initial Application of IFRS 17 and IFRS 9 – Comparative Information (issued on 9 December 2021, effective 1 January 2023 None of the IFRS standards issued, but not yet effective are expected to have a material impact on Barco’s financials. (1) Not yet endorsed by the European Union as at 31 December 2022. Barco Integrated report 2022 19 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE Critical accounting judgments and key sources of estimation uncertainty General business risks Over the year 2022, 2021 and 2020 the macroeconomic conditions have been affecting businesses all over the world – Barco included. We refer to the chapter ‘Risk factors’ (see Corporate Governance & Risk report page 29-43) for an overview of the risks affecting businesses of the Barco Group. The risks described in this chapter are not the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial also may materially adversely affect its busi- ness, financial condition and/or operating results. In view of climate related matters, Barco’s business is not impacted by extreme weather conditions such as droughts or floods. Barco is moving towards more eco-friendly prod- ucts, and we see that our customer’s behaviour and demand is making the same evolution. Deep dive on the 2022 consequences and impact of the macroeconomic environment In 2022, especially after the first quarter, the global covid-19 situation improved considerably, allowing operations to be car- ried out in normal conditions again and with demand for our products resuming in most geographies. The main exception is China, where local lockdowns continued to affect the business and local operations throughout the full year. In the aftermath of the pandemic and as a result of geopolitical events, 2022 posed new macroeconomic challenges affecting businesses all over the world – including Barco. The main ones were: • The supply chain constraints and component shortages: as previously disclosed, Barco is not immune to compo - nent shortages and supply chain constraints which have impacted and continue to impact certain product lines. These impacts relate to shortages and delayed deliveries of components, higher broker costs and higher transport costs. • High inflation in most geographies, related to salaries, energy and component costs. • Remaining pandemic-related effects in China. Several lockdowns lead to lower production and sales in the China region (mainly but not limited to the Entertainment business). • Scarcity of human resources and talent. As Russia's invasion of Ukraine and sanctions towards Russia have a limited impact on Barco's business overall, consequently there is no significant risk. Furthermore Barco reviewed the impact on the Group financials and concluded that there is no material impact. Approach In this section, Barco addresses its risk mitigation plan related to the main 2022 macroeconomic impacts. Operations and supply chain The worldwide shortages in different commodities in 2021 and 2022, tested Barco's supply chain resilience. Barco's strong, long-term supplier relationships and agile approach have proven to be key to find solutions to the shortages in many cases. Nevertheless, Barco is not immune to component shortages and supply chain constraints which have impacted and continue to impact certain product lines. While the team has largely mitigated these challenges, the impact was felt in the form of delayed sales and longer lead times, rather than cancelled orders. Barco experienced a delay in sales after the second quarter of the year of about 40 million euro, primarily in Entertainment for projector-line deliveries. By the end of the third quarter this delay decreased to 20 million euro with further improvement towards the end of the year. Barco has addressed these challenges by intense collaboration with all suppliers and the temporary involvement of brokers for the sourcing of critical components. Furthermore, the redesign of products has been a significant mitigating factor and will continue to be. For certain components and subassemblies, inventory levels have been temporarily increased to lower the risk of shortages. Coping with inflation and high commodity prices The aftermath of the pandemic and the changes in geopolitical situation have led to higher interest rates and a steep increase of the inflation in EMEA and Americas. As Barco has relatively low external debt, the direct cost effect of increased interest rates on 2022 financial costs is limited. Barco Integrated report 2022 20 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE The inflation affects mainly energy costs, salaries, and com- ponent sourcing. All these costs are being critically reviewed and optimized on a constant basis. These inflation effects were passed through were possible. Lifting of pandemic measures, with the exception of China The pandemic covid-19 situation has improved considerably in most regions throughout 2022, especially after the first quarter. This has allowed to return to normalized operations. It also has fueled the demand for our products, most notably in the Enterprise and Entertainment divisions. In China, the course of the pandemic has followed a dif- ferent pattern, with quicker recovery in 2020 and 2021, but still significant local lockdowns in 2022, affecting the busi- ness operations and the customer demand. In our Chinese locations, the hygienic safety measures (social distancing, ventilation, masks, homework policies) have therefore been continued throughout 2022. Despite all measures put in place, at times the Chinese operations have run at lower capacity than usual. Retaining and attracting talent The end of the pandemic has put more pressure on the labor market in many geographies, with higher turnover of personnel seen in many sectors, also affecting Barco. Barco has increased its hiring activity and employer branding campaigns to attract the right talent. Another consequence is an increase of the average labor cost, partly driven by salary indexations. We have cross charged the labour cost inflation effect on our products where possible to reflect this increased cost base. Strong funding and liquidity structure in place Barco has a strong balance sheet and ample liquidity. We refer to note 14 for more details on Barco’s net cash position. Barco has sufficient headroom to enable it to conform to cov- enants on its existing borrowings. The Group complied with all requirements of the loan covenants on its available credit facilities throughout the reporting period. While the future may still bring some levels of headwind, Barco’s strong funding and liquidity structure in place should be more than sufficient to ensure the going concern of the company. In addition, we refer to note 8 where we explain how we tested goodwill and all other non-current assets for impairment and concluded no impairment losses need to be recognized. Key sources of estimation uncertainty • Deferred tax assets are recognized for the carry-forward of unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the unused tax losses and unused tax credits can be utilized. In making its judgment, management considers elements such as long-term business strategy, including tax planning opportunities (see note 10 ‘Deferred tax assets – deferred tax liabilities’) and local tax laws enacted at the reporting date. • Uncertain tax positions: The Group reviews their tax posi - tions taken in the financial statements and in the tax filings and how these are supported. In addition, the Group assesses how the taxation authorities might make their examinations and how issues that might arise from exam- inations could be resolved. Based on this assessment, a deferred tax liability is determined in line with IFRIC 23 (see note 10 ‘Deferred tax assets – deferred tax liabilities’). • Impairment of goodwill: the Group tests the goodwill for impairment annually or more frequently if there are indications that goodwill might be impaired (see note 8 ’Goodwill’). The outcome of the goodwill impairment test performed in the last quarter of 2022, did not result in an impairment loss. • Write offs on inventories: Inventories are stated at the lower of cost or net realizable value. The calculation of the allow- ance for slow-moving inventory is based on consistently applied write off rules, which depend on both historical and future demand, of which the latter is subject to uncer- tainty due to rapid technological changes. On top of the minimum rules, more severe rules are applied in case of for example the decision to stop a business unit or prod- uct line. The remaining inventory on hand is in that case analyzed and reserved as appropriate. Inventory allowances are only reversed in case the above rules no longer apply or the written off inventory is sold or scrapped (see note 12 'Inventory'). • Current expected credit losses: The Group assesses on a forward-looking basis the expected credit loss associated with its financial assets carried at amortized cost. For trade receivables, the Group applies the simplified approach permitted by IFRS 9 Financial instruments, which requires expected lifetime losses to be recognized from initial rec- ognition of the receivables. The ability of the Company to collect its accounts receiv- able balances is dependent on the viability and solvency of its business partners, distributors and resellers, which Barco Integrated report 2022 21 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE is influenced by business behavior, which is on its turn influenced by consumer behavior and general economic conditions. Customers may experience financial difficulties that could cause them to be unable to fulfil their payment obligations to the Company. The Company develops its estimate of credit losses by type of business and customer type, number of days overdue and historical loss rates which are then adjusted for specific receivables that are judged to have a higher than normal risk profile after taking into account management’s internal credit assessment, as well as macro-economic and industry risk factors. Moreover, the Company had a credit insurance in place for specific higher risk cinema contracts and the Company has reached extended payment plans with some of its cinema customers, which have been honored. The remaining overdue balances with its cinema customers per 31 December 2022 are limited and the limited remaining extended payments plans are being honored. For the year ended December 31, 2022, the Company set up a limited extra provision for current expected credit losses (2022: -0.2 million euro; 2021: +0.4 million euro profit) reflecting a lower credit risk of its customers related accounts receivable compared to 2020. The extra provision recorded in 2020 (1.5 million euro) reflected a reduction in the credit quality of specific cinema customers related accounts receivable as a result of the covid-19 global pandemic. Accounting treatment of development expenses Shorter life cycles, unpredictability of which development proj- ects will be successful, and the volatility of technologies (more and more software development) and markets in which Barco operates led the Board of Directors to conclude that Barco’s development expenses do not meet the criteria of IAS38.57. As the criteria of IAS38.57 are not fulfilled, our accounting policy, with respect to research and development costs, does not allow the capitalization of development expenses. Defined benefit obligations The cost of the defined benefit pension plan (see note 19) and the present value of the pension obligation are deter- mined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual devel- opments in the future. These include the determination of the discount rate, future salary increases, mortality rates and future pension increases. Due to the complexities involved in the valuation, and its long-term nature, a defined obligation is highly sensitive to changes in these assumptions. All assump- tions are reviewed on reporting date. Barco Integrated report 2022 22 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE Notes to the consolidated financial statements Country of Incorporation Legal Entity Registered Office % Europe, Middle East and Africa Belgium Barco Coordination Center NV Beneluxpark 21, 8500 Kortrijk BELGIUM 100 Belgium Barco Integrated Solutions NV Beneluxpark 21, 8500 Kortrijk BELGIUM 100 Belgium Cinionic bv Beneluxpark 21, 8500 Kortrijk BELGIUM 80 Belgium Barco Solutions BV Beneluxpark 21, 8500 Kortrijk BELGIUM 70 France Barco SAS 177 avenue Georges Clémenceau, Immeuble “Le Plein Ouest”, 92000 Nanterre FRANCE 100 Germany Barco Control Rooms GmbH Greschbachstrasse 5 a, 76229 Karlsruhe GERMANY 100 Germany Barco GmbH Greschbachstrasse 5 a, 76229 Karlsruhe GERMANY 100 Italy Barco S.r.l. Via Monferrato 7, 20094 Corsico ITALY 100 Italy FIMI S.r.l. Via Vittor Pisani 6, 20124 Milano ITALY 100 Netherlands Barco B.V. Zuidplein 126, WTC Tower H, Floor 15, 1077XV Amsterdam NETHERLANDS 100 Norway Barco Fredrikstad AS Habornveien 53, 1630 Gamle Fredrikstad NORWAY 100 Poland Barco Sp. z o.o. Annopol 17, 03-236 Warsaw POLAND 100 Russia Barco Services OOO Office 1, Floor 3, Kondratyuka str., 3, 129515 Moscow RUSSIAN FEDERATION 100 Saudi Arabia Barco Integrated Solutions Saudi Arabia for Business Services Laysen Valley, King Khalid Rd. and Al-Orouba Rd., Plot 3855, Building 33, 2nd floor, Riyadh SAUDI ARABIA 100 Spain Barco Electronic Systems, S.A. Travessera de les Corts 241, Entlo. 3a, 08028 Barcelona SPAIN 100 Sweden Barco Sverige AB c/o Grant Thornton, Box 2230, 403 14 Göteborg SWEDEN 100 Sweden Barco Solutions Sweden AB c/o Grant Thornton, Box 2230, 403 14 Göteborg SWEDEN 100 Sweden Gnosco AB Kungsgatan 4, 411 19 Göteborg SWEDEN 70 United Arab Emirates Barco Middle East L.L.C. Concord Tower, Suite 1212, PO Box 487786, Dubai Media City, Dubai UNITED ARAB EMIRATES 49 United Kingdom Barco Ltd. Building 329, Doncastle Road, RG12 8PE Bracknell, Berkshire UNITED KINGDOM 100 United Kingdom Gnosco Dermicus Ltd. 24 Old Queen Street, SW1H 9HP London UNITED KINGDOM 70 1. Consolidated companies 1.1 List of consolidated companies on 31 December 2022 () Barco has control over the relevant activities of the entity by virtue of a contractual agreement with the local investor. Barco Integrated report 2022 23 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE Country of Incorporation Legal Entity Registered Office % Americas Brazil Barco Ltd.. Av. Ibirapuera, 2332, 8° andar, conj 82, Torre II, Moema, 04028-002 São Paulo BRAZIL 100 Canada MTT Innovation Incorporated Suite 2400, 745 Thurlow Street, V6E 0C5 Vancouver, BC CANADA 100 Colombia Barco Colombia SAS Carrera 15, n° 88-64, Torre Zimma Oficina 610, 110221 Bogota COLOMBIA 100 Mexico Barco Visual Solutions S.A. de C.V. Mariano Escobedo No. 476 Piso 10 Col. Anzures, C.P. 11590 D.F. México MEXICO 100 Mexico Cinionic Mexico, S.A. de C.V. Artemio del Valle Arizpe 16, 2ndo piso, Col del Valle, CP 03100 New Mexico city (CDMX) MEXICO 80 United States Barco, Inc. 1209 Orange Street, 19801 Wilmington DE UNITED STATES 100 United States Cinionic Inc. 11080 White Rock Road, Suite 100, 95670 Rancho Cordova CA UNITED STATES 80 Asia-Pacific Australia Barco Systems Pty. Ltd. 2 Rocklea Drive, VIC 3207 Port Melbourne AUSTRALIA 100 Australia Cinionic Pty. Ltd. C/- Accru Melbourne Pty Ltd. 50 Camberwell Road, VIC 3123 Hawthorn East AUSTRALIA 80 China Barco Trading (Shanghai) Co., Ltd. Room 702, No. 138, Fenyang Road, 200031 Shanghai CHINA 100 China Barco Visual (Beijing) Electronics Co., Ltd. No. 16 Changsheng Road, Zhong Guan Cun Science Park, Chang Ping District, 102200 Beijing CHINA 100 China Barco Visual (Beijing) Trading Co., Ltd. No. 16 Changsheng Road, Chang Ping Park, Zhong Guan Cun Science Park, Chang Ping District, 102200 Beijing CHINA 100 China Barco China Electronic Visualization Technology (Nanjing) Co., Ltd. No. 1, Hengtong Road Nanjing development zone, 210038 Nanjing, Jiangsu CHINA 100 China Barco (Suzhou) Healthcare Technology Co., Ltd. No. 111, Sutong Road, Suzhou Industrial Park, 215021 Suzhou CHINA 100 China Barco (Wuxi) Technology Co., Ltd. B312-109, No. 3, Fengwei Road, Huizhi Enterprise Center, Xishan development zone, 214101 Wuxi CHINA 100 Hong Kong Barco Ltd. Suite 2607-2610, 26/F, Prosperity Center, 25 Chong Yip Street, Kwun Tong, Kowloon HONG KONG 100 Hong Kong Barco Visual Electronics Co., Ltd. Suite 2607-2610, 26/F, Prosperity Center, 25 Chong Yip Street, Kwun Tong, Kowloon HONG KONG 100 Hong Kong Barco China (Holding) Ltd. Suite 2607-2610, 26/F, Prosperity Center, 25 Chong Yip Street, Kwun Tong, Kowloon HONG KONG 100 Hong Kong Cinionic Ltd. Suite 2607-2610, 26/F, Prosperity Center, 25 Chong Yip Street, Kwun Tong, Kowloon HONG KONG 80 India Barco Electronic Systems Pvt. Ltd. c/o Perfect Accounting & Shared Services P.Ltd., E-20, 1st & 2nd Floor, Main Market, Hauz Khas, 110016 New Delhi INDIA 100 Japan Barco Co., Ltd. Yamato International Bldg 8F, 5-1-1 Heiwajima, Ota-ku, 143-0006 Tokyo JAPAN 100 Malaysia Barco Sdn. Bhd. No. 13A, Jalan SS21/56B, Damansara Utama, 47400 Petaling Jaya, Selangor MALAYSIA 100 Singapore Barco Singapore Private Limited 100G Pasir Panjang Road Interlocal Center, 118523 Singapore SINGAPORE 100 South Korea Barco Korea Ltd. 1F. & 3F., DS Tower, 72-13 (GwanYang-Dong), BoelMal-Ro, DongAn-Gu, GyeongGi-Do, 14058 AnYang-si KOREA, REPUBLIC OF 100 Taiwan Barco Ltd. 33F., No. 16, Xinzhan Rd., Banqiao Dist., 220 New Taipei City TAIWAN, PROVINCE OF CHINA 100 Barco Integrated report 2022 24 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE 1.2 List of equity accounted companies on 31 December 2022 Exemption of publishing financial statements and management report according German legislation §264 Abs. 3 HGB: Following subsidiary-companies will be released of publishing their financial statements and management report 2022: • Barco GmbH • Barco Control Rooms GmbH These companies are included in the consolidation scope of Barco Consolidated 2022 as listed above. Country of Incorporation Legal Entity Registered Office % Americas United States CCO Barco Airport Venture LLC Corporation Trust Center, 1209 Orange Street, 19801 Wilmington (DE) UNITED STATES 35 Asia-Pacific China CFG Barco (Beijing) Electronics Co., Ltd. No. 16 Changsheng Road, Zhong Guan Cun Science Park, Chang Ping District, 102200 Beijing CHINA 49 1.3 Acquisitions and divestments 2022 Acquisition of Gnosco AB In order to advance its growth initiative Demetra, Barco signed a joint venture agreement with the Swedish company Gnosco AB on July 1 st , 2022. The two teams will first combine their expertise, go-to-mar- ket capabilities and installed bases and then plan the path to commercial success including a joint teledermatology and telewound care roadmap based on high quality, affordable skin solutions. Barco acquired 70% of the shares in Gnosco AB. As the effective control is transferred on 1 July 2022, the Gnosco figures are taken up in the figures of the Barco Group from 1 July, 2022 onwards. The investment payment is recorded as an intangible asset (acquired know-how) on the Barco Consolidated Balance Sheet, which will be amortized over 5 years. A financial liability related to puttable non-controlling interests was recorded for an amount of 2 million euros. See note 15 for more information. In 2022 Gnosco AB contributed six months of turnover (0.8 million euro) to the total turnover of the Group, though in its start-up phase not yet contributing to EBITDA (-0.1 million euro). If the acquisition had taken place at the beginning of the year, the total turnover would have been 1.2 million euro and the EBITDA loss for the period would have been -0.3 million euro. Transaction costs of 0.1 million euro have been expensed and are included in administrative expenses in the statement of profit or loss and are part of operating cash flows in the state- ment of cash flows. The following table summarizes the consideration paid for Gnosco and the fair values of the assets acquired and liabilities assumed recognized at the acquisition date. The difference between the consideration paid, the underlying net assets is related to future cash flows Barco expects to realize based on the sale of services provided by Dermicus, the teledermatol- ogy platform for diagnosis of skin cancer, wounds and other skin lesions. Barco Integrated report 2022 25 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE The acquisition has been accounted for using the acquisition method conform IFRS3 Business Combinations. We refer to note 23 'Cash flow statement: effect of acquisitions and disposals' for impact on the cash flow of the Group. 2021 - 2020 Barco did not close any acquisition or divestment agreements in 2021 and 2020. Assets and Liabilities Gnosco AB In thousands of euro 1 July 2022 Opening B/S Fair value restatements IFRS Opening B/S Capitalized development 354 -354 - Know-how 0 7,607 7,607 Deferred tax assets - 73 73 Total non-current assets 354 7,326 7,68 0 Trade receivables 29 - 29 Other current assets 12 - 12 Total current assets 40 - 40 LT loan -172 - -172 Deferred tax liability - -1,567 -1,567 Total non-current liabilities -172 -1,567 -1,739 Other current liabilities -170 - -170 Total current liabilities -170 - -170 Cash 237 - 237 Total net assets 289 5,759 6,048 Upfront consideration 4,000 Total acquisition cost (excl. net cash) 4,000 Financial liabilities related to puttable non-controlling interest 2,048 Cash flow on acquisition 1 July 2022 Net cash acquired with the subsidiary 237 Cash paid -4,000 Net cash flow on acquisition -3,763 Barco Integrated report 2022 26 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE 2. Operating Segments information 2.1. Basis of operating segments information Barco is a global technology company developing solutions for three main markets, which is also reflected in its divisional structure: Healthcare, Enterprise and Entertainment. • Healthcare: The Healthcare division comprises two busi- ness units: - Diagnostic imaging offers an extensive line-up of high-pre- cision medical display systems for disciplines including radiology, mammography, dentistry, pathology and clinical review imaging, plus a full suite of support services. - Surgical and Modality brings together two activities with great synergy potential, as they target the same end-cus- tomers (often opering rooms) and require the same go-to-market strategy. The offering of this business unit includes the company’s digital operating room portfolio (hardware + video-over-IP-technology), custom medical displays for modality imaging and a full suite of support services. • Enterprise: The Enterprise division comprises two business units: - Meeting Experience offers collaboration and visualization technologies for a smart workplace or learning environ- ment: ClickShare wireless conference and presentation systems, weConnect Virtual Classroom as well as services. - Large Video Walls offers a package of solutions to help control room operators make well-informed decisions: video walls, video wall controllers, control room software and a full suite of support services. • Entertainment: The Entertainment division comprises two business units: - Cinema offers the industry’s most complete range of laser and lamp-based cinema projectors, including image pro- cessing and audio solutions. Barco’s cinema offering is marketed via Barco CFG (for China) and Cinionic (for rest of the world), which combines the projection technology with consultancy, installation, financing, monitoring and maintenance services. - The Immersive Experience business unit offers solutions tailored to the specific needs of large venues, live events, themed entertainment (museums, theme parks, digital immersive art installations, projection mapping, etc.) and simulation applications: projection, image processing and related services. No operating segments have been aggregated to form the above reportable operating segments. The Board of directors monitor the results of each of the three divisions separately, so as to make decisions about resource allocation and performance assessment and consequently, the divisions qualify as operating segments. These operating segments do not show similar economic characteristics and do not exhibit similar long-term financial performance, there- fore cannot be aggregated into reportable segments. Division performance is evaluated based on EBITDA. Group financing (including finance costs and finance revenue) and income taxes are managed on a group basis and are not allocated to the operating divisions. The modification in the management structure and the core leadership team in 2021 had no impact on the identification of the operating segments. Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties. We refer to ‘Our markets’ for more explanation on the activities performed by each division. Barco Integrated report 2022 27 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE 2.2. Healthcare Driven by the gradual resumption of spending by Diagnostic Imaging and Surgical customers, the Healthcare division deliv- ered 31% sales growth compared to last year. As a result of platform redesigns, last year challenges associated with com- ponent shortages were alleviated allowing for a resumption of conventional lead times. EBITDA margin for the division reached 11.2%, up 2.6 percent- age points year-over-year thanks to better gross margins and operating leverage. Improved gross margins are resulting from a better product mix and adjusted pricing, passing through increased component and transportation costs and impact of inflation where possible. Increase in segment assets in 2022 are mainly the result of a temporary increase in inventory levels to lower the risk of shortages. Higher capital expenditure in 2021 compared to 2020 and 2022, concern the new build factory in China, Suzhou, both facility and production (impact of 8 million euro in 2021). We refer to 'Our results' and 'Risk management and control processes' for more explanation. In thousands of euro 2022 2021 2020 Variance 2022-2021 Variance 2021-2020 Net sales 341,701 100% 261,486 100% 261,856 100% 30.7% -0.1% Cost of goods sold -225,340 -65.9% -174,294 -66.7% -166,115 -63.4% 29.3% 4.9% Gross profit 116,361 34.1% 87,192 33.3% 95,741 36.6% 33.5% -8.9% EBITDA 38,354 11.2% 22,399 8.6% 35,030 13.4% 71.2% -36.1% Depreciation TFA and (acquired) intangibles 11,176 3.3% 11,775 4.5% 13,362 5.1% -5.1% -11.9% Adjusted EBIT 27,179 8.0% 10,624 4.1% 21,668 8.3% 155.8% -51.0% Capital expenditures TFA and software 6,193 1.8% 12,271 4.7% 3,368 1.3% -49.5% 264.4% Segment assets 193,103 141,127 127,180 Segment liabilities 74,717 59,882 49,398 Barco Integrated report 2022 28 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE 2.3. Enterprise The Enterprise division saw a strong topline growth over the year, resulting in a year-over-year increase in sales of 36.1% led by Meeting Experience. Enterprise saw a continued recovery after the pandemic with significant sales growth in both segments. Meeting Experience sales picked up in the different regions as soon as lockdown measures were eased. The rebound linked to the return-to- the-office wave started in EMEA, followed by Americas and Asia. Also Large Video Walls realized double-digit sales growth in all regions, fueled by deployments of control rooms. The Enterprise division saw a very solid recovery of profitability with an EBITDA margin of 19.1%, up 12.8 percentage points from 6.3% in 2021, primarily driven by the favorable impact on product mix of Clickshare’s sales growth. We refer to 'Our results' and 'Risk management and control processes' for more explanation. In thousands of euro 2022 2021 2020 Variance 2022-2021 Variance 2021-2020 Net sales 317,250 100% 233,090 100% 216,794 100% 36.1% 7.5% Cost of goods sold -144,922 -45.7% -124,529 -53.4% -111,601 -51.5% 16.4% 11.6% Gross profit 172,328 54.3% 108,561 46.6% 105,193 48.5% 58.7% 3.2% EBITDA 60,609 19.1% 14,645 6.3% 18,246 8.4% 313.9% -19.7% Depreciation TFA and (acquired) intangibles 8,601 2.7% 9,408 4.0% 10,033 4.6% -8.6% -6.2% Adjusted EBIT 52,009 16.4% 5,237 2.2% 8,214 3.8% 893.0% -36.2% Capital expenditures TFA and software 4,015 1.3% 2,706 1.2% 3,436 1.6% 48.4% -21.2% Interest in associates 13,443 9,557 Segment assets 195,912 202,365 137,786 Segment liabilities 75,144 81,053 53,299 Barco Integrated report 2022 29 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE In thousands of euro 2022 2021 2020 Variance 2022-2021 Variance 2021-2020 Net sales 399,339 100% 309,712 100% 291,433 100% 28.9% 6.3% Cost of goods sold -275,276 -68.9% -217,980 -70.4% -208,584 -71.6% 26.3% 4.5% Gross profit 124,063 31.1% 91,732 29.6% 82,849 28.4% 35.2% 10.7% EBITDA 27,510 6.9% 21,465 6.9% 287 0.1% 28.2% 7379.7% Depreciation TFA and (acquired) intangibles 16,555 4.1% 17,953 5.8% 19,989 6.9% -7.8% -10.2% Adjusted EBIT 10,955 2.7% 3,512 1.1% -19,702 -6.8% 211.9% -1 17.8% Capital expenditures TFA and software 8,002 2.0% 3,810 1.2% 8,177 2.8% 110.0% -53.4% Interest in associates 13,723 11,316 19,713 Segment assets 288,556 226,584 285,370 Segment liabilities 140,825 144,702 117,6 4 8 The Entertainment division delivered 29% sales growth in 2022, explained by the solid demand in Cinema for Barco’s all-laser portfolio and an all-time high topline in Immersive Experience, with a particular uptake in the fixed install business reflect- ing greater demand from museums, projection mapping and theme parks, while impacted by supply constraints (mainly in the first half of the year). The division was able to turnaround a negative EBITDA in the first half of 2022 to an EBITDA margin at the same level as 2021 (6.9%). An improved gross margin, as the negative impact of component shortages (more pronounced in the first half of 2022) was largely resolved in the second half of the year thanks to implemented product redesigns was partly offset by increased investments in R&D and sales and marketing to further strengthen the division’s value proposition and accel- erate certain growth initiatives. Increase in segment assets in 2022 are mainly the result of a temporary increase in inventory levels to lower the risk of shortages. We refer to 'Our results' and 'Risk management and control processes' for more explanation. 2.4. Entertainment Barco Integrated report 2022 30 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE 2.5. Reconciliation of segment information with group information In thousands of euro 2022 2021 2020 External sales Healthcare 341,701 261,486 261,856 At a point in time revenues 337,983 99% 257,466 98% 258,026 99% Over time revenues 3,718 1% 4,020 2% 3,830 1% Enterprise 317,250 233,090 216,794 At a point in time revenues 232,932 73% 161,093 69% 153,435 71% Over time revenues 84,319 27% 71,996 31% 63,359 29% Entertainment 399,339 309,712 291,433 At a point in time revenues 364,830 91% 276,981 89% 255,694 88% Over time revenues 34,509 9% 32,731 11% 35,739 12% Total external sales segments 1,058,291 804,288 770,083 At a point in time revenues 935,745 88% 695,541 86% 667,155 87% Over time revenues 122,546 12% 108,747 14% 102,928 13% Net Income EBITDA Healthcare 38,354 22,399 35,030 Enterprise 60,609 14,645 18,246 Entertainment 27,510 21,465 287 Depreciation and other amortizations Healthcare 11,176 11,775 13,362 Enterprise 8,601 9,408 10,033 Entertainment 16,555 17,953 19,989 Adjusted EBIT Healthcare 27,179 10,624 21,668 Enterprise 52,009 5,237 8,214 Entertainment 10,955 3,512 -19,702 Total adjusted EBIT 90,143 19,373 10,180 Barco Integrated report 2022 31 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE In thousands of euro 2022 2021 2020 Restructuring and impairments -2,500 -6,420 -14,513 EBIT 87,6 43 12,953 -4,332 Interest income (expense) - net 843 -1,110 -121 Income/(loss) before taxes 88,486 11,843 -4,453 Income taxes -15,927 -2,132 - Result after taxes 72,559 9,711 -4,453 Share in the result of joint ventures and associates 3,337 48 -276 Net income 75,896 9,759 -4,729 Net income attributable to non-controlling interest 677 878 -335 Net Income attributable to the equity holder of the parent 75,219 8,881 -4,393 The total over time revenues relate to project sales mainly in the Enterprise division and to recurring service revenues generated on maintenance contracts. In thousands of euro 2022 2021 2020 Assets Segment assets Healthcare 193,103 141,127 127,180 Enterprise 195,912 202,365 137,786 Entertainment 288,556 226,584 285,370 Total segment assets 677,572 570,076 550,336 Deferred tax assets 55,239 64,155 62,811 Short term investments 1,651 2,763 3,175 Cash and cash equivalents 305,915 351,571 235,402 Other non-allocated assets 107,028 115,684 166,479 Total assets 1,147,405 1,104,249 1,018,203 Barco Integrated report 2022 32 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE In thousands of euro 2022 2021 2020 Liabilities Segment liabilities Healthcare 74,717 59,882 49,398 Enterprise 75,144 81,053 53,299 Entertainment 140,825 144,702 117,648 Total segment liabilities 290,687 285,637 220,344 Equity attributable to equityholders of the parent 759,189 693,783 659,309 Non-controlling interest 19,792 41,031 37,798 Long-term debts 32,335 34,366 35,854 Deferred tax liabilities 3,229 3,823 4,745 Current portion of long-term debts 11,217 10,218 9,187 Short-term debts - - 86 Other non-allocated liabilities 30,957 35,390 50,880 Total equity and liabilities 1,147,405 1,104,249 1,018,203 Barco Integrated report 2022 33 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE 2.6. Geographic information Management monitors sales of the Group based on the regions to which the goods are shipped or the services are rendered in three geographical regions Europe, Americas (North-America and LATAM) and Asia-Pacific (APAC). We refer to the ‘Comments on the group results’ for a split of revenue from external customers based on the geographical location of the customers to whom the invoice is issued. There is no significant (i.e. representing more than 10% of the Group’s revenue) concentration of Barco’s revenues with one customer. Sales to Belgium represent 42 million euro of the Group rev- enues in 2022 versus 21 million euro in 2021 and 23 million in 2020. Below table gives an overview of the assets per region and the most important capital expenditures in non-current assets per region. In thousands of euro 2022 2021 2020 Net sales Europe 405,190 38.3% 305,199 37.9% 280,280 36.4% Americas 435,793 41.2% 300,826 37.4% 296,942 38.6% Asia-Pacific 217,308 20.5% 198,262 24.7% 192,862 25.0% Total 1,058,291 100% 804,288 100% 770,083 100% Total assets Europe 515,349 44.9% 557,571 50.5% 455,930 44.8% Americas 266,778 23.3% 180,303 16.3% 222,214 21.8% Asia-Pacific 365,277 31.8% 366,375 33.2% 340,059 33.4% Total 1,147,405 100% 1,104,249 100% 1,018,203 100% Purchases of tangible and intangible fixed assets (excl. IFRS 16) Europe 10,037 47.3% 8,186 43.6% 7,315 48.8% Americas 3,763 17.7% 1,223 6.5% 1,441 9.6% Asia-Pacific 7,418 35.0% 9,379 49.9% 6,224 41.5% Total 21,218 100% 18,787 100% 14,980 100% () As included in the consolidated statement of cash flow. Barco Integrated report 2022 34 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE 3. Income from operations (EBIT) Sales for the year increased 32% (24% at constant curren- cies) to 1,058.3 million euro, close to the pre-pandemic 2019 level. Excluding China, all regions are back to the sales level of 2019. Year-over-year, all divisions delivered a double-digit sales growth, fueled by the steady improvement in the supply chain over the second half of 2022. The gross profit margin improved with 3.3 percentage points year-on-year to 39%. This recovery close to the pre-pandemic levels was thanks to gross profit actions and fueled by a more favorable product mix most outspoken in the Enterprise divi- sion and by a better supply chain situation during the second half of the year. Adjusted EBIT margin reached 8.5% in 2022, up 6.1 percent- age points versus 2021. Both gross margin improvement and operational leverage on the topline growth contributed to these uptakes. In 2021 topline increased 4.4 % compared to 2020. Although sales were up year-over-year in all divisions, prolonged pandemic induced restrictions and component shortages continued to cause delays in converting orders to sales. Component and transport scarcity caused higher transport and broker costs and restricted production and sales (volume) efficiency, pressuring gross profit margins, down 1.2 percent- age points versus 2020. In absolute numbers the higher topline compensated for the lower gross profit margins and was 3.7 million euro higher than 2020. Indirect costs in 2022 decreased to 30.3 % of sales (2021: 33%). The increase in absolute numbers is caused by high inflation, resumed activity levels and investments post-covid. In 2021, indirect costs were kept stable versus 2020, a result of extending cost containment measures with selective invest- ments in research and development and commercialization to defend and extend the Company’s market position. The lower level of indirect costs in 2020 and 2021 (-17% below pre covid level) as a result of measures taken to align the activity rate with market realities and customer demand, could not compensate for the margin losses resulting from the lower topline compared to pre covid level, resulting in an adjusted EBIT margin of 2.4 % in 2021 and 1.3% in 2020. In 2022, EBIT includes restructuring costs as a result of a num- ber of cost down measures across different countries and functions in the Enterprise division, mainly in the business unit Large Video Walls where the profitability keeps lagging. Management intends to conduct a strategic review of this busi- ness unit in 2023, focusing on profitable products and markets. EBIT in 2021 included 6.4 million euro restructuring and impairment costs as a result of the changes in organizational structure and a number of cost down measures across dif- ferent countries and functions. In 2020 restructuring and impairment costs related to the closure of the Taiwanese Unisee Liquid Crystal Module (LCM) production factory and to reorganizations in the Entertainment and Enterprise divisions caused by the economic impact of the covid-19 pandemic (14.5 million euro). For more details on adjusting items we refer to note 5 'Restructuring and impairment'. In thousands of euro 2022 2021 2020 Sales 1,058,291 804,288 770,083 Cost of goods sold -645,538 -516,803 -486,300 Gross profit 412,753 287,485 283,783 Gross profit as % of sales 39.0% 35.7% 36.9% Indirect costs -320,947 -265,437 -265,300 Other operating income (expenses) - net -1,663 -2,676 -8,302 Adjusted EBIT 90,143 19,373 10,180 Adjusted EBIT as % of sales 8.5% 2.4% 1.3% Restructuring and impairments -2,500 -6,420 -14,513 EBIT 87,643 12,953 -4,332 EBIT as % of sales 8.3% 1.6% -0.6% Barco Integrated report 2022 35 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE The increased topline and higher gross profit margins in 2022 resulted in an improvement of the EBITDA margin by 4.7 per- centage points, landing at 12% in 2022 (+68 million euro above last year), compared to an EBITDA margin of 7.3% on sales in 2021 and 7% in 2020. In 2022 depreciations are 2.8 million lower than in 2021, explained by fully amortized software and acquired know- how in 2022. In thousands of euro 2022 2021 2020 Product sales 882,052 83% 663,034 83% 639,667 83% Project sales 73,920 7% 65,487 8% 55,743 7% Service sales 102,318 10% 75,767 9% 74,673 10% Sales 1,058,291 804,288 770,083 Major part of the sales relates to product sales (in 2022: 83%, in 2021: 83%, in 2020: 83%). Project sales remained stable at 7-8% of total sales over the period 2020-2022 and include combined sales from products, installations and services. Most of these project sales have a lifetime of less than one year. The share of service sales in 2022 is 10% of total sales (2021:9%, 2020: 10%). We refer to note 2 'Segment Information' and to the chapter ‘Our results’ for more explanation on sales and income from operations. Total product and project sales amount to 956.0 million euro in 2022. We refer to the note on EU taxonomy on p. 59 for the Company’s EU taxonomy eligible turnover in 2022. In thousands of euro Note 2022 2021 2020 Adjusted EBIT 90,143 19,373 10,180 Depreciations and amortizations 9 36,331 39,136 43,383 EBITDA 126,474 58,509 53,563 EBITDA as % of sales 12.0% 7. 3% 7.0% Barco Integrated report 2022 36 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE In thousands of euro 2022 2021 2020 Research and development expenses (a) -120,493 -101,338 -102,610 Sales and marketing expenses (b) -142,740 -116,240 -112,329 General and administration expenses (c) -57,714 - 47,858 -50,362 Indirect costs -320,947 -265,437 -265,300 Other operating income (expenses) - net (d) -1,663 -2,676 -8,302 Indirect costs and other operating income (expenses) - net -322,610 -268,112 -273,603 Indirect costs and other operating income (expenses) - net Indirect costs in 2022 decreased to 30.3 % of sales (2021: 33%, 2020: 34.5%). In absolute numbers indirect costs increased, caused by high inflation, increase in headcount as a result of resumed activity levels and investments post-covid. Indirect costs in 2021 were in line with 2020, a result of extending cost containment measures such as implemented temporary work arrangements and economic unemployment measures for both white and blue collars, while sustaining investments in strategic projects. Both in 2021 and 2020, the negative impact on the company’s topline versus pre covid was higher than the reduction in indirect costs via cost measures could compensate for. Barco Integrated report 2022 37 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE (a) Research and development expenses Research and development activities are spread over the divisions as follows: In thousands of euro 2022 % of sales 2021 % of sales 2020 % of sales Total research & development expenses 120,493 11.4% 101,338 12.6% 102,610 13.3% In thousands of euro 2022 % of sales 2021 % of sales 2020 % of sales Sales and marketing expenses 142,740 13.5% 116,240 14.5% 112,329 14.6% In 2022 research and development expenses represent 11.4% of sales (12.6% in 2021; 13.3% in 2020). In absolute numbers research and development expenses have increased to 120.5 million euro. In 2020 and 2021, the lower absolute level of research and development expenses were the result of cost containment measures taken as response to the covid crisis. The Company, however, continued investments in its product roadmap to sustain and extend the Company’s technology leadership position. Only the cost related to research and development is consid- ered material and therefore included in EU taxonomy eligible Opex. We refer to the note on EU taxonomy on p. 61 for the EU taxonomy eligible opex in 2022. Sales and marketing expenses include all indirect costs related to the sales organization which are not billed as part of a prod- uct or service to the customer as well as the costs related to regional or divisional marketing activities. Sales and marketing expenses in 2022 are 13.5% of sales compared to 14.5% in 2021 and 2020. The absolute increase in 2022 is the result of inflation and increase in headcount. Further activity level resumed, e.g. travel, post-covid. (b) Sales and marketing expenses Barco Integrated report 2022 38 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE (c) General and administration expenses General and administrative expenses in 2022 are at 5.5% of sales, down 1 percentage point versus previous years. In abso- lute numbers expenses increased with almost 10 million euro, due to the impact of the inflation in Europe and Americas on personnel costs and higher cost of recruitment as a result of higher attrition post-covid and activity levels back to a normal level. In 2021 and 2020 expenses were lower as a a result of the covid-related measures taken. Steady investments in IT systems over the past years have led to IT costs (including amortizations on SAP ERP system) rep- resenting the major part of G&A expenses (2022: 42%, 2021: 47%, 2020: 45%). In thousands of euro 2022 % of sales 2021 % of sales 2020 % of sales General and administration expenses 57,714 5.5% 47,858 6.0% 50,362 6.5% Barco Integrated report 2022 39 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE (d) Other operating income (expense) – net (a) The 49% share in the net result of BarcoCFG is repre- sented in EBITDA. See note 11. As a result of the remaining pandemic-related effects in China (especially on the cin- ema businesses), the 2022 results of the Chinese cinema joint-venture are at the lowest point, since the start of the covid-19 global pandemic impact on the cinema business (2020). (b) A limited extra bad debt provision is set-up (2022: -0.2 million euro; 2021: +0.4 million euro provision rever - sal), reflecting a lower credit risk of its customers related accounts receivable compared to 2020. The extra provision recorded in 2020 (1.5 million euro) reflected a reduction in the credit quality of specific cinema customers related accounts receivable as a result of the covid-19 global pandemic. (c) We refer to note 19 'Provisions'. In thousands of euro 2022 2021 2020 Share in the result of BarcoCFG (a) 2,764 3,028 3,507 Bad debt provisions (net of write-offs and reversals of write-offs) (b) -243 448 -1,697 Cost of share-based payments -1,548 -3,067 -2,907 Exchange gains and losses (net) -672 -63 -3,109 Other provisions (net of additions and reversals of provisions) (c) 72 -1,059 -4,609 Bank charges -1,139 -778 -902 Customer financial discounts -1,230 -571 -628 Gains/(Loss) on disposal of tangible fixed assets 1,670 1,824 14 Other (net) -1,337 -2,438 2,029 Other operating income (expense) -1,663 -2,676 -8,302 Barco Integrated report 2022 40 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE 4. Revenues and expenses by nature The table below provides information on the major items contributing to the adjusted EBIT, categorized by nature. Material costs in 2022 increased with 103 million euro or 24% compared to 2021 which is in line with the increased top line (+32%). Also, in 2022 material costs are impacted by higher component prices due to inflation and supply shortages. As the topline increased stronger than the material cost we see a relative improvement of the gross margin of 4 percentage points compared to last year. Material costs in 2021 increased as percentage of sales com- pared to 2020, impacted by higher component prices linked to supply shortages. Personnel cost in 2022 is 48 million euro higher than 2021, as a result of increased headcount, inflation and higher bonus. As Barco’s activity rate is increasing again after covid we saw an increase in the number of full-time equivalents, mainly in the second semester of 2022, and an increase in temporary personnel compared to 2021. Personnel cost in 2021 was 5.9 million euro higher than 2020, but still 46 million euro lower than pre covid level as a result of temporary measures and executed restructuring lay-offs (see note 5. Restructuring and impairments) to align costs with lower demand as a result of the impact of the covid- 19 pandemic on the Company’s markets. The company has implemented temporary work arrangements and economic unemployment measures as of 2020 for both white and blue collars, in conformity with country specific legal frameworks, support mechanisms and regulations. The increase compared to 2020 can be explained by reduced unemployment measures, lower wage subsidies received and merits (see ‘Remuneration report for financial year 2021’ in corporate governance chapter). The company was able to apply for wage grants under the enacted Covid-19 relief legislation in APAC and Canada for 0.2 million euro (2020: 3.4 million euro, then also including Cinionic US). In 2020 and 2021 these measures also entailed shifts in the planned investment patterns on selected long-term initiatives and a sustained strict discipline on discretionary spending (e.g. travel, marketing spend, consulting,… ). The company made deliberate choices on the continuation and timetable of selected development projects and adjusted internal and external support levels in function of the focus shift. This has resulted in 8 million euro (2020: 32.7 million euro) lower ser- vices and other costs. These measures are no longer in place in 2022 and explain part of the increase in services and other costs, together with higher inflation and contractors hired to fill temporary gaps as a result of higher recruiting. In thousands of euro 2022 2021 2020 Sales 1,058,291 804,288 770,083 Material cost -534,317 -50% -430,858 -54% -393,761 -51% Services and other costs -106,529 -10% -70,942 -9% -79,065 -10% Personnel cost (a) -289,308 -27% -241,303 -30% -235,392 -31% Depreciation property, plant, equipment and software -36,331 -3% -39,136 -5% -43,383 -6% Other operating income (expense) - net (note 3) -1,663 0% -2,676 0% -8,302 -1% Adjusted EBIT 90,143 9% 19,373 2% 10,180 1% Barco Integrated report 2022 41 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE a) Personnel cost In thousands of euro 2022 2021 2020 Wages and salaries -237,564 -194,851 -189,654 Social security contributions -27,709 -26,642 -25,494 Pension expense for defined benefit plans -12,859 -12,554 -13,339 Temporary labour -4,004 -1,661 -2,388 Recruiting expenses -2,264 -1,294 -1,552 Other personnel cost -4,908 -4,301 -2,966 Personnel cost -289,308 -241,303 -235,392 In thousands of euro 2022 2021 2020 Barco NV (parent company) 1,196 1,199 1,282 Other subsidiaries 2,004 1,941 2,237 Total average number of full time equivalents 3,200 3,140 3,519 Personnel cost includes the cost for temporary personnel for an amount of 4 million euro (in 2021: 1.7 million euro, in 2020: 2.4 million euro). The average number of full time equivalents can be split as follows: Average number of employees in 2022 was 3,200 (versus 3,140 in 2021; 3,519 in 2020), including 2,628 white-collars (in 2021: 2,555, in 2020: 2,738) and 572 blue-collars (in 2021: 585, in 2020: 781). The average level of bleu-collars in 2022 is impacted by component shortages which resulted in tempo- rary unemployment, mainly in the first half of the year. both white and blue collars, in conformity with country specific legal frameworks, support mechanisms and regulations. In 2021 temporary measures were extended for a limited period, during the first half year only, in conformity with country spe- cific legal frameworks and more structural measures were taken. As of the second half of 2021, the Company noted an increased number of voluntary leavers, which continued in the first half of 2022. There is a lagging effect on the replacements of those positions, which mainly occurred in the second half of 2022. This explains the higher number of fulltime equiva- lents at year-end 2022, while the increase in average number of employees is lower and also explains the lower number of fulltime equivalents at year-end 2021, while the personnel costs were still higher than in 2020. Full time equivalents at year end 2022 amount to 3,299 (versus 3,133 end of 2021; 3,317 end of 2020), including 2,724 white collars (2021: 2,568, in 2020: 2,671) and 575 blue collars (in 2021: 565, in 2020: 646). In 2020, the Company has implemented temporary work arrangements and economic unemployment measures for Barco Integrated report 2022 42 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE 5. Restructuring and impairment costs The table below shows the restructuring and impairment costs recognized in the income statement. As a result of scaling down activities, mainly in the business unit Large Video Walls announced at the end of 2022, the Company has recorded 2.5 million euro of restructuring (cash) costs in 2022. In 2021, as a result of the redesign of the organization, announced in the second semester and a number of cost down measures across different countries and functions, the Company has recorded 4.9 million euro of restructuring (cash) costs. The non-cash costs of 1.5 million euro relate to the remaining fair value of share options of former leadership team members, accounted for the moment they stopped providing services to the Company. Restructuring cash costs include a provision for severance of 0.5 million euro per 31 December 2021 (see note 19 'Provisions'), paid in 2022. In 2022 1.2 million euro and in 2021 8.2 million euro of restructuring was paid (see the Consolidated statement of cash flow). Restructuring costs in 2020 relate to the closure of the Taiwanese Unisee LCM production factory and to reorgani- zations in the Entertainment and Enterprise divisions, caused by the economic impact of the pandemic on our markets, with the purpose to adjust cost levels to the lower topline but also with the aim to have the right focus and structure in place after the global crisis. All 412 people impacted were informed before the end of 2020. Restructuring cash costs include a provision for severance of 3.7 million euro per 31 December 2020 (see note 19 'Provisions'), paid in 2021. In 2020, 9.5 million euro of restructuring was paid (see the Consolidated statement of cash flow). As the company decided to move to a more cost competitive and next generation UniSee platform, the industrialization pro- cess came to a pivotal moment. After careful evaluation of the options, Barco’s management decided to outsource UniSee LCM (Liquid Crystal Module)-production as of the second half of 2020 and to phase out the inhouse UniSee LCM-production activity in its Taiwanese factory in the second half of 2020. All impacted people (232) left the company by the end of 2020. The decision has resulted in mainly non-cash restructuring costs related to the closure of the factory and impairment of the machinery and equipment (see note 9.2 'Tangible fixed assets'). In thousands of euro Note 2022 2021 2020 Restructuring (cash) 19 -2,500 -4,920 -7,171 Impairments (non-cash) - -1,500 -7,342 Total restructuring and impairments -2,500 -6,420 -14,513 Barco Integrated report 2022 43 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE 6. Income taxes (a) Tax positions taken in the financial statements and in the tax filings and how these are supported, as well as how the taxation authorities might make their examinations and how issues that might arise from examinations could be resolved, are reviewed. Based on this assessment, a deferred tax liability is determined in line with IFRIC 23. A reversal on the deferred tax liability is taken when the uncertain tax position is no longer in place as a result of an occurred tax examination or expiration of the examination period. (b) Includes withholding taxes on dividends received and tax impact of intragroup dividends that did not apply for a divi- dend received exemption regime to their full extent. (c) Deferred tax assets not recognized on tax losses/credits or tax losses/credits carried forward when assessment shows it is not probable that these tax benefits can be utilized in the near future, in 2021 and 2020 mainly in Barco NV (Belgium). Reference is made to note 10. In 2020, this also related to an impairment on the deferred tax assets set up in relation to tax losses carried forward in Barco Taiwan Technology Ltd., linked to the decision to close the factory and liquidate the legal entity. (d) Capital loss incurred on the liquidation of Barco Taiwan Technology Ltd. in 2021. In thousands of euro Note 2022 2021 2020 Current versus deferred income taxes Current income taxes -13,301 -5,333 -6,886 Deferred income taxes 10 -2,626 3,201 6,886 Income taxes -15,927 -2,132 - Income taxes versus income before taxes EBIT 87,643 12,953 -4,332 Interest income (expense) - net 843 -1,110 -121 Income before taxes 88,486 11,843 -4,453 Income taxes -15,927 -2,132 - Effective income tax rate % 18.0% 18.0% 0.0% Income before taxes 88,486 11,843 -4,453 Theoretical tax rate % 25% 25% 25% Theoretical tax credit/(cost) -22,122 -2,961 1,113 Innovation income deduction (IID) 6,518 5,224 5,302 Effect of different tax rates in non-Belgian affiliates -523 546 968 Uncertain tax treatment (a) 60 280 1,840 Income not taxed Other income exempt from tax (mainly government grants) 2,758 1,706 2,141 Non deductible expenses Dividends received (b) -90 -319 -4,265 Other non-deductible expenses -1,693 -2,038 -2,042 Tax adjustments related to prior periods -773 -165 1,029 Deferred tax assets, derecognized in current year (c) -420 -9,377 -6,895 Set-up/use of deferred tax assets, not recognized in prior years 357 533 809 Realized capital loss on investment in affiliates (d) - 4,439 - Taxes related to current income before taxes -15,927 -2,132 - Barco Integrated report 2022 44 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE 7. Earnings per share In thousands of euro 2022 2021 2020 Net income/(loss) attributable to the equity holder of the parent 75,219 8,881 -4,393 Weighted average of shares 90,005,918 88,984,041 88,265,478 Basic earnings per share 0.84 0.10 -0.05 Net income/(loss) attributable to the equity holder of the parent 75,219 8,881 -4,393 Weighted average of shares (diluted) 90,486,263 89,185,100 88,693,611 Diluted earnings per share (a) 0.83 0.10 -0.05 (a) The difference between the weighted average of shares and weighted average of shares (diluted) is due to exercisable stock options, which are in the money (which means that the closing rate of the Barco share was higher than the exercise price). For more detailed information concerning the shares and stock options, we refer to note 16. Barco Integrated report 2022 45 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE 8. Goodwill There are no changes to goodwill in 2022, 2021 and 2020 and the impairment tests on goodwill in the 3 years did not result in any impairment. The test was performed on a cash-generating unit level by comparing each unit’s carrying value, including goodwill, to its value-in-use. The value-in-use of each reporting unit was assessed using a discounted cash flow model based on management’s revised budget on division level for the year and estimated long-term projections covering a five-year period. Consistently with its yearly impairment test, the Company adjusts the divisional management cash flow projections for future years to more conservative levels in view of the level of uncertainty. In 2020 and 2021, an appropriate level of conservatism was applied, to take into account covid-19 related uncertainty. For 2022 the high level of conservatism is again applied to be consistent with prior year testing. In 2022, 2021 and 2020, the outcome of the impairment tests on goodwill impairment tests performed did not result in any impairment loss. See below for explanations on the impairment testing performed. In thousands of euro 2022 2021 2020 At cost 179,775 179,775 179,775 Impairment 74,163 74,163 74,163 Net book value 105,612 105,612 105,612 Barco Integrated report 2022 46 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE Goodwill by cash-generating unit On acquisition, goodwill acquired in a business combination is allocated to the cash-generating unit which is expected to ben- efit from that business combination. These cash-generating units correspond to the division level for Healthcare, Enterprise and Entertainment. Therefore, impairment testing is performed at the level of the cash-generating units as presented below. The carrying amount of goodwill (after impairment) has been allocated to the cash-generating units as follows: Cash-generating units in thousands of euro 2022-2020 Healthcare 28,263 Enterprise 41,785 Entertainment 35,564 Total goodwill (net book value) 105,612 The allocation remained the same over 2022, 2021 and 2020. The Group performed its annual impairment test in the fourth quarter of 2022 consistently with prior years. The Group looks at the relationship between its market cap - italization and its book value, amongst other factors, when reviewing the indicators of impairment. At 31 December 2022, the market capitalization of the Group was almost three times the amount of equity of the Group. As such, this general test does not show an indication for impairment. The annual impairment tests were performed for each cash-generating unit. The recoverable amount for each of the cash-generating units has been determined based on a value-in-use calculation using cash flow projections generated by management covering a five-year period. Due to the level of uncertainty of future years, these financial projections have been adjusted to more conservative levels for the purpose of our impairment testing. The pre-tax discount rate applied to projected cash flows is 10.1% (2021 and 2020: 8.7%) and cash flows beyond the five- year period are extrapolated using a conservative growth rate of 0% (2021: 0%, 2020: 0%). The amount by which the unit’s recoverable amount exceeds its carrying amount is 151 million euro (142 million euro in 2021) in Healthcare, 130 million euro in Enterprise (97 million euro in 2021) and 106 million euro in Entertainment (42 million euro in 2021). The increase versus 2021 is the result of recovering markets after covid. The level of conservatism applied in the EBITDA % (average of the last 3 years) is consistent with prior years and include 2 covid impacted years (2020 and 2021). Despite the high level of conservatism applied, all three divisions have substantial headroom. A sensitivity analysis is performed on all cash-generating units with respect to the discount rate (see Sensitivity to changes in assumptions – Discount rate). For forward looking statements on sales and EBITDA, we refer to the company report of this annual report. The assumptions of the annual impairment test are consistent with external sources. For none of the cash-generating units management identified an impairment loss after the impairment test. Key assumptions used in value-in-use calculations The calculation of value-in-use for all cash-generating units is most sensitive to the following assumptions: • Sales growth rate used during the projection period; • EBITDA; • Growth rate used to extrapolate cash flows beyond the budget period; • Discount rate; Barco Integrated report 2022 47 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE The assumptions are shown in below table: Sensitivity to changes in assumptions Per 31 December 2022, only a change in EBITDA margin could result in impairment losses. The implications of the key assumptions for the recoverable amount are discussed below: EBITDA percentage on sales – Management has considered the possibility of lower than projected EBITDA percentages on sales. For Healthcare, Enterprise and Entertainment a reduction of the EBITDA percentage in the last year of the projected period of respectively more than 7%, 7% and 4% would result in an impairment. Discount rates – Management has considered the possibil- ity of a significant higher weighted average cost to test the sensitivity. For none of the cash-generating units this leads to an impairment. Growth rate estimate (beyond the projection period) – For all divisions, no reasonable possible change in the growth rate, used to extrapolate beyond the projection period, would result in an impairment. Healthcare Enterprise Entertainment Sales growth rate used during the projection period 0.0% 0.0% 0.0% EBITDA as % of sales 11.2% 11.4% 9.2% Growth rate estimates 0.0% 0.0% 0.0% Discount rate 10.1% 10.1% 10.1% Sales growth rate used during the projection period – Sales growth rate used over the projected period has been kept conservatively at zero percent for all cash-generating units, since even then there is no risk for impairment. EBITDA as percentage of sales – EBITDA as percentage of sales is based on average percentages over the three years pre- ceding the start of the budget period for all divisions. The EBITDA percentage has been kept conservatively flat over the projected period, except for Entertainment, where as of 2024, the EBITDA percentage has been set back to pre-covid EBITDA level, using the 2019 EBITDA% (9.2%) it is more realistic to take the pre-covid EBITDA level of 2019 (9.2%) as of 2024. Growth rate estimates – The long-term rate used to extrapolate the projection has been kept conservatively at zero % for all cash-generating units. Discount rate – Discount rate reflects the current market assessment of the risks specific to Barco Group. The discount rate was estimated based on a (long-term) pre-tax cost of capital, the risks being implicit in the cash flows. It was deter- mined on group level. Barco Integrated report 2022 48 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE 9. Other intangible and tangible fixed assets 9.1 Other intangible assets In thousands of euro 2022 2021 2020 Software Customer Relations Know-how Other Intangible Assets Other Intangible assets under construction Total Total Total At cost On 1 January 63,761 15,124 47,786 9,907 - 136,578 134,608 157,250 Expenditure 489 - 1,733 - 1,614 3,836 1,230 1,951 Sales and disposals -404 -5,453 -9,535 -4,702 - -20,094 -3,312 -8,064 Acquisition of subsidiaries - - 7,607 - - 7,607 - - Transfers 1,552 - - - -1,552 - - - Translation (losses)/gains 600 147 -23 -5 - 719 4,052 -16,529 On 31 December 65,998 9,818 47, 569 5,200 62 128,646 136,578 134,608 Amortizations and impairment On 1 January 48,709 15,124 45,702 9,616 - 119,151 105,655 112,781 Amortization 6,375 - 3,602 59 - 10,037 13,095 13,388 Impairment - - - - - - - 3,500 Sales and disposals -404 -5,453 -9,535 -4,702 - -20,094 -3,312 -7,953 Translation (losses)/gains 23 147 159 -27 - 302 3,713 -16,061 On 31 December 54,703 9,818 39,928 4,946 - 109,396 119,151 105,655 Carrying amount On 1 January 15,053 - 2,084 290 - 17,427 28,952 44,469 On 31 December 11,296 - 7,640 253 62 19,251 17,427 28,952 Barco Integrated report 2022 49 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE As a result of the Gnosco acquisition know-how for an amount of 7.6 million euro was acquired, which is amortized over 5 years. We refer to note 1.3 for more explanation on the net assets acquired. Barco’s intangibles mainly include SAP ERP software and remaining book value of acquired know-how. In 2022, capital expenditures for intangible assets amount to 2.1 million euro (2021: 1.2 million euro, 2020: 2 million euro). Expenditures in 2022 and 2021 mainly related to new customer relationship management (CRM) software. Expenditures in 2020 were mainly related to SAP ERP software licenses. Disposals in 2022 and 2021 relate to fully amortized IT software which is no longer used. In 2020 the impairment test on acquired intangibles resulted in an impairment of 3.5 million euro on the acquired know- how for caresyntax. The impairment cost is included in research and development expenses in 2020. The group performed its annual impairment review on acquired intangibles in the fourth quarter of 2022 consistently with prior years. Special attention was paid to the potentialim- pacts of the macroeconomic environment. The test concluded no impairments. Barco does not hold intangible assets with indefinite lifetime. Barco Integrated report 2022 50 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE 9.2. Tangible fixed assets In thousands of euro 2022 2021 2020 Land and buildings Plant, machinery and equipment Furniture, office equipment and vehicles Other property, plant and equipment Assets under construction Total Other tangible assets Total Total Total At cost On 1 January 138,155 87,56 4 42,217 12,586 3,794 146,162 284,317 267,104 276,862 Expenditure 7,637 5,239 6,429 1,099 9,616 22,383 30,020 27,040 26,513 Sales and disposals -14,739 -6,790 -4,822 -1,683 - -13,295 -28,034 -16,614 -29,847 Transfers 1,269 2,533 345 1,936 -6,082 -1,269 - - - Translation (losses)/gains 227 -981 -83 -124 -90 -1,277 -1,050 6,786 -6,423 On 31 December 132,549 87,566 44,086 13,813 7, 238 152,704 285,253 284,317 267,104 Depreciation and impairment On 1 January 59,553 57,850 30,187 9,840 - 97,877 157,430 143,630 141,393 Depreciation 11,242 7,845 6,139 1,068 - 15,052 26,294 26,041 26,495 Impairment - - - - - - - - 5,757 Sales and disposals -8,135 -6,731 -4,589 -1,683 - -13,002 -21,137 -15,787 -26,346 Transfers - 22 28 -50 - - - - - Translation (losses)/gains 212 -234 -75 -94 - -403 -191 3,546 -3,669 On 31 December 62,872 58,751 31,690 9,082 - 99,523 162,396 1 57,430 143,630 Carrying amount On 1 January 78,602 29,714 12,031 2,746 3,794 48,285 126,887 123,474 135,469 On 31 December 69,677 28,815 12,396 4,731 7, 238 53,181 122,856 126,886 123,473 () Expenditures also include the additions for IFRS16. Barco Integrated report 2022 51 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE Capital expenditures for tangible assets in 2022, excluding the impact of IFRS16, amount to 19 million euro. Major investments in 2022 concern the purchase of land for the new factory in China, Wuxi (4 million euro) and renewal of demo experience centers (2 million euro). In 2021, major capex concerned the new factory in China, Suzhou, both facility and production related (2021: 8 million euro; 2020: 3.3 million euro). Other facility related capex in 2020 relate to the software lab in Noida (1.9 million euro) and heating, ventilation and airco investments in the Kortrijk and Duluth facilities (1.1 million euro). In addition, capital expenditures include machinery and tooling linked to new product development projects (2022: 2 million euro; 2021: 2.5 million euro; 2020: 3.6 million euro), IT hard- ware equipment (2022: 2.5 million euro; 2021: 2.4 million euro; 2020: 1.6 million euro) and leasing agreements with cinema customers (2022: 3 million euro). The main tangible fixed assets on the balance sheet, real- ized in the period 2015 – 2019, relates to the headquarters of Barco and the extended operations facility for 50 million euro. The net book value per 31 December 2022 amounts to 29.5 million euro. The total amount of capital expenditure for tangible assets in 2022 equals the EU taxonomy eligible CapEx as the total amount of CapEX relates solely to assets or processes asso- ciated with Barco economic activities defined in section “Taxonomy-eligible economic activity - Turnover”. We refer to the note on EU taxonomy on p. 60. Disposals in 2022 mainly relate to the sale of the building in Norway, which had a net book value of 4.3 million euro. The other disposals relate to old machinery & equipment and furniture, which are no longer in use and fully written down. Disposals in 2021 mainly relate to old machinery & equipment and furniture, which are no longer in use and fully written down, and the sale of part of the land and building in Karlsruhe. Disposals in 2020 mainly relate to the closure of the Taiwan factory, together with old machinery. The closure of the Taiwanese Unisee LCM-production factory in the second half of 2020 resulted in an impairment of 5.8 million euro mainly related to the machinery and equipment (see note 5 'Restructuring and impairments'). The closure was linked to the decision to outsource the Unisee LCM panels. The Company considered the potential impact of macroeco- nomic impacts on the utilization levels of its factories and potential impairment of its machinery and equipment. The analysis did not conclude an impairment. See ‘Critical account- ing judgements and key sources of estimation uncertainty’ for more explanation on the impact of the macroeconomic environment on Barco’s operations. Barco Integrated report 2022 52 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE Leases This note provides more information for leases where the Group is a lessee. The balance sheet shows the following amounts relating to leases: In thousands of euro 2022 2021 2020 Buildings Vehicles Total Total Total On 1 January 37,534 9,387 46,922 39,013 37,965 New leases or extensions of current leases 7,599 3,387 10,986 10,702 11,000 Termination of leases -4,892 -1,695 -6,586 -4,403 -8,290 Translation (losses)/gains -78 -40 -117 1,611 -1,663 On 31 December 40,164 11,041 51,205 46,922 39,013 Depreciation and impairment On 1 January -16,680 -4,439 -21,119 -14,415 -9,948 Depreciation -6,936 -2,604 -9,539 -10,023 -10,334 Termination of leases 2,608 1,533 4,141 3,956 5,372 Translation (losses)/gains 123 23 146 -636 495 On 31 December -20,884 -5,487 -26,371 -21,119 -14,415 Right-of-use assets On 1 January 20,855 4,949 25,803 24,598 28,017 On 31 December 19,280 5,554 24,834 25,803 24,598 Additions to the right-of-use assets during 2022 were 11 mil- lion euro (2021: 10.7 million euro; 2020: 11 million euro) split over leased buildings (2022: 7.6 million euro; 2021: 9 million euro) and leased vehicles (2022: 3.4 million euro; 2021: 1.7 million euro). The additions are both renewals of existing lease agreements as well as new lease agreements in US, Sweden and South Korea over a lease period of respectively 2 years, 3 years and 5 years. We refer to note 14 for more information on the lease liabilities. Barco Integrated report 2022 53 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE The statement of profit or loss shows the following amounts relating to leases: The total cash outflow for leases in 2022 was 9.2 million euro (2021: 9.7 million euro; 2020: 10.8 million euro). In thousands of euro 31 DEC 2022 31 DEC 2021 31 DEC 2020 Buildings -6,936 -7,591 -7,944 Vehicles -2,604 -2,433 -2,390 Total depreciation charge of right-of-use assets -9,539 -10,023 -10,334 Interest expense (included in finance cost) -1,072 -1,066 -1,000 Expense relating to short-term leases 0 -17 -41 Expense relating to leases of low-value assets that are not shown above as short-term leases -19 -24 -26 Barco Integrated report 2022 54 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE 10. Deferred tax assets – deferred tax liabilities The deferred tax asset and liability balance comprises tempo- rary differences attributable to: Assets Liabilities Net asset/(liability) In thousands of euro 2022 2021 2020 2022 2021 2020 2022 2021 2020 Tax value of tax credits 17,920 26,586 13,616 - - - 17,920 26,586 13,616 Tax value of loss carry forwards 13,721 10,201 22,854 - - - 13,721 10,201 22,854 Deferred revenue 10,227 9,961 5,082 - - -442 10,227 9,961 4,640 Inventory 8,837 8,573 9,133 -211 -34 - 8,626 8,539 9,133 Provisions 6,062 8,477 12,197 122 -32 -142 6,184 8,445 12,054 Tangible fixed assets and software 1,580 2,031 1,734 -363 -678 -925 1,217 1,353 809 Employee benefits 1,333 1,024 843 258 88 -525 1,591 1,112 318 Trade debtors 416 362 407 - - - 416 362 407 Other investments 54 319 797 - - - 54 319 797 Capitalized development cost 6 - - - - - 6 - - Uncertain tax positions (IFRIC 23) - - - -3,060 -3,120 -3,400 -3,060 -3,120 -3,400 Patents, licenses, ... - - - -5,704 -3,792 -3,688 -5,704 -3,792 -3,688 Other items 852 435 589 -40 -68 -64 812 367 525 Gross tax assets/(liabilities) 61,008 67,969 67,253 -8,998 -7,636 -9,187 52,010 60,333 58,066 Offset of tax -5,769 -3,814 -4,441 5,769 3,814 4,441 - - - Net tax assets/(liabilities) 55,239 64,155 62,811 -3,229 -3,822 -4,745 52,010 60,333 58,066 Barco Integrated report 2022 55 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE Movements in the deferred tax assets / (liabilities) arise from the following: Net deferred tax assets recognized primarily relate to the tax value of loss carry forwards (13.7 million euro), dividends received exemption (3.0 million euro), intellectual property regimes (13.5 million Euro) and other tax credits carried forward (1.4 million euro) primarily relate to Belgium. On top of these items for which a net deferred tax is recognized, the Group owns tax losses carried forward amounting to 70.3 million euro as of 31 December 2022 (80 million euro in 2021) for which a valuation allowance has been recorded (resulting in a valuation allowance of 18.3 million euro (20.8 million euro in 2021) on deferred tax assets recognized in relation to tax losses carried forward). A valuation allowance is recorded on these items because it is not probable that tax assets will be utilized within their statue of limitations or that taxable profit will be available in the near future against which the benefits can be utilized. The tax losses carried forward for which an allowance has been recorded have no expiration date. In assessing the realization of deferred tax assets, management considers whether it is probable that some portion or all of the deferred tax assets will be realized within the foreseeable future. The ultimate realization of deferred tax assets is depen- dent upon the generation of future taxable profit during the periods in which those temporary differences become deduct- ible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable profit and foreseeable tax events in making this assessment. In 2020 and 2021, the covid-19 impact on future taxable profit was factored in in the realization assessment. A time period of 5 years is considered. In order to fully realize the deferred tax asset, the Group will need to generate future taxable profit in the countries where the net operating losses and other items carried forward were incurred. Based upon the level of historical taxable income and projections for future taxable profit over the periods in which the deferred tax assets are deductible, management believes it is probable that the Group will be able to utilize these deferred tax assets. Barco has not recognized income taxes on undistributed earnings of its subsidiaries which will not be distributed in the foreseeable future. The cumulative amount of undistributed earnings (irrespective of tax treatment exemptions) on which the Group has not recognized income taxes was approximately 488 million euro per December 31, 2022 (2021: 504 million euro, 2020: 478 million euro). In thousands of euro As at 1 January 2022 Recognized through income statement Recognized through OCI Acquisitions Exchange gains and losses As at 31 December 2022 Tax value of tax credits 26,586 -8,687 - - 21 17,920 Tax value of loss carry forwards 10,201 3,504 - - 16 13,721 Deferred revenue 9,961 -328 - - 594 10,227 Inventory 8,539 -163 - - 250 8,626 Provisions 8,445 2,483 -4,599 - -146 6,184 Employee benefits 1,112 478 - - 1 1,591 Tangible fixed assets and software 1,353 -104 - - -32 1,217 Trade debtors 362 40 - - 14 416 Other investments 319 -285 - - 20 54 Capitalized development cost - 6 - - - 6 Uncertain tax positions (IFRIC 23) -3,120 60 - - - -3,060 Patents, licenses, ... -3,792 -56 - -1,494 -362 -5,704 Other items 367 425 - - 20 812 Net deferred tax 60,333 -2,626 -4,599 -1,494 396 52,010 Barco Integrated report 2022 56 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE 11. Investments and interest in associates (a) Investments Investments include entities in which Barco owns less than 20% of the shares. These are accounted for as fair value through profit and loss or other comprehensive income instruments, as determined at moment of initial recognition, which implies that the Group measures these investments on a fair value basis with differences in fair value reflected in profit and loss or other comprehensive income. Interest in associates represents entities in which Barco owns between 20% and 50% of the shares. In thousands of euro 2022 2021 2020 Investments (a) 37,645 47,135 87, 228 Interest in associates (b) 27,167 20,872 19,713 Investments and interest in associates 64,811 68,008 106,942 In thousands of euro 2022 2021 2020 Opening net assets 1 January 47,135 87, 228 23,215 Additions 14,893 - 52,273 Divestments -4,384 -54,993 - Other comprehensive income -23,004 9,945 18,331 Translation gains/(losses) 3,003 4,955 -6,591 Closing net assets 31 December 37,645 47,135 87,228 The investments are measured at market price. For invest- ments that are publicly quoted in an active market, the quoted market price is the best measure of fair value (level 1). The remeasurement at fair value per 31 December 2022 versus the carrying amount, resulted in an unrealized loss of -23 million euro, reflected in other comprehensive income. The loss is caused by a general decrease of the global stock markets in 2022 compared to 2021. Further, a new minority stake, below regulatory threshold levels, was taken (14.9 million euro cash- out impact) and a minority stake was sold, resulting in 4 million euro cash-in in 2022, both reflected in the line ‘other investing activities’ in the cash flow statement, and 0.7 million euro gain realized since the moment of acquisition, over the periods until divestment reflected in other comprehensive income reserve. The decrease in investments from 2020 to 2021 is related to a sold minority stake, below regulatory threshold levels. The sale resulted in 55 million euro cash-in in 2021, reflected in the line ‘other investing activities’ in the cash flow statement and 25.2 million euro gain realized since the moment of acquisition, which was over the periods until divestment reflected in other comprehensive income reserve. The remeasurement at fair value per 31 December 2021 versus the carrying amount amounted to 9.9 million euro and is reflected in other com- prehensive income (2020: 18.3 million euro). Barco Integrated report 2022 57 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE (b) Interest in associates Interest in associates, in 2022 - 2020, reflects the equity invest- ment in BarcoCFG and CCO Barco Airport Venture. The Group’s share of the assets and liabilities as at 31 December 2022 and 2021 and income and expenses of the joint ventures and associates for the year ended 31 December 2022 and 2021, which are accounted for using the equity method: Summarized balance sheet In thousands of euro Barco CFG 31 DEC 22 CCO 31 DEC 22 Total 31 DEC 22 Barco CFG 31 DEC 21 CCO 31 DEC 21 Total 31 DEC 21 Cash and cash equivalents 12,185 30,467 42,652 38,822 21,355 60,177 Other current assets 58,842 11,785 70,627 45,535 9,303 54,838 Total current assets 71,027 42,252 113,279 84,356 30,659 115,015 Non-current assets 7,050 9,437 16,487 8,962 8,257 17,219 Other current liabilities 50,070 13,279 63,349 70,225 11,610 81,835 Total current liabilities 50,070 13,279 63,349 70,225 11,610 81,835 Other non-current liabilities - - - - 1 1 Total non-current liabilities - - - - 1 1 Net assets 28,007 38,409 66,416 23,093 27,305 50,398 Reconciliation to carrying amounts Opening net assets 1 January 23,093 27,305 50,398 22,324 25,070 47,394 Profit/(loss) for the period 5,641 9,534 15,176 6,180 137 6,316 Other comprehensive income (CTA) -728 1,570 842 2,466 2,098 4,564 Dividends paid - - - -7,876 - -7,876 Closing net assets 28,007 38,409 66,416 23,093 27,305 50,398 Group’s share in % 49% 35% - 49% 35% - Group’s share 13,723 13,443 27,167 11,316 9,557 20,872 Carrying amount 13,723 13,443 27,167 11,316 9,557 20,872 Barco Integrated report 2022 58 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE Summarized statement of comprehensive income In thousands of euro Barco CFG 31 DEC 22 CCO 31 DEC 22 Total 31 DEC 22 Barco CFG 31 DEC 21 CCO 31 DEC 21 Total 31 DEC 21 Profit/(loss) for the period 5,641 9,534 15,176 6,180 137 6,316 Other comprehensive income (CTA) -728 1,570 842 2,466 2,098 4,564 Total comprehensive income 4,913 11,105 16,018 8,646 2,234 10,880 Group’s share in % 49% 35% - 49% 35% - Group’s share in profit/(loss) for the period 2,764 3,337 6,101 3,028 48 3,076 Share in the result of joint ventures and associates - 3,337 3,337 - 48 48 Included in other operating income 3(d) 2,764 - 2,764 3,028 - 3,028 The Group has no contingent liabilities or capital commit- ments in relation to its associates as at 31 December 2022, 2021 and 2020. For all equity accounted investments, the parent’s or other investor’s consent is required to distribute its profits; which is not decided at the reporting date. The equity accounted investments did not recognize items in other comprehensive income. Barco Integrated report 2022 59 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE 12. Inventory Increase in inventory (+ 40%) compared to 2021 is linked to the higher sales volume (+ 31.6%) and increase in component prices (14%). Further due to the component shortages, safety buffers were stocked for a number of scarce components and additional component purchases were made in expecta- tion of upcoming price increases. Finished goods are higher than usual, mainly in cinema and diagnostic imaging, a result of capacity ramp-up after component shortages and will be reduced when delivering out of the high orderbook. As a result turns remain low at 2.1. In 2021, as a result of the higher sales volume in the fourth quarter (+29% yoy), finished goods inventory has decreased significantly compared to 2020, which was offset by increased raw materials inventory, caused by the emerging supply constraints in the second semester. The supply scarcity has In thousands of euro 2022 2021 2020 Raw materials and consumables 120,610 90,139 68,053 Work in progress 79,993 64,384 57,972 Finished goods 123,930 92,931 122,408 Write-off on inventories -78,819 -71,957 -73,043 Inventory 245,714 175,496 175,390 Inventory turns 2.1 2.4 2.3 resulted in an acceleration of the Company’s raw material purchases and higher raw material prices (see note 18). Total inventory and inventory turns remained stable compared to last year. Inventory levels in the company vary depending on the oper- ating segment within Barco. Operating segments selling more hardware products compared to software or project sales generally have higher inventory levels. Barco Integrated report 2022 60 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE The two divisions that were impacted the most by the supply constraints, Entertainment and Healthcare show the highest increase in raw materials. For Entertainment, finished goods increased mainly due to recovery of the market, price increases (12%), but also partly due to lagging demand from China cus- tomers as a result of covid lockdowns. Increase in inventory in Enterprise is linked to higher sales, turns remained stable. In 2021, raw materials inventory increased in all three divisions as a result of accelerated purchases in view of component shortages. In Entertainment and Enterprise the increase in raw materials inventory was offset by a higher decrease in finished goods inventory, thanks to higher fourth quarter sales than in 2020. In Healthcare raw material inventory has increased more than in the other divisions, as, next to the impact of compo- nent shortages, the Company has purchased raw materials upfront under the form of a last-time-buy order for compo- nents for which the supplier decided to stop the production. We refer to chapter ‘Critical accounting judgements and key sources of estimation uncertainty’ for more explanation on the impact of the macroeconomic environment Inventories are stated at the lower of cost or net realizable value. The calculation of the allowance for slow-moving inven- tory is based on consistently applied write-off rules, which depend on both historical and future demand. In 2022 write-offs recognized as expense remained stable at 0.7% of sales compared to 2021. In 2020, write-offs were impacted by the covid-19 pandemic and resulted in higher write-offs recognized as expense (11.6 million euro, 1.5% of sales). Barco Integrated report 2022 61 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE In thousands of euro 2022 2021 2020 Trade debtors - gross 197,493 160,930 150,452 Trade debtors - bad debt reserve (a) -2,850 -3,954 -4,314 Trade debtors - net (b) 194,643 156,977 146,138 V.A.T. Receivable 5,911 6,418 5,358 Taxes receivable 3,491 6,083 5,744 Interest receivable 1 4 24 Currency rate swap (note 20) 2,537 1,055 5,345 Other 2,569 2,650 1,319 Other amounts receivable 14,509 16,211 17,789 Other non-current assets (c) 5,819 6,849 5,870 Number of days sales outstanding (DSO) 54 56 67 13. Amounts receivable and other non-current assets Per 31 December 2022, the number of days sales outstanding decreased to 54 days (56 days in 2021 and 67 in 2020) and are back at pre-covid levels. The higher number of days sales outstanding in 2020 was the result of higher overdues, mainly from cinema customers, caused by the covid-19 global impact on the cinema markets. For the year ended December 31, 2022, the Company set up a limited extra provision for current expected credit losses (2022: -0.2 million euro; 2021: + 0.4 million euro profit) reflecting a lower credit risk of its customers related accounts receivable compared to 2020. The extra provision recorded in 2020 (1.5 million euro) reflected a reduction in the credit quality of spe- cific cinema customers related accounts receivable as a result of the covid-19 global pandemic. The bad debt reserve in proportion to the gross amount of trade debtors decreased to 1.5% (2020: 2.5%, 2020: 2.9%). Barco Integrated report 2022 62 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE In thousands of euro 2022 2021 2020 On 1 January -3,954 -4,314 -2,874 Additional provisions -1,191 -797 -2,341 Amounts used 1,234 444 100 Amounts unused 1,156 833 645 Translation (losses) / gains -93 -120 156 On 31 December -2,850 -3,954 -4,314 (a) Movement in bad debt reserve: In thousands of euro 2022 2021 2020 Not due 171,431 138,188 111,020 Overdue less than 30 days 12,699 10,377 12,282 Overdue between 30 and 90 days 9,176 6,620 6,246 Overdue between 90 days and 180 days 2,869 1,746 12,899 Overdue more than 180 days 1,318 4,000 8,005 Total gross 197,493 160,930 150,452 Bad debt reserve -2,850 -3,954 -4,314 Total 194,643 156,977 146,138 (b) At 31 December 2022 the ageing analysis of trade debtors is as follows: In 2022, total overdue trade receivables amount to 26.1 million euro (2021: 22.7 million euro, 2020: 39.4 million euro), resulting in 7 days overdue DSO (2021: 9 days, 2020: 19 days), which is even better than pre-covid levels. The increase in overdue amounts and long outstanding overdues in 2020 was mainly from the Company’s cinema customers. The Company was able to reach extended payment plans, which were honored by the major part of its customers in 2021, resulting in a decrease of the Company’s overdues from 19 days in 2020 to 9 days in 2021. The Company has a credit insurance in place for specific higher risk cinema contracts and for cinema customers with long payment terms. During 2021 and 2022, the Company did not need to exercise its rights under the insurance as the cus- tomers, for which the credit insurance is in place, paid timely. The bad debt reserve in 2022 covers more than double of the trade receivables overdue more than 180 days (2021: 99%, 2020: 54%). Pre covid level was around 140%. In 2020, the Company has taken into account the credit insurance in place, payment plans being honored and revenue recognition, when assessing the potential credit risk and the need for recording a bad debt reserve on expected credit losses, which explains the bad debt reserve in 2020 amounting to 54% of the trade receivables overdue more than 180 days. (c) Other non-current assets The other non-current assets include mainly cash guarantees for an amount of 2.7 million euro (2021: 5.6 million euro, 2020: 5 million euro) and 1.6 million euro other long term receivable related to a subleased building in America. Barco Integrated report 2022 63 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE In thousands of euro 2022 2021 2020 Short term investments (a) 1,651 2,763 3,175 Deposits (a) 151,491 197,039 79,911 Cash at bank (b) 154,342 154,453 155,426 Cash in hand 82 79 65 Cash and cash equivalents 305,915 351,571 235,402 Long-term financial receivables Long-term debts (c) -32,335 -34,366 -35,854 Current portion of long-term debts (c) -11,217 -10,218 -9,187 Short-term debts (d) - - -86 Net financial cash / (debt) 264,014 309,750 193,450 14. Net financial cash/debt At the end of December 2022, Barco’s net cash position reaches 264 million euro, 45.8 million euro lower compared to last year (2021: 309.8 million euro, 2020: 193.5 million euro), a result of the limited positive free cash flow (13 million euro), a number of minority investments, the increase of Barco's share in Cinionic from 55% to 80% and the acquired share in Gnosco AB (-42 million euro), dividends paid out (-21 million euro) and use of own shares for stock options (8 million euro). We refer to the supplementary statements, note 16 and note 11 for more explanation. Of the total net financial cash, 306 million euro is cash on the balance sheet. Additional financial flexibility is provided with 82.5 million euro of unused bilateral committed credit facil- ities with a selected group of commercial banks. In addition to significant liquidity, Barco has a well-balanced debt profile with debt limited to 43.5 million euro of which 11 million euro near-term maturities. The net financial cash at the end of 2021 amounts to 309.8 million euro, 116 million euro higher compared to end 2020, a result of the positive free cash flow (78 million euro), sold investments (55 million euro), dividends paid out (-21 million euro), share buy back program ( -11 million euro) and use of own shares for stock options (8 million euro). We refer to the supplementary statements, note 16 and note 11 for more explanation. Barco Integrated report 2022 64 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE (a) Short term investments and deposits: Cash in Hong Kong was used for the repayment of the minority shareholders in Cinionic (see note 17) and the purchase of other investments below regulatory threshold levels, explain- ing the decrease in foreign currency deposits in HKD in 2022 compared to 2021. The larger deposit amounts in USD and HKD in 2021 are held in the according home currency of the entities or hedged, avoiding FX impact in the profit & loss, and optimizing yield (by avoiding negative yields in EUR). In thousands of euro 2022 Average interest rate 2021 Average interest rate 2020 Average interest rate Deposits in USD 120,908 4.22% 141,324 0.09% 71,839 0.70% Deposits in EUR 19,000 1.25% - - - - Deposits in HKD 9,379 5.24% 45,057 0.27% - - Deposits in INR 1,549 5.97% 2,763 4.10% 3,175 3.61% Deposits in CNY - - 9,368 2.11% 6,232 1.88% Deposits in other currencies 2,307 - 1,291 - 1,839 - Total short term investments and deposits 153,142 199,802 83,086 Short term investments are convertible to known amounts of cash between three and twelve months from inception. Deposits are short term (between zero and three months), highly liquid investments, which are readily convertible to known amounts of cash. The short term investments and deposits do not carry a mate- rial risk of change in valuation. At closing date, all short term investments and deposits include: Barco Integrated report 2022 65 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE 2022 2021 2020 EUR 41.7% 54.4% 34.7% HKD 7.1 % 3.9% 28.8% CNY 15.8% 8.5% 15.3% USD 21.2% 19.2% 8.6% Others 14.2% 14.1% 12.5% (b) Cash at bank: Cash at bank is immediately available. It is denominated in the following currencies: (c) Long-term financial debts: The below table gives an overview of the long-term financial debts including the current portion of long-term financial debts, per type of interest rate: Type of interest rate Maturity 31 December 2022 31 December 2021 31 December 2020 Real estate financing Variable, swapped into fixed (EU) Later than 2025 8,288 9,563 10,838 Variable (EU) Later than 2025 7,713 8,438 9,163 Leasing (IFRS 16) 27,458 26,482 24,929 Other 94 103 113 Total long-term financial debts 43,552 44,585 45,042 Barco Integrated report 2022 66 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE The long-term debts, including interests due, and excluding the current portion of the long-term debts, are payable as follows: Per 31 December 2022 Per 31 December 2021 Per 31 December 2020 Payable in 2024 9,784 Payable in 2023 10,128 Payable in 2022 9,883 Payable in 2025 8,081 Payable in 2024 7,724 Payable in 2023 7,03 4 Payable in 2026 5,559 Payable in 2025 5,883 Payable in 2024 6,214 Payable in 2027 3,535 Payable in 2026 3,799 Payable in 2025 5,083 Later 7,667 Later 9,679 Later 13,168 Total long-term debts 34,625 Total long-term debts 37,21 2 Total long-term debts 41,381 Barco NV signed a number of bilateral committed credit facilities totaling 28 million euro, for the financing of Barco’s headquarters campus project. Drawings have a long-term tenor of 15 years following the end of the availability period (as of the end of 2015). An amount of 16 million euro is out- standing per 31.12.2022. These commitments carry either a variable interest rate or have been swapped via derivatives into fixed rate character. Barco is meeting all requirements of the loan covenants on its available credit facilities. The below table summarizes the long-term financial debts, including the current portion of long-term financial debts, per currency: 2022 2021 2020 EUR 28,213 28,078 31,348 USD 3,829 4,584 4,098 INR 5,154 3,446 4,162 Other 6,356 8,477 5,434 Total 43,552 44,585 45,042 The lease liabilities per 31 December are as follows: In thousands of euro 2022 2021 2020 On 1 January 26,482 24,929 28,259 New leases or extensions of current leases 10,991 10,702 11,000 Payments or termination of leases -10,060 -10,159 -13,132 Translation (losses)/gains 45 1,011 -1,199 Total lease liabilities on 31 December 27,458 26,482 24,929 Current 9,217 8,218 7,187 Non-current 18,241 18,264 17,742 Barco Integrated report 2022 67 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE In thousands of euro 2022 2021 2020 Other amounts payable (a) 2,312 350 75 Accrued charges 884 - 3,058 Deferred Income (b) 41,328 48,510 40,016 Prepayment customers LT - - 138 Other long-term liabilities 44,524 48,860 43,286 15. Other long-term liabilities (a) Barco signed a joint venture agreement with the Swedish company Gnosco, AB on July 1 st , 2022. Barco acquired 70% of the shares in Gnosco AB for 4 million euros. Further, a financial liability was recognized related to puttable non- controlling interests for an amount of 2 million euros. The terms do not grant the Group any current ownership interest in the shares to which the put option relates. The fair value of the put option is the present value of the estimated redemption amount. The liability will subsequently be adjusted in the income statement for changes in value, including the effect of unwinding the discount and other changes in the estimated redemption amount due to changes in management's assumptions. (b) Deferred income which will be recognized in revenue over a longer period than one year, is shown in other long-term liabilities. It concerns mainly maintenance contracts sold in the Entertainment division which cover a long-term period. The contracts start at the end of the two years standard warranty period. The decrease in deferred income in 2022 is caused by the lower installation rate during covid and the replacement wave for Cinema starting up, meaning the extended warranty period has not always started yet. Barco Integrated report 2022 68 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE In thousands of euro 2022 2021 2020 Share capital 56,752 56,296 55,879 Share premium 176,919 161,091 147,003 Share-based payments 20,215 18,667 14,100 Acquired own shares -25,443 -31,435 -26,962 Retained earnings 558,777 527,783 535,093 Cumulative translation adjustment -28,350 -37,906 -64,693 Derivatives 319 -713 -1,111 Equity attributable to equity holders of the parent 759,189 693,783 659,309 16. Equity attributable to equity holders of the parent 1. Share capital, share premium and own shares The shareholders had in 2022 the option to elect for a dividend in cash or a dividend in shares. The option to reinvest the gross dividend over 2021 has resulted in a share premium increase of 14,173 (000) euro and an increase of the statutory capital of 456 (000) euro. As a result, the company’s share capital amounts to 56.7 million euro on 31 December 2022, consisting of 92,916,645 fully paid shares. In the Extraordinary General Meeting of 25 April 2019, Barco’s shareholders authorized a share buyback. A first share buyback program for a period of 6 months, starting on 20 September, 2021 was announced on 16 September, 2021. Barco acquired 600,000 own shares for a total amount of 11,186 (000) euro in 2021. Further, Barco sold in total 574,760 own shares in 2022 upon the exercise of 574,760 stock options with a resulting decrease of the own shares of 5,992 (‘000) euro and an increase in the share premium account of 1,655(‘000) euro. The number of own shares acquired by Barco NV up to 31 December 2022 therefore decreased to 2,457,922 own shares (2021: 3,032,682; 2020: 3,160,032 own shares). The total value of the share-based payments amount to 20.2 million euro at the end of 2022. As a result of the share dividend and exercised stock-options the company’s share premium account per 31 December 2022 amounts to 177 million euro. 2. Share-based payments On 8 December 2022, 2 new option plans have been approved by the Board of Directors, through which maximum 575,000 stock options could be granted before 31 December 2022. Each stock option gives right to the acquisition of one (1) share. In 2022, 322,833 stock options have been granted to and accepted by employees and management of the group based upon these option plans. On 31 December 2022, no options remained available for distribution under the 2022 stock option schemes. Stock option plans The total number of outstanding stock options on 31 December 2022 amounted to 2,401,900. The company’s own shares will be used under the outstanding stock option plan to fulfill the commitment. During 2022, 574,760 stock options have been exercised (in 2021, 727,350 stock options). These stock options may be exercised the earliest 3 years after the allocation date (i.e. the vesting period) over a period of maximum 10 years and during a couple of fixed periods over the year. Below is an overview of the outstanding stock option plans: Barco Integrated report 2022 69 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE Allocation date End term Exercise price (in euro) Balance on 31 Dec 2021 Accepted in 2022 Exercised in 2022 Cancelled in 2022 Expired in 2022 Balance on 31 Dec 2022 Stock options 10/31/12 10/30/22 7.48 4,200 - -700 - -3,500 0 10/21/13 10/20/23 8.43 11,060 - -1,260 - - 9,800 10/23/14 10/22/24 7.86 18,891 - -2,100 - - 16,791 10/23/14 10/22/22 7.86 24,864 - -12,600 - -12,264 0 10/23/14 1 10/22/22 7.91 16,450 - -10,150 - -6,300 0 10/22/15 10/21/25 8.16 13,200 - -4,550 - - 8,650 10/22/15 10/21/23 8.16 37,100 - -4,550 - - 32,550 10/22/15 1 10/21/23 8.26 20,650 - -5,250 - - 15,400 10/24/16 10/23/26 10.40 143,960 - -18,800 - - 125,160 10/24/16 10/23/24 10.40 42,210 - -6,650 - - 35,560 10/24/16 1 10/23/24 10.61 22,601 - -2,100 - - 20,501 10/20/17 10/16/27 12.54 214,575 - -29,650 -3,500 - 181,425 10/20/17 10/16/25 12.54 65,800 - -6,000 - - 59,800 10/20/17 1 10/16/25 12.67 1 27,950 - -110,050 - - 17,90 0 10/23/18 10/22/28 14.40 410,900 - -360,350 - - 50,550 10/11/19 10/10/29 24.83 323,330 - - -53,900 - 269,430 10/29/20 10/28/30 12.76 403,000 - - -21,150 - 381,850 12/06/21 12/06/31 17.80 882,400 - - -28,700 - 853,700 12/08/22 12/07/32 21.74 - 289,946 - - - 289,946 12/08/22 1 12/07/32 22.32 - 32,887 - - - 32,887 Total number of stock options 2,783,141 322,833 -574,760 -107, 250 -22,064 2,401,900 (1) Deviation of exercise price as a result of the implementation of the US sub plan. Barco Integrated report 2022 70 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE The cost of these stock option plans is recognized over the vesting period on a straight line basis and included in the income statement in other operating expense. The stock options are measured at grant date, based on the share price at grant date, exercise price, expected volatility, dividend esti- mates and interest rates. The value of the share-based payment increased with 1.5 million euro to 20.2 million euro in 2022 (2021: 4.5 million euro; 2020: 2.9 million euro). In 2021, 3 million euro is reflected in other operating income (see note 3 (d) and 1.5 million euro in restructuring, related to the remain- ing fair value of share options of the former leadership team, accounted for the moment they stopped providing services to the Company (see note 5 'Restructuring and impairment costs'). 4. Cumulative translation adjustment In 2022, the exchange differences on translation of foreign operations have a net positive impact of 12 million euro, mainly relating to foreign balances held in Hong Kong Dollar (10.4 million euro), US Dollar (6 million euro), Chinese Yuan (-1.4 million euro) and Indian Rupee (-1.1 million euro). 5. Derivatives Derivative financial instruments are disclosed in note 20. 6. Main shareholders 3. Retained earnings The change in retained earnings includes the net income of 2022, actuarial profits, change in the fair value of equity invest- ments, and the distribution of 35.7 million euro dividend, as approved by the general shareholders meeting of 28 April 2022. The board of directors of Barco NV will propose a gross dividend of 0.44 euro per share out of the available reserves per 31 December 2022. In 2022 a gross dividend of 0.40 euro per share was granted on the results of 2021 for which the shareholders had the option to either receive cash or new shares of the company, 41% opted for shares instead of cash, resulting in actual pay-out of 21 million euro dividend in 2022. Before Dilution Public 58,057,400 62.48% Vandewiele Group NV 20,162,824 21.70% 3D NV 4,808,391 5.17% Norges Bank 4,102,042 4.41% Alantra EQMC Asset Management SGIIC, S.A. 3,328,066 3.58% Barco NV 2,457,922 2.65% Total 92,916,645 100% Barco Integrated report 2022 71 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE Name Country of incorporation and operation 2022 2021 2020 Cinionic Ltd. Hong Kong 20% 45% 45% Gnosco AB Sweden 30% - - 17. Non-controlling interest The below table represents the proportion of equity interest held by non-controlling interests: Overview of the equity attributable to non-controlling interest: Upon the start of Cinionic, three minority shareholders have contributed in the capital of Cinionic Ltd. totaling 45% of total contributions of USD 100 million. These capital contributions all gave right to 45% in the Cinionic legal entities’ equity and result. In 2022 Barco agreed to buy the stakes held by the minority shareholders Appotronics and CITICPE in Cinionic, increasing Barco’s ownership interest in the joint venture to 80%. The 20% stake is shown as non-controlling interest. The financials of Cinionic are fully consolidated in the Entertainment results in 2020 - 2022. In order to advance its growth initiative Demetra, Barco signed a joint venture agreement with the Swedish company Gnosco AB on July 1 st , 2022. Barco acquired 70% of the shares in Gnosco AB. As the effective control is transferred on 1 July 2022, the Gnosco figures are taken up in the figures of the Barco Group from 1 July, 2022 onwards. In thousands of euro 2022 2021 2020 Cinionic Ltd. 20,345 41,031 37,798 Gnosco AB -554 - - Total equity attributable to non-controlling interest 19,792 41,031 37,798 Barco Integrated report 2022 72 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE Below is the consolidated balance sheet of the Cinionic legal entities as at 31 December 2022, 2021 and 2020. Assets and Liabilities Cinionic JV In thousands of euro 2022 2021 2020 Total non-current assets 11,081 6,788 4,901 Total current assets 134,248 114,807 107,537 Total assets 145,329 121,595 112,438 Equity attributable to equityholders of the parent 81,381 50,149 46,197 Equity attributable to non-controlling interest 20,345 41,031 37,798 Total equity 101,726 91,181 83,995 Total non-current liabilities 29,645 28,512 24,420 Total current liabilities 40,024 26,724 24,186 Total liabilities 171,395 146,416 132,601 Below is the consolidated balance sheet of the Gnosco legal entities as at 31 December 2022. Assets and Liabilities Gnosco JV In thousands of euro 2022 Total non-current assets 7,4 46 Total current assets 1,218 Total assets 8,664 Equity attributable to equityholders of the parent 2,791 Equity attributable to non-controlling interest -554 Total equity 2,237 Total non-current liabilities 3,246 Total current liabilities 1,632 Total liabilities 7,115 We refer to note 1.1 for more details on the Gnosco legal entities: Gnosco AB, Barco Solutions BV, Gnosco Dermicus Ltd. We refer to note 1.1 for more details on the Cinionic legal entities: Cinionic Limited, Cinionic bv, Barco CineAppo Mexico, S.A. de C.V., Cinionic Inc. and Cinionic Pty. Ltd. Barco Integrated report 2022 73 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE Overview of the net income attributable to non-controlling interest: Other comprehensive income/(loss) for the period, net of tax effect, part attributable to non-controlling interest amounts to 2.5 million euro in 2022, 2.4 million euro in 2021 and -2.5 million euro in 2020. Total comprehensive income for the year, net of tax, part attrib - utable to non-controlling interest amounts to 3.2 million euro in 2022, 3.2 million euro in 2021 and -2.8 million euro in 2020. In thousands of euro % non- controlling 2022 2021 2020 Cinionic Ltd. 374 -208 618 Cinionic bv 6,628 2,559 -741 Cinionic Inc. 1,072 -754 -389 Barco Cine Appo Mexico, S.A. de C.V. -2,343 238 -233 Cinionic Pty. Ltd. 146 116 - Barco Solutions BV -688 - - Gnosco AB -976 - - Gnosco Dermicus Ltd. 2 - - Net income 4,215 1,951 -745 Cinionic Ltd. 20% 75 45% -93 45% 278 Cinionic bv 20% 1,326 45% 1,151 45% -334 Cinionic Inc. 20% 214 45% -339 45% -175 Barco Cine Appo Mexico, S.A. de C.V. 20% -469 45% 107 45% -105 Cinionic Pty. Ltd. 20% 29 45% 52 0% - Barco Solutions BV 30% -206 - - Gnosco AB 30% -293 - - Gnosco Dermicus Ltd. 30% 1 - - Net income attributable to non-controlling interest 677 878 -335 Barco Integrated report 2022 74 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE 18. Trade payables and advances received from customers In thousands of euro 2022 2021 2020 Trade payables (a) 121,920 113,979 70,299 Days payable outstanding (DPO) 68 80 53 Advances received from customers 51,183 54,105 42,375 (a) The increase in trade payables in 2022 and 2021 is the result of higher raw material purchases (increase in volume, component prices and transport charges). In 2022 higher purchases are caused by higher sales in the 4 th quarter (+29% year-over-year). In 2021, the higher purchases are caused by higher sales in the 4 th quarter (+ 29% year-over-year) and accelerated purchases in view of component and transport scarcity and resulted in higher days payable outstanding. Payment terms with suppliers were not extended and there has been no change in payment behavior towards suppliers. In 2020 purchases were braked in view of lower demand to avoid build-up of inventories. Barco Integrated report 2022 75 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE 19. Provisions In thousands of euro Balance sheet 2022 Additional provisions made Amounts used Unused amounts reversed Transfers Remeasurement gains/(losses) on DBO Translation (losses) / gains Balance sheet 2021 Balance sheet 2020 Total long-term provision 14,998 3,392 -1,233 - -78 -18,395 137 31,175 40,156 Defined benefit obligations (b) 4,891 1,529 -1,019 - - -18,395 -49 22,826 31,282 Technical warranty (a) 10,087 1,862 -215 - -78 - 185 8,332 8,857 Other claims and risks (d) 20 - - - - - 2 18 18 Total short-term provision 9,325 4,744 -2,704 -1,419 78 - 89 8,537 13,720 Technical warranty (a) 4,816 1,161 -285 - 78 - 55 3,807 4,922 Restructuring provision (c) 1,748 2,500 -1,211 - - - - 458 3,743 Other claims and risks (d) 2,761 1,083 -1,208 -1,420 - - 34 4,272 5,055 Provisions 24,323 8,136 -3,937 -1,419 - -18,395 226 39,712 53,876 (a) Technical warranty Provisions for technical warranty are based on historical data of the cost incurred for repairs and replacements. There are three different technical warranty provisions: provisions related to ‘standard’ (mostly 2 years) warranty period, provisions related to extended warranty periods and provisions for specific claims/ issues. Barco Integrated report 2022 76 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE (b) Defined benefit obligations As per 31 December 2022, 2021 and 2020, the defined benefit obligations are composed of: In thousands of euro 2022 2021 2020 Pension plans in Belgium 732 17,835 26,190 Early retirement plans in Belgium 104 155 213 Local legal requirements (mainly Italy, Korea, Japan, Germany, France) 3,762 4,590 4,754 A small number of individual plans 293 246 125 Total 4,891 22,826 31,282 Belgian regulations require that the minimum guaranteed rate of return on employer and participant contributions amount- ing to 1.75%, is annually recalculated based on a risk-free rate of 10-year government bonds. According to IAS19, Belgian defined contribution plans that guarantee a specified return on contributions classify as defined benefit plans, as the employer is not responsible for the contribution payments but has to cover the investment risk until the legal minimum rates appli- cable. The returns guaranteed by the insurance companies are in most cases lower than or equal to the minimum return guaranteed by law. As a result, the Group has not fully hedged its return risk through an insurance contract and a provision needs to be accounted for. The plans at Barco are financed through group insurance contracts. The contracts are bene- fiting from a contractual interest rate granted by the insurance company. When there is underfunding, this will be covered by the financing fund and in case this is insufficient, additional employer contributions will be requested. IAS 19 requires an entity to recognize a liability when an employee has provided service in exchange for employee benefits to be paid in the future. Therefore, pension provisions are setup. The obligations are measured on a discounted basis because they are settled many years after the employees ren- der the related service. A qualified actuary has determined the present value of the defined benefit obligations and the fair value of the plan assets. These assets are held by an insurance company. The projected unit credit method was used to esti- mate the defined benefit obligations, the defined benefit cost and the re-measurements of the net liability. There are 15 defined benefit plans in Barco Belgium, for which we show below the aggregated view as these do not differ materially from characteristics, regulatory environment, report- ing segment or funding arrangement. In accordance with IAS 19 the disclosure is in the form of a weighted average. Barco Integrated report 2022 77 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE 2022, 2021 and 2020 changes in the Belgian defined benefit obligation and fair value of plan assets: In thousands of euro 2022 2021 2020 Defined benefit obligation Fair value of plan assets Net defined benefit liability Defined benefit obligation Fair value of plan assets Net defined benefit liability Defined benefit obligation Fair value of plan assets Net defined benefit liability Pension cost charged to P/L On 1 January 130,214 -112,378 17,835 134,340 -108,150 26,190 124,416 -100,185 24,231 Service cost 5,575 - 5,575 5,639 - 5,639 7,929 - 7,929 Net interest expense 987 -862 126 388 -310 78 585 -474 111 Decrease due to curtailement - - - - - - - - - Sub-total included in profit or loss 6,562 -862 5,701 6,026 -310 5,716 8,513 -474 8,039 Benefits paid -3,030 3,030 - -2,383 2,383 - -1,285 1,285 - Remeasurement gains/losses in OCI Increase due to effect of transfers - - - - - - - - - Return on plan assets (excluding amounts included in net interest expense) - -1,210 -1,210 - -2,231 -2,231 - -2,733 -2,733 Actuarial changes arising from changes in financial assumptions -16,172 - -16,172 -5,679 - -5,679 1,698 - 1,698 Actuarial changes arising from experience adjustments -1,014 - -1,014 -2,091 - -2,091 998 - 998 Sub-total included in OCI -17,186 -1,210 -18,395 -7,769 -2,231 -10,000 2,696 -2,733 -37 Contributions by employer - -4,409 -4,409 - -4,070 -4,070 - -6,043 -6,043 On 31 December 116,560 -115,828 732 130,214 -112,378 17,835 134,340 -108,150 26,190 Barco Integrated report 2022 78 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE The 17 million euro decrease in net defined benefit liability in 2022 versus 2021 is mainly recorded via other comprehensive income as caused by change in parameters (see below table): increased discount rate (3.7% vs 0.8%) and higher assumed merit and inflation in 2022 and 2023. The 8.4 million euro decrease in net liability in 2021 versus 2020 is mainly coming from increased discount rate (0.8% vs 0.3%) and higher effective return on plan assets, both recorded via OCI (equity), as change in parameter. The P&L impact of € -1.8m is the result of lower discount rate versus minimum guaranteed future rate of return, which needs to be compen- sated by the employer. In 2020, 2 million euro net increase in P&L is caused by the increased service cost as a result of a low discount rate com- pared to the minimum guaranteed future rate of return, for which additional employer contributions will be requested. The fair value of the plan assets (115.8 million euro) are fully invested in insurance policies. In 2022, the target asset mix did not change compared to 2021 and consists of 67.50% government bonds, 14% real estate, 7.5% corporate bonds, 6% corporate loans and 5% shares. The following overview summarizes the sensitivity analysis performed for significant assumptions as at 31 December. The figures show the impact on the defined benefit obligation. 2022 2021 2020 Discount rate 3.73% 0.77% 0.29% Future salary increases* 8.81% 2.43% 2.44% Future consumer price index increases 8.14% 1.75% 1.75% analyses are based on a change in a significant assumption, keeping all other assumptions constant. These may not be representative for an actual change in the defined benefit obligation, as it is unlikely that changes in assumptions would occur in isolation of one another. The following payments are the expected benefit payments from the plan assets: In thousands of euro 2022 2021 2020 Discount rate 0.25% decrease 331 2,834 3,324 0.25% increase -265 -4,305 -3,868 Future salary change 0.25% decrease -143 -1,036 -1,212 0.25% increase 112 1,093 596 Future consumer price index change 0.25% decrease -88 -609 -711 0.25% increase 106 615 735 In thousands of euro 2022 2021 2020 Within the next 12 months 4,750 3,724 3,197 Between 2 and 5 years 33,002 24,696 20,865 Between 5 and 10 years 40,332 41,648 46,857 Total expected payments 78,084 70,068 70,919 * 8.81% in 2022-2023 ; 2.67% from 2024 ** 8.14% in 2022-2023 ; 2% from 2024 The sensitivity analyses above have been determined based on a method that extrapolates the impact on the defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period. The sensitivity The principal assumptions used in determining pension obli- gations for the Group's plans are shown below: The average duration of the defined benefit plan obligation at the end of the reporting period is 11.3 years (12.3 years in 2021 and 12.6 years in 2020). The expected employer contributions to the plan for the next annual reporting period amounts to 9 million euro (3.9 million euro in 2022 and 4.0 million euro in 2021); the employee contributions are expected to amount to 1.2 million euro (1.1 million euro in 2022 and 2021). Early retirement plans are recognized as liability and expensed when the company is committed to terminate the employment of the employees affected before the normal retirement date. In Belgium, a multi-employer plan exists for some blue collars where payments go into a sectoral fund. As Barco does not have access to information about the plan that satisfies the requirements of the standard, the plan is further classified as a defined contribution plan and expensed as incurred. Barco Integrated report 2022 79 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE (c) Restructuring provision See note 5 'Restructuring and impairments'. We refer to the accounting standards on provisions including provisions on restructuring. (d) Other claims and risks This provision relates to disputes with suppliers, pending litiga- tions and specific customer warranty disputes. Barco cannot provide details on the specific cases, as this could cause con- siderable harm to Barco in the particular disputes. With respect to the contingent liabilities related to former acquisitions, there is one earn-out capped at 15 million euro linked to the retention of the former shareholders and future results for which the future results could not be reliably esti - mated at acquisition. The earn-outs will flow through profit and loss at moment of payment over the earn-out period, which ends May 25, 2026. Per end 2022, no payments occurred under this earn-out. Barco Integrated report 2022 80 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE 20. Risk management - derivative financial instruments General risk factors are described in the director’s report “Risk Factors”. Derivative financial instruments are used to reduce the expo- sure to fluctuations in foreign exchange rates and interest rates. These instruments are subject to the risk of market rates changing subsequent to acquisition. These changes are generally offset by opposite effects on the item being hedged. Foreign currency risk Recognized assets and liabilities Barco incurs foreign currency risk on recognized assets and liabilities when they are denominated in a currency other than the company’s local currency. Such risks may be naturally cov- ered when a monetary item at the asset side (such as a trade receivable or cash deposit) in a given currency is matched with a monetary item at the liability side (such as a trade payable or loan) in the same currency. Forward exchange contracts and selectively option contracts are used to manage the currency risk arising from recognized receivables and payables, which are not naturally hedged. The balances on foreign currency monetary items are valued at the rates of exchange prevailing at the end of the accounting period. Derivative financial instruments that are used to reduce the exposure of these balances are rated in the balance sheet at fair value. Both changes in foreign currency balances and in fair value of derivative financial instruments are recognized in the income statement. Forecasted transactions Barco selectively designates forward contracts to forecasted sales. Hedge accounting is applied to these contracts. The portion of the gain or loss on the hedging instrument that will be determined as an effective hedge is recognized directly in comprehensive income. At 31 December 2022, there were no forward contracts outstanding under hedge accounting treatment. Estimated sensitivity to currency fluctuations Sensitivity to currency fluctuations is mainly related to the evolution of a portfolio of foreign currencies (mainly USD and CNY) versus the euro. This sensitivity is caused by the following factors: • The fair value of foreign currency monetary items is impacted by currency fluctuations. In order to eliminate most of these effects in foreign currencies, Barco uses monetary items and/or derivative financial instruments as described above, which are meant to offset the impact of such results to a major extent. • As the company has no cash flow hedges in place that aim at hedging forecasted transactions, a similar fluctuation in foreign currencies would not have any effect on the equity position of Barco. • Profit margins may be negatively affected because an important part of sales are realized in foreign currencies, while costs are incurred in a smaller part in these curren- cies. Barco has done great efforts throughout the years to increase its natural hedging ratio in USD (being its main foreign currency in terms of sales) by increasing its oper- ational costs and by purchasing more components in this currency. Impact on adjusted EBIT is currently estimated at 20.0 million euro when the weighted average rate of a foreign currency basket, that has an overall overweight of USD & CNY, changes by 10% versus the euro in a year. The overall natural hedge ratio of foreign currencies reached a level of 71% in 2022 (2021: 73%). • Another impact is the fact that some of Barco’s competi- tors are USD-based. Whenever the USD decreases in value against the euro, these competitors have a worldwide com- petitive advantage over Barco. This impact on operating result cannot be measured reliably. Interest rate risk Barco uses following hedging instruments to manage its inter- est rate risk: Swap on outstanding or anticipated borrowing Barco concluded a series of interest rate swaps with an out- standing notional amount of 8.3 million euro by means of a partial hedge for the bilateral real estate leasing (currently outstanding at 16.0 million euro) for the financing of Barco's HQ campus starting in 2016. This instrument swaps the variable interest rate into a fixed 1.76%. These swaps are determined as an effective hedge of outstanding or anticipated borrowings and meet the hedging requirements of IAS 39. The fair values of the effective portion of the hedging instrument are therefore recognized directly in comprehensive income under hedge accounting treatment. Estimated sensitivity to interest rate fluctuations Changes in interest rate are closely followed up by management. Barco Integrated report 2022 81 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE With reference to the fair values table below, just over 60% of Barco’s outstanding long-term debt portfolio has a fixed inter- est rate character, which limits the exposure of the company to interest rate fluctuations. This ratio increases to 83% when including the swap instruments disclosed above. Credit risk Credit risk on accounts receivable Credit evaluations are performed on all customers requiring credit over a certain amount. The credit risk is monitored on a continuous basis. In a number of cases collateral is being requested before a credit risk is accepted. Specific trade finance instruments such as letters of credit and bills of exchange are regularly used in order to minimize the credit risk. In 2022, Barco continued to conclude credit insurances in order to cover credit risks on specific customers or large con- tracts on a case by case basis. Credit risk on liquid securities and short-term investments A policy defining acceptable counter parties and the maximum risk per counter party is in place. Short-term investments are made in marketable securities, cash holdings or in fixed term deposits with reputable banks. Fair values Set out on the right is an overview of the carrying amounts of the Group’s financial instruments that are shown in the finan- cial statements. In general, the carrying amounts are assumed to be a close approximation of the fair value. In thousands of euro 2022 2021 2020 Carrying amount / Fair value (approx.) Financial assets Investments at fair value through equity 37,337 46,680 86,651 Trade receivables 194,643 156,977 146,138 Other receivables 14,509 16,211 17,789 Loan and other receivables 11,971 15,152 12,420 Interest receivable 1 4 24 Currency rate swap 2,187 1,055 5,345 Interest rate swap 350 - - Other non-current assets 5,819 6,849 5,870 Short term investments 1,651 2,763 3,175 Cash and cash equivalents 305,915 351,571 235,402 Total 559,874 581,051 495,026 Financial liabilities Financial debts 16,000 18,000 20,000 Floating rate borrowings 8,288 9,563 10,838 Fixed rate borrowings 7,71 3 8,438 9,163 Other long-term liabilities 44,524 48,860 43,286 Short-term debts - - 86 Trade payables 121,920 113,979 70,299 Other current liabilities 5,412 5,036 8,980 Other short term amounts payable 750 1,206 80 Dividends payable 2,289 2,289 2,290 Currency rate swap 2,373 859 5,529 Interest rate swap - 682 1,080 Total 187,856 185,875 142,650 Barco Integrated report 2022 82 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE The fair value of the financial assets and liabilities is defined as the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values: • Cash and cash equivalents and short-term investments, trade receivables, trade payables, and other current liabili- ties approximate their carrying amounts largely due to the short-term maturities of these instruments. • Investments are measured at market price. For investments that are publicly quoted in an active market, the quoted market price is the best measure of the fair value. The remeasurement at fair value per 31 December 2022 versus the carrying amount is reflected in other comprehensive income. • Long term fixed rate and variable rate other assets are eval- uated by the Group based on parameters such as interest rates, specific country risk factors, individual creditwor- thiness of the customer and the risk characteristics of the financed project. Based on this evaluation, allowances are made to account for the expected losses of these receiv- ables. As at 31 December 2022, the carrying amounts of such receivables, net of allowances, are assumed not to be materially different from their calculated fair values. • The fair value of unquoted instruments, loans from banks and other financial liabilities, obligations under finance leases as well as other non-current financial liabilities is esti- mated by discounting future cash flows using the effective interest rates currently available for debt on similar terms, credit risk and remaining maturities. As of 31 December 2022, the effective interest rate is not materially different from the nominal interest rate of the financial obligation. • The Group enters into derivative financial instruments with various counterparties, principally financial institutions with investment grade credit ratings. Derivatives valued using valuation techniques with market observable inputs are mainly interest rate (cap/floor) swaps and foreign exchange forward contracts. The most frequently applied valuation techniques include forward pricing and swap models, using present value calculations. The models incorporate various inputs including foreign exchange spot and forward rates and interest rate curves. Barco Integrated report 2022 83 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE Fair value hierarchy As at 31 December 2022, the Group held the following financial instruments measured at fair value: The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: Level 1: quoted (unadjusted) prices in active markets for iden- tical assets or liabilities; Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly; Level 3: techniques that use inputs having a significant effect on the recorded fair value that are not based on observable market data. In thousands of euro 2022 2021 2020 Assets measured at fair value Financial assets at fair value through profit or loss Foreign exchange contracts - non-hedged 2,187 1,055 5,345 Financial assets at fair value through equity Investments 37,337 46,680 86,651 Interest rate swap 350 - - Liabilities measured at fair value Financial liabilities at fair value through profit or loss Foreign exchange contracts - non-hedged 2,373 859 5,529 Financial liabilities at fair value through equity Interest rate swap - 682 1,080 All fair values mentioned in the above table relate to Level 2, except for the investments which were based on level 1 input. The liabilities associated with puttable non-controlling interests are in the IFRS fair value hierarchy level 3, i.e. one or more significant inputs are not based on observable market data (see note 15). During the reporting period ending 31 December 2022, there were no transfers between Level 1 and Level 2 fair value measurements. Barco Integrated report 2022 84 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE Capital Management Management evaluates its capital needs based on following data: In thousands of euro Note 2022 2021 2020 Net financial cash / (debt) 14 264,014 309,750 193,527 Equity 778,981 734,814 697,107 % Net financial cash (debt) / Equity 33.9% 42.2% 27.8% In thousands of euro 2022 2021 2020 Equity 778,981 734,814 697,107 Total equity and liabilities 1,147,405 1,104,249 1,018,203 % Equity / Total equity and liabilities 67.9% 66.5% 68.5% In 2022, the net cash position ended at a level of 264 million euro compared to 309.8 million euro as per end of 2021. We refer to note 14 for the details on the movement. The solvency position and other current ratios continue to con- solidate at healthy levels. Together with the existing committed credit facilities, management considers that it has secured a healthy liquidity profile and strong capital base for the further development of the group. Barco Integrated report 2022 85 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE Changes in liabilities arising from financing activities In thousands of euro Non-cash changes 1 January 2022 Cash flows IFRS 16 movements Acquisition / sale Foreign exchange movement 31 December 2022 Long-term debts Long-term liabilities 16,000 -2,173 - 172 2 14,000 Long-term lease liabilities 18,366 -10,216 10,134 - 51 18,335 Short-term debts Short-term liabilities 2,000 - - - - 2,000 Short-term lease liabilities 8,218 999 - - - 9,217 Total liabilities from financing activities 44,585 -11,391 10,134 172 53 43,552 The long-term liabilities and lease liabilities are together the long-term debts as shown in the balance sheet. The short-term liabilities are the total of current portion of long-term debts and short-term debts, as shown in the balance sheet. Barco Integrated report 2022 86 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE 21. Rights and commitments not reflected in the balance sheet (a) Guarantees given to third parties mainly relate to guarantees given to customers for ongoing projects, guarantees given to suppliers for investment projects and to authorities for commitments related to VAT, duties, etc. (b) The total mortgage includes three loans of 10 million euro each to fund the headquarter campus. The decrease in net book value since 2020 is due to depreciation. 22. Related party transactions During the ordinary course of their business conduct Barco affiliates will also enter into related party transactions. This includes both service transactions and financing arrangements. Related party transactions are generally undertaken on an at arm’s length basis based on Barco’s worldwide transfer pricing policies. Where appropriate, the arm’s length nature of transac- tions is tested against benchmarking searches and the results thereof are shared with tax authorities worldwide in line with local transfer pricing requirements and regulations. Barco commits not to use tax structures without economic substance or make use of jurisdictions for the sole purpose of tax avoidance. Barco NV, as the ultimate parent entity of the Barco group, submits the transfer pricing Country-by-Country (CbC) report in Belgium, thereby disclosing taxes paid world- wide on a jurisdictional level to the Belgian tax authorities on an annual basis. Following the implementation of the CbC reporting in Belgian legislation, submitted CbC reports will be shared by the Belgian tax authorities with tax authorities worldwide. Transactions between the Company and its subsidiaries, which are related parties, have been eliminated in the consolida- tion and are accordingly not disclosed in this note. None of the related parties have entered into any other transactions with the Group that meet the requirements of IAS 24, ‘Related party disclosures’. We refer to note 1 'Consolidated companies' for an overview of the consolidated and equity accounted companies. We refer to the ‘Corporate Governance Chapter’ for informa- tion with respect to remuneration of directors and members of the core leadership team. At the annual shareholders meeting of 29 April 2021, PWC Bedrijfsrevisoren bv, Culliganlaan 5, 1830 Diegem, was appointed as statutory auditor of the company for a period of three years. In 2022, remuneration approved by the Audit Committee to the statutory auditor for auditing activities amounted to 320,982 euro. Remuneration paid to the statutory auditor for special assignments was 81,432 euro. In thousands of euro Note 2022 2021 2020 Guarantees given to third parties (a) 3,594 3,474 3,850 Mortgage obligations given as security (b) 30,000 30,000 30,000 Book value of the relevant assets 29,539 33,029 36,527 Barco Integrated report 2022 87 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE 23. Cash flow statement: effect of acquisitions and disposals The following table shows the effect of acquisitions and dis- posals on the balance sheet movement of the Group. The acquisition in 2022 relates to a joint venture agreement with the Swedish company Gnosco AB. We refer to note 1.3 on acquisitions and divestments and to the Cash flow statement. There were no acquisitions and disposals in 2021 and 2020. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are carried in terms of historical cost using the exchange rate at the date of the acquisition. In thousands of euro Aquisitions 2022 Net-identifiable assets and liabilities -1,796 Know-how on acquisitions 7,607 Put option non-controlling interest -2,049 Acquired/(sold) cash 237 Purchase price 4,000 24. Events subsequent to the balance sheet date There are no major events subsequent to the balance sheet date which have a major impact on the further evolution of the company. Barco Integrated report 2022 88 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE Supplementary statements In thousands of euro 2022 2021 2020 Adjusted EBIT 90,143 19,373 10,180 Restructuring -1,211 -8,204 -9,536 Depreciations of tangible and intangible fixed assets 36,331 39,136 43,383 Gain/(Loss) on tangible fixed assets -1,621 196 170 Share in the profit/(loss) of joint ventures and associates 3,337 48 -276 Gross operating Free Cash Flow 126,979 50,549 43,921 Changes in trade receivables -35,615 -4,918 41,391 Changes in inventory -70,161 4,432 -12,260 Changes in trade payables 7,425 42,825 -59,936 Other changes in net working capital 2,823 13,195 -23,960 Change in net working capital -95,528 55,534 -54,764 Net operating Free Cash Flow 31,451 106,083 -10,843 Interest received 2,773 713 1,845 Interest paid -1,930 -1,823 -1,965 Income taxes -6,042 -8,386 -10,398 Free Cash flow from operating activities 26,252 96,587 -21,361 Purchases of tangible & intangible FA -21,218 -18,787 -14,980 Proceeds on disposals of tangible & intangible fixed assets 8,038 183 488 Free Cash flow from investing activities -13,180 -18,604 -14,493 FREE CASH FLOW 13,072 7 7,983 -35,854 Free Cash Flow In 2022 the Company generated 13.1 million euro positive free cash flow reflecting a significant uptake in gross operating free cash flow, which amounted 127.0 million euro. This was offset by increased working capital, due to higher inventory levels and higher trade receivables. The higher trade receivables are linked to the peak sales of the fourth quarter. The higher inven- tories include proactive buying of inventories, as a response to supply chain challenges and inflation. At the end of December 2022, Barco’s net cash position reaches 264 million euro, 46 million euro lower compared to last year (2021: 309.8 million euro, 2020: 193.5 million euro). The decrease versus last year is attributable to the lower free cash flow, a number of minority investments and the increase of Barco’s share in Cinionic from 55% to 80%, dividends paid out (-21 million euro) and use of own shares for stock options (8 million euro) We refer to note 14, note 16 and note 11 for more explanation. Balance Sheet Net working capital increased to 14.3% of sales compared to 5.8% in 2021. The increase in working capital is mainly caused by an increase in inventory levels (see note 12). Due to the component shortages, safety buffers were stocked for a number of scarce components. High sales in the last quarter helped to start reducing inventories, however inven - tory levels remained higher than usual at year end and will require more work in 2023 to bring them back to pre-covid levels. In addition to the increase in inventory, higher trade receivables contributed to the increase in working capital, mainly due to very strong sales in December, for which cash will be collected in 2023. In 2021 net working capital reduced to 5.8% of sales compared to 10% in 2020, as a result of higher trade payables, customer advances received, reduced DSO from 67 days to 56 days and stable inventory. Barco Integrated report 2022 89 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE The return on capital employed increased to 16% in 2022 (2021: 4%, 2020: 3%), thanks to a stronger increased operational result compared to the increase in capital employed (14.2% of sales). In thousands of euro Note 2022 2021 2020 Trade debtors 194,643 156,977 146,138 Inventory 245,714 175,496 175,390 Trade payables -121,920 -113,979 -70,299 Other working capital -168,014 -171,695 -170,620 Working capital 150,423 46,799 80,610 Other long term assets & liabilities 194,119 204,646 210,493 Operating capital employed 344,543 251,445 291,102 Goodwill 105,612 105,612 105,612 Operating capital employed (incl goodwill) 450,155 357,056 396,714 Adjusted EBIT 90,143 19,373 10,180 Adjusted ROCE after tax (%) (a) 16% 4% 3% Return on Operating Capital Employed (a) Tax rate used is the effective tax rate (in 2022 and 2021: 18%; 2020: 0%) Barco Integrated report 2022 90 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE Supplementary information Barco NV Summary version of statutory accounts Barco NV The financial statements of the parent company, Barco NV, are presented below in a condensed form. The accounting principles used for the statutory annual accounts of Barco NV differ from the accounting principles used for the consolidated annual accounts: the statutory annual accounts follow the Belgian legal requirements, while the consolidated annual accounts follow the International Financial Reporting Standards. Only the consolidated annual financial statements as set forth in the preceding pages present a true and fair view of the financial position and performance of the Barco Group. The management report of the Board of Directors to the Annual General Meeting of Shareholders and the annual accounts of Barco NV, as well as the Auditor’s Report, will be filed with the National Bank of Belgium within the statutory periods. These documents are available upon request from Barco’s Investor Relations department, and at www.barco.com. The statutory auditor’s report is unqualified and certifies that the non-consolidated financial statements of Barco NV for the year ended 31 December 2021 gives a true and fair view of the financial position and results of the company in accordance with all legal and regulatory dispositions. Barco Integrated report 2022 91 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE Balance sheet after appropriation In thousands of euro 2022 2021 2020 Fixed assets 345,576 351,619 362,928 Intangible fixed assets 11,381 17,505 27,260 Tangible fixed assets 61,623 63,788 67,267 Financial fixed assets 272,572 270,326 268,401 Current assets 340,521 273,469 255,249 Inventory 156,492 103,283 109,712 Amounts receivable within one year 145,766 129,543 109,517 Investments (own shares) 25,623 31,615 27,143 Cash and cash equivalents 2,818 124 295 Deferred charges and accrued income 9,822 8,904 8,582 TOTAL ASSETS 686,097 625,088 618,177 Capital and reserves 358,218 273,313 276,033 Capital 56,753 56,297 55,880 Share premium account 173,360 159,186 146,776 Reserves 32,687 38,678 34,207 Accumulated profits 93,383 18,042 38,977 Investment grants 2,035 1,110 193 Provisions 9,566 8,633 11,739 Provisions for liabilities and charges 9,566 8,633 11,739 Creditors 318,312 343,141 330,404 Amounts payable after more than one year 14,000 16,000 18,000 Amounts payable within one year 304,312 327,141 312,404 TOTAL LIABILITIES 686,097 625,088 618,177 Intangible fixed assets relate mainly to the implementation cost of SAP ERP software. These SAP capital expenditures are amortized over 7 years. In 2022, 1.9 million euro investments were made in new customer relationship management (CRM) software. The main capital expenditures realized in 2022 relate to machinery and tooling (3.5 million euro) linked to new prod- uct development projects as well as the renewal of the Barco’s HQ customer experience centre (1.6 million euro). Financial fixed assets in 2022 increased by net 2.5 million euro. The increase is attributable to the joint venture agreement entered into on July 1 st , 2022 with the Swedish company Gnosco AB whereas an additional statutory impairment was taken on the participation in Barco Fredrikstad AS (Norway). Inventory levels in 2022 are at an all-time high.Raw material inventory increased due to supply chain constraints causing base price increase (7.5%), combined with the effect of change in currency rates. Furthermore, due to missing other compo- nents raw materials remain longer in inventory. These effects are also reflected in work in progress and finished goods inven- tory levels, mainly in the Entertainment and Healthcare division. Amounts receivable are higher compared to 2021 primarily caused by the strong fourth quarter and year-end external and intercompany sales. Days sales outstanding evolved positively from 59.5 days in 2021 to 44.2 days in 2022. The decrease in amounts payable within one year in 2022 is mainly attributable to the decrease in the intercompany cash pool account with Barco Coordination Center NV following the improved results compared to 2021 and 2020. Further the decrease was linked to the slowdown in last quarter purchase volume in view of the high inventory levels. Barco Integrated report 2022 92 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE Income statement Sales in 2022 were close to pre-covid levels, increased 27.8% compared to 2021, thanks to reopening of most global markets after two years with considerable impact on sales due to the pandemic as well as consequential component shortages that delayed order to sales conversion in 2021. Gross margin in 2022 increased to 41% compared to 40.3% in 2021 and 36.2% in 2020. The turnaround from an operat- ing loss in 2021 towards an operating income in 2022 was attributable to the considerable higher topline at improved margins. Operating costs increased in 2022, though relatively operating expenses decreased to 18.3% of sales compared to 20% in 2021 & 2020. The recurring financial result of 46.2 million euro in 2022 includes mainly the intercompany dividends received from Barco Coordination Center NV, Barco Ltd. (U.K.), Barco SAS (France), Barco Limited (Taiwan) and Barco Sdn. Bhd. (Malaysia) compared to one intercompany dividend from Barco Inc. (US) in 2021. The negative non-recurring financial result in 2022 is caused by an additional impairment on Barco Fredrikstadt (Norway) caused by higher interest rates applied on calculating future discounted cashflows. Further there is a negative impact fol- lowing the reclassification of the impairment on caresyntax, included in other investments, formerly included in intangibles. In 2020 the significant negative non-recurring financial result was attributable to impairments on Barco Ltd. (Taiwan) and the liquidation of Barco Technology Taiwan. The income taxes in 2022 relate to corporate taxes on the result of the year, net after usage of tax credits, and withholding taxes on received dividends. In 2021 and 2020 income taxes related entirely to withholding taxes on dividends. As a result of the above, Barco NV realized a profit for the year 2022 of 109.2 million euro compared to 19.2 million euro in 2021 and a 17.3 million euro loss in 2020. In thousands of euro 2022 2021 2020 Sales 745,160 583,012 583,172 Recurring operating income/(loss) 76,974 -4,097 -15,954 Recurring financial result 46,201 19,388 44,514 Non-recurring financial result -11,024 3,966 -41,784 Income taxes -2,960 -66 -4,030 Profit/(loss) for the year 109,191 19,191 -17, 25 4 Barco Integrated report 2022 93 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE Proposed appropriation of Barco NV result The board of directors of Barco NV will propose to the General Assembly to distribute a gross dividend of 0.44 euro per share, relating to the result as of 31 December 2022. In thousands of euro 2022 2021 2020 Profit/(loss) for the year for appropriation 109,191 19,191 -17, 25 4 Profit brought forward 18,002 38,978 87,771 Profit to be appropriated 127,193 58,169 70,517 Transfer from other reserves -5,992 4,472 -1,848 Profit to be carried forward 93,383 18,042 38,977 Gross dividends 39,802 35,655 33,388 Total 1 27,193 58,169 70,517 Barco Integrated report 2022 94 FIN Financial report Information about the share Barco Integrated report 2022 95 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE Barco Integrated report 2022 95 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE Key figures for the shareholder (a) Gross dividend / share price at year-end closing date (b) Increase or decrease share price + gross dividend paid out in the year, divided by closing share price of previous year (c) Gross dividend number of shares on 31 December / net income attributable to the equity holder of the parent (d) Share price 31 December / earnings per share Number of shares (in thousands): 92,917 92,170 91,487 Per share (in euro) 2022 2021 2020 EPS 0.84 0.10 -0.05 Diluted EPS 0.83 0.10 -0.05 Gross dividend 0.44 0.400 0.378 Net dividend 0.31 0.28 0.26 Return on Equity (ROE) 9.7% 1.3% -0.7% Gross dividend yield (a) 1.9% 2.1% 2.1% Yearly return (b) 22.5% 9.6% -41.8% Pay-out ratio (c) 54.4% 415.1% -787.1% Price/earnings ratio (d) 27.6 191.9 -358.0 Barco Integrated report 2022 96 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE Share price performance * Values for 2011-2019 restated following to the 7:1 share split; see press release ** The average number of shares traded daily for the period 2022 is taking into account the trades on the Lit Venues: Euronext as well as registered trades on alterna- tive platforms (Source: Refinitiv Market Share Reporter and Euronext’ customer portal “Connect”). Values for the period 2021 are based on the Fidessa stock report. Values for the periods 2018-2020 are based on Euronext’ customer portal “Connect”. 5 10 20 25 30 35 15 0 2010 2011 2012 2013 2014 2015 2016 2019 2020 2022202120182017 Lowest to highest closing price Average closing price Share price Per share (in euro) 2022 2021 2020 2019 2018 Average closing price 21.37 20.04 21.22 23.80 15.09 Highest closing price 25.58 24.42 35.21 31.71 17.66 Lowest closing price 17.50 15.92 12.76 14.37 12.84 Closing price 31 December 23.08 19.16 17.82 31.29 14.13 Average number of shares traded daily 177,237 165,296 279,797 165,784 137,160 Stock market capitalization on 31 December (in millions) 2,144.52 1,765.98 1,630.31 2,862.09 1,292.35 Barco Integrated report 2022 97 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE Liquidity January February March April May June July August September October November December January February March April May June July August September October November December January February March April May June July August September October November December 2020 2021 2022 100,000 200,000 300,000 600,000 700,000 800,000 900,000 1,000,000 500,000 400,000 Daily average shares traded * The numbers referenced here take into account the trades in the Lit-category. "All Venues" includes Lit-venues, the Systematic internalisers and dark venues (LIT+Auction+Dark+OTC+SI). Source for period 2022: Refinitiv Market Share Reporter and Euronext’ customer portal “Connect” Source for period 2021: Fidessa stock report Source for period 2020: Euronext’ customer portal “Connect” (no information for other venues than Euronext in 2020). Source Source 2022 2021 2020 Total yearly volume (shares) Euronext 26,486,626 42,646,488 71 ,907,829 Lit venues (1) 45,549,874 48,913,548 All venues (2) 95,232,679 86,712,750 Daily average number of shares traded Euronext 103,061 165,296 279,797 Lit venues (1) 177,237 189,587 All venues (2) 370,555 336,096 Total yearly volumes (turnover) in million euro Euronext 563.11 837.86 1,459.92 Lit venues (1) 971.24 958.21 All venues (2) 2,036.62 2,501.13 Velocity Euronext 27.27% 44.98% 77.56% (1) & (2): The numbers referenced here take into account the trades in the Lit- category. The category "Lit venues" includes Euronext and the alternative platforms. "All Venues" includes Lit-venues, the Systematic internalisers and dark venues (LIT+Auction+Dark+OTC+SI). Source for period 2022: Refinitiv Market Share Reporter and Euronext’ customer portal “Connect” Source for period 2021: Fidessa stock report Source for period 2020: Euronext’ customer portal “Connect” (no information for other venues than Euronext in 2020). All venues Euronext data Barco Integrated report 2022 98 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE Barco share price 2022 Barco share price 2022 15 20 10 25 30 02-01 01-0301-02 01-04 01-05 01-06 01-07 01-08 01-09 01-10 01-11 01-12 -30 -20 0% -10 10 30 20 02-01 01-0301-02 01-04 01-05 01-06 01-07 01-08 01-09 01-10 01-11 01-12 Barco Bel 20 Next 150 Barco / Bel 20 / Next 150 Barco Eurostoxx 50 Eurostoxx technology Nasdaq - 100 Barco / Eurostoxx 50 / Eurostoxx Technology / Nasdaq - 100 Barco -40 -30 -20 0% -10 10 20 30 02-01 01-0301-02 01-04 01-05 01-06 01-07 01-08 01-09 01-10 01-11 01-12 -40 Barco Integrated report 2022 99 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE Shareholders A study of Barco’s global shareholdership, carried out in December 2022 and January 2023, plotted nearly 98% of the company’s shareholder composition (1) . Identified institutional investors hold 74.8% of all shares. Treasury shares held by the company are good for 2.65% of the shares and approximately 14.1% of the shares are held by retail investors, down from 14.9% a year ago. Geographic distribution Belgium remains the dominant investment region in Barco’s institutional shareholder base, with a strong proportional rep- resentation versus peers and industry averages. Over 2022 Belgium ownership experienced inflows to hold now almost half (48.4%) of the institutional shares compared to 48.6% at the end of 2021. US remains the second largest region in institutional owner- ship and saw their exposure rising by more than 2 percentage points to 16.1%, up from 14.0% the year before, due to more buying than selling activity. France remained the third country in Barco’s institutional investor universe, with a 10.5% share, an increase from 9.3% last year. The United Kingdom took the fourth place. It registered more sellers than buyers and declined from a 8.7% position last year to 6.1% in 2022. Compared to the Nasdaq Belgian client base benchmark, Belgium continues to show substantial overweight in terms of domestic ownership. Barco remains very much underweight in both the US and the UK compared to the benchmark. Investment style Growth ownership has been declining since 2021, down by 1.0% to now account for 15.6% of institutional shares. Conversely, value-oriented investors increased their exposure by 0.7% to 15.1% of institutional shares. The position of GARP- type investors declined by 1.2 percentage points at 10.0% from 11.2% a year ago. The main reference holders further strengthened their posi- tion in the company. They are grouped together with other shareholders, in the category 'other investment style' that now accounts for more than 50% of the ownership. This category is significantly overweighted, making all other main categories underweight when compared to Nasdaq Technology Base benchmark. Index type investors maintained their position in 2022, owning now 8.6%, slightly up versus 8.5 % the year before. Investing responsibly According to the analysis, 24% of the institutional shares are held by ESG funds, an increase of almost 5 percentage points compared to 2021. This level remains below average when compared to Nasdaq’s technology sector, Belgian and wider European major benchmarks. Concentration The concentration level amongst Barco top holders moved slightly in 2022, with the top-10 category increasing over this analysis period, and both top-25 and top-50 categories slightly decreasing. The categories now account for: • Top 10: 59.2% of institutional shares compared to 57 % last year • Top 25: 75.5% compared to 77% last year • Top 50: 89.2% compared to 90% last year Compared to the average observed in the mid-cap client base benchmark (Nasdaq European Mid Cap client base), Barco’s concentration levels are above average. (1) Shareholder analysis performed by Nasdaq Advisory services in December 2022 and January 2023. Shareholder structure Barco Integrated report 2022 100 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE Shareholder structure Geographic distribution Investment style 74.8% 14.1% 4.9% 2.7% 3.5% 15.6% 15.1% 10.0% 8.6% 0.5% 50.3% 48.4% 16.1% 10.5% 6.1% 4.2% 14.3% 0.5% Growth Value GARP Index Hedge Fund Other Institutional Retail Brokerage/trading Company-related Unassigned Shares Ownership of Barco’s shares 2022 (per 31 December 2022) Vandewiele Group nv 3D NV Norges Bank Alantra EQMC Asset Management SGICC, S.A. Public TOTAL Belgium United States France United Kingdom Spain Rest of Europe Rest of world * Public: inclusive Barco (2,457,922 shares, or 2.65%) 21.70% 5.17% 4.41% 3.58% 100.00% 65.13% 20,162,824 shares 4,808,391 shares 4,102,042 shares 3,328,066 shares 92,916,645 shares 60,515,322 shares Barco Integrated report 2022 101 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE Shareholder remuneration Barco’s investment case Dividend Barco’s Board of Directors will propose to the General Assembly to distribute a gross dividend of 0.44 euro per share, a 10% increase from 0.40 euro a year ago. Dividend policy The dividend is set by the Board of Directors and subsequently proposed at the Annual General Meeting of shareholders at the end of each fiscal year. Barco’s Board believes that consistency and reliability towards the investment community is key, and considers a consis- tent dividend pay-out as a key contributor, reflecting the long-term confidence in the company and its future growth opportunities. Strong foundation with technology and market leadership in healthy markets Backed by over 85 years of experience, Barco is a strong brand known for its technology leadership in three solid and healthy markets: Healthcare, Enterprise and Entertainment. Building on sustainable advantages, Barco has established global leader- ship positions in all of these markets. The solutions delivered to these markets are mostly mission-critical with a real effec- tive need for high-performance and reliable technology. Based on a solid experience, a thorough understanding of customer needs, advanced know-how in developing differ - entiated technology and delivering value-add solutions and a well-developed go-to-market network, Barco continues to lead in these markets. Focused strategy Barco's strategy is focused around three levers. 'Capturing profitable and efficient growth' focuses on leveraging lever- aging operational efficiencies from a simplified organization and digital transformation, seizing the China opportunity with strong local presence, and developing new vertical market segments via adjacent products and geographic expansion. The 'Innovate for impact' lever builds on increasing the man- ufacturing footprint with a strengthened supply chain, and on accelerating innovation with a rebalanced R&D portfolio. The underlying 'Go for Sustainable Impact' pillar addresses Barco's ambition to design and act towards sustainable outcomes for our planet, people, and communities. Solid financial results Over the past years, Barco has continued to sharpen the focus of its activities. Since introducing the ‘focus to perform’ program in 2016, Barco has made measurable and steady progress by rational- izing the business portfolio and footprint and by implementing value engineering initiatives. EBITDA margin expanded from 8% in 2016 to 14% in 2019 and net earnings grew to 9% of sales. In 2020 and 2021 the company delivered weaker results mainly due to covid-19 pandemic impacts and supply chain constraints, which resulted in a softer sales and profit per- formance. End of 2021, Barco carried out an organizational redesign to install greater empowerment and accountability at the business unit level while enhancing customer and market responsiveness. In 2022, Barco was able to reconnect with its long-term growth ambitions, bringing the EBITDA margin back to 12%, and laying the foundations to expand its markets and accelerate innovation with its visualization and collaboration technology. Except in 2020, Barco booked year-on-year net cash positive results. The company follows a conservative course in man- aging its financials and net cash position. Barco Integrated report 2022 102 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE A strong and reliable leadership team Further strengthened with the onboarding of some new leaders, Barco’s leadership team holds diverse and global competencies and insights. The organizational redesign brings together focused teams per market, with accountability from R&D over product development to supply chain and sales. With a clear focus on the customer, the leadership team and the entire company are committed to delivering sustainable and profitable long-term growth. Shareholder trust Barco has a stable international shareholder base with a pre-dominance of value-oriented investors. Since 2015, both Vandewiele group nv and 3D NV are represented in the Board of Directors. Together they own close to 27% of Barco's shares. Board believes that consistency and reliability towards the investment community is key and considers a consistent dividend pay-out as a key contributor, reflecting the long- term confidence in the company and its future growth and opportunities. Barco Integrated report 2022 103 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE Analysts covering Barco Bank Degroof Petercam sa Kris Kippers Berenberg Trion Reid De Belegger Geert Smet Flemish Federation of Investors and Investor Club Gert De Mesure ING Marc Hesselink KBC Securities Guy Sips Kepler Cheuvreux Matthias Maenhaut Van Lanschot Kempen Emmanuel Carlier Announcement of results 4Q22 and FY22 Thursday 9 February 2023 Trading update 1Q23 Wednesday 19 April 2023 Annual General Shareholders Meeting Thursday 27 April 2023 Announcement of results 1H23 Wednesday 19 July 2023 Trading update 3Q22 Wednesday 18 October 2023 Barco share BAR ISIN BE0974362940 Reuters BARBt.BR Bloomberg BAR BB Financial calendar 2023 Share info More info including the quarterly consensus update, reports, reference to conference, roadshows and relevant tradeshows are available on Barco’s investor portal www.barco.com/investors. Barco Integrated report 2022 104 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE barco.com Group management Beneluxpark 21 8500 Kortrijk – Belgium Tel.: +32 (0)56 23 32 11 Registered office President Kennedypark 35 8500 Kortrijk – Belgium Tel.: +32 (0)56 23 32 11 VAT BE 0473.191.041 | RPR Gent, Section Kortrijk Stock exchange Euronext Brussels Financial information More information is available from the Group’s Investor Relations Department: Willem Fransoo Director Investor Relations Tel.: +32 (0)56 26 23 22 E-mail: [email protected] Copyright © 2023 Barco NV All rights reserved Realization Barco Corporate Marketing & Investor Relations Office Focus Advertising Barco Beneluxpark 21 8500 Kortrijk – Belgium Barco Integrated report 2022 105 FIN Financial report 01 BARCO CONSOLIDATED 02 INFORMATION ABOUT THE SHARE 2022 Integrated annual report Integrated Data Pack 04 PLANET 05 PEOPLE 06 COMMUNITIES 03 INTELLECTUAL 02 MANUFACTURED 01 FINANCIAL Table of contents Financial .............................................3 Manufactured.........................................4 Intellectual ...........................................5 Planet ................................................6 People ...............................................9 Communities ........................................11 This is the Integrated Data Pack 2022. This is an appendix to the 2022 Annual Report. Other sections are available via the download center at ir.barco.com/2022. CORE MORE • Governance & risk report • Report on planet - people - communities • Financial report ANNEX • Glossary • GRI Content index • Assurance report Integrated Data Pack Barco Integrated report 2022 IDP 2 04 PLANET 05 PEOPLE 06 COMMUNITIES 03 INTELLECTUAL 02 MANUFACTURED 01 FINANCIAL Capital Topic Indicator Unit FINANCIAL Sustained profitable growth Group sales mio € ,. . . Gross profit mio € . . . Gross profit (% of sales) % . . . EBITDA mio € . . . EBITDA margin % . . . OPEX as % of sales % . . . Earnings per share € . . -. Dividend € . . . Nominal tax amount paid mio € Effective tax rate % Financial resilience Total amount paid in dividends to shareholders k€ , , , Total amount of share buybacks undertaken # of shares - , - Net financial cash/(debt) mio € . . . Free Cash Flow mio € . . -. Equity as % of balance sheet total % . . . Integrated Data Pack This Integrated Data Pack document contains a full set of metrics (financial and non-financial) with the respective performance results over the last 3 years. These metrics are organized per Capital and (material) topic. This document is being updated every year and released together with the Annual Report. For definitions on the indicators, see the Glossary. Integrated Data Pack Barco Integrated report 2022 IDP 3 04 PLANET 05 PEOPLE 06 COMMUNITIES 03 INTELLECTUAL 01 FINANCIAL 02 MANUFACTURED Capital Topic Indicator Unit MANUFACTURED Long term asset performance % make % . . . Countries with a manufacturing facility # ROCE % . . . Inventory turns # . . . Capex (in % of sales) % . . . Integrated Data Pack Barco Integrated report 2022 IDP 4 04 PLANET 05 PEOPLE 06 COMMUNITIES 02 MANUFACTURED 01 FINANCIAL 03 INTELLECTUAL Capital Topic Indicator Unit INTELLECTUAL Innovation management Number of patents at year-end # Number of new patent filings # % of employees in R&D % of heads . . . R&D spend mio € R&D spend (in % of sales) % . . . Innovation awards # Integrated Data Pack Barco Integrated report 2022 IDP 5 05 PEOPLE 06 COMMUNITIES 03 INTELLECTUAL 02 MANUFACTURED 01 FINANCIAL 04 PLANET Capital Topic Indicator Unit PLANET EU taxonomy % revenues eligible for EU Taxonomy alignment % . . - % revenues aligned under EU Taxonomy alignment % . - - % capex eligible for EU Taxonomy alignment % - % capex aligned under EU Taxonomy alignment % . - - % opex eligible for EU Taxonomy alignment % - % opex aligned under EU Taxonomy alignment % . - - Environmental management system % of (manufacturing) sites covered by a certified environmental management system % Product stewardship % of new products released with Barco ECO label (hardware) % Revenues from products with Barco ECO label mio € revenues . . . % revenues from products with Barco ECO label (hardware) % Energy efficiency index of sold products relative versus base year # . . . Greenhouse gas emissions of sold products (product use emissions) (relative) Tonnes CO e /mio € revenues . . . Material use (absolute) kg ,, ,, ,, Material use (relative) kg /mio € revenues , , , % of new products released with recycled plastics (hardware) % % of revenues in countries with Barco return and recycling programs % % of active components covered by Full Material Declarations % . . . Integrated Data Pack Barco Integrated report 2022 IDP 6 05 PEOPLE 06 COMMUNITIES 03 INTELLECTUAL 02 MANUFACTURED 01 FINANCIAL 04 PLANET Capital Topic Indicator Unit Climate change & energy Total greenhouse gas emissions (absolute) Tonnes CO e , , , Total greenhouse gas emissions (relative) Tonnes CO e /mio € revenues . . . Greenhouse gas emissions scope (absolute) Tonnes CO e , , , Greenhouse gas emissions scope (absolute) Tonnes CO e Greenhouse gas emissions scope incl. product use emissions (absolute) Tonnes CO e , , , Greenhouse gas emissions of our own operations Tonnes CO e /mio € revenues . . . Greenhouse gas emissions infrastructure Tonnes CO e /mio € revenues . . . Greenhouse gas emissions mobility Tonnes CO e /mio € revenues . . . Greenhouse gas emissions logistics Tonnes CO e /mio € revenues . . . Energy consumption in own operations (absolute) MWh , , , Energy consumption in own operations (relative) MWh/mio € revenues . . . % energy consumption from renewable sources % Total electricity consumption (absolute) MWh , , , % electricity from renewable sources % Waste management Total solid waste (absolute) Tonnes , , , Total solid waste (relative) Tonnes/mio € revenues . . . Total hazardous waste (absolute) Tonnes . . . % hazardous waste of solid waste % . . . Integrated Data Pack Barco Integrated report 2022 IDP 7 05 PEOPLE 06 COMMUNITIES 03 INTELLECTUAL 02 MANUFACTURED 01 FINANCIAL 04 PLANET Capital Topic Indicator Unit Recycled & composted solid waste (absolute) Tonnes . . , . Recycled & composted solid waste (relative) Tonnes/mio € revenues . . . Landfilled waste (absolute) Tonnes . . . Landfilled waste (relative) Tonnes/mio € revenues . . . % waste to landfill % Recycling & composting rate of solid waste % Water Water withdrawal (absolute) m , , , Integrated Data Pack Barco Integrated report 2022 IDP 8 04 PLANET 06 COMMUNITIES 03 INTELLECTUAL 02 MANUFACTURED 01 FINANCIAL 05 PEOPLE Capital Topic Indicator Unit PEOPLE Number of employees at the end of the financial year (heads) # heads , , , Number of employees at the end of the financial year (FTEs) # FTEs , , , Number of new (external) hires # heads Permanent workforce at the end of the financial year (heads) # heads , , , Non-permanent workforce at the end of the financial year directly employed by Barco (heads, fixed-term contracts + temporary work + apprenticeship) # heads Employee wages and benefits (personnel costs) mio € Employer contributions to pensions or other retirement plans mio € Employee engagement Employee Net Promoter Score # - - Voluntary turnover rate % of heads . . . Number of iGemba improvement suggestions per operator # . . . Learning & Development Average training hours per employee # hours . . . % of employees having received training % of heads Average training investment per employee € . . . Internal mobility (% of vacancies filled internally) % % of employees who received Annual performance review, or regular feedback/check-in session(s) % of heads Employee health, safety & wellbeing Lost Time Injury Frequency rate (per ,, hours worked) employees # . . . Lost Time Injury Severity rate (per , hours worked) employees # . . . Total work-related fatalities (employees and contractors) # % employees trained in Standards@Work Safety (white collars) % of heads . . . Rate of absenteeism % . . Integrated Data Pack Barco Integrated report 2022 IDP 9 04 PLANET 06 COMMUNITIES 03 INTELLECTUAL 02 MANUFACTURED 01 FINANCIAL 05 PEOPLE Capital Topic Indicator Unit Diversity & inclusion % women overall % of heads . . . % women in senior management % of heads % women in Core Leadership Team % of heads % women in Board % of heads % employees < yrs % of heads % employees > yrs < yrs % of heads % employees > yrs % of heads Average age of the workforce # Number of nationalities in the global workforce # Labor practices & human rights % employees covered by formal collective agreements % of heads % of the total workforce across all locations represented in formal joint management-worker health & safety committees % of heads Integrated Data Pack Barco Integrated report 2022 IDP 10 04 PLANET 05 PEOPLE03 INTELLECTUAL 02 MANUFACTURED 01 FINANCIAL 06 COMMUNITIES Capital Topic Indicator Unit COMMUNITIES Customer engagement Customer Net Promoter Score (relationship NPS) # Product quality, safety & security Number of incidents of non-compliance regarding the health and safety impacts of products and services # % employees trained in Standards@Work Quality (white collars) % of heads . . . % of (development and manufacturing) sites covered by a certified quality management system % Number of notifications about potential vulnerabilities (including duplicates) in products or services, reported by customers, ethical hackers and third-party pen-testers contracted by Barco # Information security & data pro- tection Number of data / GDPR / privacy incidents reported to data protection authorities # Average cybersecurity maturity (NIST CSF) score # . . . Number of product lines in scope of ISO # % employees trained in Standards@Work Cybersecurity (white collars) % of heads . . . % employees trained in Standards@Work Data protection (white collars) % of heads . . . Business ethics % employees trained in Standards@Work (white collars) % of heads % employees trained in Standards@Work Ethics (white collars) % of heads . . . Number of incidents reported via ethics mailbox # Corporate governance Average remuneration per FTE employee k€ . . . Total CEO Compensation k€ ,. ,. ,. Highest CEO compensation / Lowest employee compensation in legal entity Barco nv (euros/euros) ratio . . . Number of non-executive Board members / Number of Board members excluding employee representatives ratio / / / % independent directors % of heads % non-Belgian members in the Core Leadership Team % of heads Integrated Data Pack Barco Integrated report 2022 IDP 11 04 PLANET 05 PEOPLE03 INTELLECTUAL 02 MANUFACTURED 01 FINANCIAL 06 COMMUNITIES Capital Topic Indicator Unit Participation rate Annual General Meeting % Average % of 'For' votes in Annual General Meeting % Average total attendance rate at Board and Committee meetings % Responsible supply chain management Number of major (key, key+, core) suppliers (covering X% of production spend) # (%) () () () Days payment outstanding (average payment term of suppliers) # Number of supplier quality audits # % of production spend covered by signed Barco supplier code of conduct % % of production spend covered by contracts with sustainability clause (MSA, signed T&Cs, PA) % % of production spend covered by supplier sustainability score % . . . % of new production suppliers screened using social and environmental criteria % - % in-scope suppliers that responded to Conflict Minerals Reporting Template % Community engagement Community investment € , , , Integrated Data Pack Barco Integrated report 2022 IDP 12 barco.com Group management Beneluxpark 21 8500 Kortrijk – Belgium Tel.: +32 (0)56 23 32 11 Registered oce President Kennedypark 35 8500 Kortrijk – Belgium Tel.: +32 (0)56 23 32 11 VAT BE 0473.191.041 | RPR Gent, Section Kortrijk Stock exchange Euronext Brussels Financial information More information is available from the Group’s Investor Relations Department: Willem Fransoo Director Investor Relations Tel.: +32 (0)56 26 23 22 E-mail: [email protected] Copyright © 2023 Barco NV All rights reserved Realization Barco Corporate Marketing & Investor Relations Oce Focus Advertising Barco Beneluxpark 21 8500 Kortrijk – Belgium Barco Integrated report 2022 IDP 13 Integrated Data Pack 2022 Integrated annual report Glossary This is the Glossary 2022. This is an appendix to the 2022 Annual Report. Other sections are available via the download center at ir.barco.com/2022. CORE MORE • Governance & risk report • Report on planet - people - communities • Financial report ANNEX • Integrated Data Pack • GRI Content index • Assurance report Barco Integrated report 2022 2 Glos sary GLO GLOSSARY Glossary Indicator Unit of measure Definition % capex aligned under EU Taxonomy alignment % Relative proportion of capex that complies with the requirements of alignment in accordance with the EU taxonomy regulation % capex eligible for EU Taxonomy alignment % Relative proportion of capex that qualifies for eligibility in accordance with the EU taxonomy regulation % electricity consumption from renewable sources % Electricity consumption from renewable sources / total electricity consumption of the considered Barco sites. Renewable electricity is either achieved by own production using a renewable source (e.g. PV panels) or by having renewable electricity contracts (e.g. Guarantees of Origin, RECs). Renewable energy sources are sources which have zero direct CO2e-emissions (e.g. solar power, wind turbines). % employees < 30 yrs % of heads Number of permanent and fixed-term contracted employees on Barco payroll at the end of the year, in heads, with age < 30 years / total number of permanent and fixed-term contracted employees on Barco payroll at year-end, in heads. Interim/temp contracts, interns, contractors and Cinionic employees are excluded. % employees > 30 yrs < 50 yrs % of heads Number of permanent and fixed-term contracted employees on Barco payroll at the end of the year, in heads, with age >=30 years and =<50 years / total number of permanent and fixed-term contracted employees on Barco payroll at year-end, in heads. Interim/temp contracts, interns, contractors and Cinionic employees are excluded. % employees > 50 yrs % of heads Number of permanent and fixed-term contracted employees on Barco payroll at the end of the year, in heads, with age > 50 years / total number of permanent and fixed-term contracted employees on Barco payroll at year-end, in heads. Interim/temp contracts, interns, contractors and Cinionic employees are excluded. % employees covered by formal collective agreements % of heads Barco applies an active formal collective agreements policy in these countries and industries where collective agreements are mandatory, relevant or customary. For the scope of this definition, we take into consideration the number of employees captured by collective agreement for these sites and regions where a formal collective agreements policy is applicable. In Belgium where the company has its headquarter as well as its main manufacturing site, Barco applies interprofessional, industry as well as company-specific formal collective agreements. In the rest of the EMEA region as well as the Latin American region Barco applies interprofessional and industry collective agreements. In other regions such as APAC- region; where collective agreements are less common, the company is typically subject of regulatory requirements in this domain. In addition to the regulatory framework the respective topics are typically captured in local policies and employee handbooks. % employees trained in Standards@Work (white-collars) % of heads Number of white-collars trained in Standards@Work (sum of all modules) / number of white-collars at the end of the financial year. % employees trained in Standards@Work Continuous Improvement (white-collars) % of heads Number of white collars trained in Standards@Work Continuous Improvement / number of white collars at the end of the financial year. % employees trained in Standards@Work Cybersecurity (white-collars) % of heads Number of white collars trained in Standards@Work Cybersecurity / number of white collars at the end of the financial year. % employees trained in Standards@Work Data protection (white-collars) % of heads Number of white collars trained in Standards@Work Data Protection / number of white collars at the end of the financial year. % employees trained in Standards@Work Ethics (white-collars) % of heads Number of white collars trained in Standards@Work Ethics / number of white collars at the end of the financial year. This glossary document contains a description of frequently used Financial Terms, Alternative Performance Measures (APM) and Non-financial KPIs in Barco’s reporting deliverables. It is being updated every year and disclosed together with the Annual Report. Barco Integrated report 2022 3 Glos sary GLO GLOSSARY Indicator Unit of measure Definition % employees trained in Standards@Work Quality (white-collars) % of heads Number of white collars trained in Standards@Work Quality / number of white collars at the end of the financial year. % employees trained in Standards@Work Safety (white-collars) % of heads Number of white collars trained in Standards@Work Safety / number of white collars at the end of the financial year. % employees trained in Standards@Work Sustainability (white-collars) % Number of white collars trained in Standards@Work Sustainability / number of white collars at the end of the financial year. % hazardous waste of solid waste % Tonnes hazardous waste / total tonnes of solid waste generated at the considered Barco sites. Note that the classification of "hazardous" is dependent on the legal framework of the country considered. % independent directors % of heads Independent directors must either meet the independence criteria laid down in art. 3.5 of the Belgian Corporate Governance Code 2020 or have been expressly qualified as independent by the shareholders % in-scope suppliers that responded to Conflict Minerals Reporting Template % Number of in-scope suppliers that responded to Conflict Minerals Reporting Template (CMRT) / Total number of in-scope suppliers. In-scope suppliers are suppliers that deliver products or components containing tungsten, tantalum, tin or gold. The CMRT is provided by the Responsible Minerals Initiative (RMI). % make % Product revenue (excl. services) of materials inhouse manufactured / Total product & project sales. We refer to note 3 in finance report for total product and project sales of the financial year. % non-Belgian members in the Core Leadership Team % of heads Core leadership team is Barco's executive team which operates under the chairmanship of the Chief Executive Ocer, comprises key ocers from functions, businesses and regions. Non-Belgian members are these members who do not have a Belgian passport. % of active components covered by Full Material Declarations % Number of purchased components that are covered by FMD-A (Full Material Declaration) or FMD-B material declarations / total purchased components. % of (development and manufacturing) sites covered by a certified quality management system % Number of product development or manufacturing sites having a valid ISO9001 or ISO13485 Quality Management System certificate / total number of product development and manufacturing sites % of employees having received training % of heads Number of employees who had followed a training course over the year/ total number of employees at the end of the financial year % of employees in R&D % of heads Employees per functional group R&D % of employees who received annual performance review, or regular feedback/check-in session(s) % of heads % bonus eligible white collars / permanent workforce at the end of the financial year % of (manufacturing) sites covered by a certified environmental management system % Number of manufacturing sites having a valid ISO14001 Environmental Management System certificate / total number of manufacturing sites % of new production suppliers screened using social and environmental criteria % New production suppliers are suppliers which were created in Barco's ERP system in the reporting year and with confirmed purchase orders. Screened means supplier self-assessment including social and environmental criteria is completed. % of new products released with Barco ECO label (hardware) % Number of newly introduced hardware products that have received the Barco ECO label / total number of newly introduced hardware products. Definition "hardware product": Barco branded finished electronic hardware product, either designed inhouse or outsourced to OEM suppliers, that can deliver standalone its intended function. Definition "newly introduced hardware product": commercial launch of first member of product family covered by one dedicated hardware development project. Options or modules are not in scope of the definition. Definition "commercial launch": projects for which Formal Quality Review (FQR) is granted and or is available on Barco.com. The ecoscoring methodology, which is validated against the ISO 14021 standard, is explained on our website. Barco Integrated report 2022 4 Glos sary GLO GLOSSARY Indicator Unit of measure Definition % of new products released with recycled plastics (hardware) % Number of newly introduced hardware products containing recycled plastics / total number of newly introduced hardware products. Definition "hardware product": Barco branded finished electronic hardware product, either designed inhouse or outsourced to OEM suppliers, that can deliver standalone its intended function. Definition "newly introduced hardware product": commercial launch of first member of product family covered by one dedicated hardware development project. Options or modules are not in scope of the definition. Definition "commercial launch": projects for which Formal Quality Review (FQR) is granted and or is available on Barco.com. Definition "containing recycled plastics": product containing a minimum mass percentage recycled content in plastic parts larger than 25 grams. The minimum mass percentage is defined in the applied Barco ecoscore tool version. % of production spend covered by contracts with sustainability clause (MSA, signed T&Cs, PA) % Total spend by production suppliers with formally signed MSA, T&C's or Purchase Agreement / total production spend. MSA means Master Supply Agreement. T&C's means Terms & Conditions. % of production spend covered by signed Barco supplier code of conduct % Production spend covered by a signed commitment to the Barco code of conduct for suppliers or equivalent/total production spend. Production spend equals total cost of production materials. % of production spend covered by supplier sustainability score % Total production spend from suppliers that have been scored on sustainability by Barco / Total production spend. % of revenues in countries with Barco return and recycling programs % Revenue of products sold in countries where Barco joined an EPR (Extended Producer Responsibility) scheme relative to the total revenue % of the total workforce across all locations represented in formal joint management-worker health & safety committees % of heads Total number of permanent and fixed-term contracted employees on Barco payroll in countries with a committee divided by total number of permanent and fixed-term contracted employees on Barco payroll at the end of the financial year, in heads. % opex aligned under EU Taxonomy alignment % Relative proportion of opex that complies with the requirements of alignment in accordance with the EU taxonomy regulation % opex eligible for EU Taxonomy alignment % Relative proportion of opex that qualifies for eligibility in accordance with the EU taxonomy regulation % revenues aligned under EU Taxonomy alignment % Relative proportion of total revenues that complies with the requirements of alignment in accordance with the EU taxonomy regulation % revenues eligible for EU Taxonomy alignment % Relative proportion of total revenues that qualify for eligibility in accordance with the EU taxonomy regulation % revenues from products with Barco ECO label (hardware) % Total revenues from products with Barco ECO label / Total product & project sales. We refer to note 3 in finance report for total product and project sales of the financial year. % waste to landfill % Tonnes of waste sent to landfill / total tonnes of solid waste generated at the considered Barco sites. % women in board % of heads Total number of female members of the Board of Directors divided by total number of members of the Board at the end of the financial year, in heads. % women in Core Leadership Team % of heads Total number of female members of the Core Leadership Team divided by total number of members of the Core Leadership Team at the end of the financial year, in heads. % women in senior management % of heads We define senior management as employees with hay grade >=18. As a result the metrics equates the following: number of female employees with hay grade >= 18 / total number of employees with hay grade >= 18 at year-end. For Hay grade information see public sources. % women overall % of heads Number of female permanent and fixed-term contracted employees on Barco payroll at the end of the year, in heads / total number of permanent and fixed-term contracted employees on Barco payroll at year-end, in heads. Interim/temp contracts, interns, contractors and Cinionic employees are excluded. Barco Integrated report 2022 5 Glos sary GLO GLOSSARY Indicator Unit of measure Definition Adjusted EBIT € EBIT excluding restructuring costs and impairments relating to reorienting or stopping certain activities, business or product lines, as well as impairments on goodwill and revenues resulting from a single material transaction not linked to current business activities (e.g. change of control in a subsidiary). Results out of divestments or acquisitions are included in EBIT(DA). Reconciliation from EBIT to adjusted EBIT can be found in the income statement. Adjusted Return on operating capital employed (ROCE) € Adjusted EBIT after tax relative to operating capital employed (including goodwill). ROCE = (Adjusted) EBIT(1- tax rate)/Operating capital employed (including goodwill) Associates Companies in which Barco has a significant influence, generally reflected by an interest of at least 20%. Associates are accounted for using the equity method. Average age of the workforce # Sum of all ages of the number of permanent and fixed-term contracted employees on Barco payroll at the end of financial year divided by the number of permanent and fixed-term contracted employees on Barco payroll at the end of the financial year. Interim/temp contracts, interns, contractors and Cinionic employees are excluded. Average cybersecurity maturity (NIST CSF) score # NIST CST: National Institute of Standards and Technology Cybersecurity Framework. The NIST CSF self-assessment result is performed at the end of the financial year and is the average of the NIST CSF Functions according to the NIST CSF methodology. Average number of blue collars (incl. Cinionic) # FTEs Average blue-collar number of permanent and fixed-term contracts on Barco payroll over the full year, in fulltime equivalents. Interim/temp contracts, interns and contractors are excluded. Calculation average: sum of number at month end divided by 12. Average number of employees (incl. Cinionic) # FTEs Average number of permanent and fixed-term contracts on Barco payroll over the full year, in fulltime equivalents. Interim/temp contracts, interns and contractors are excluded. Calculation average: sum of number at month end divided by 12. Average number of white-collars (incl. Cinionic) # FTEs Average white-collar number of permanent and fixed-term contracts on Barco payroll over the full year, in fulltime equivalents. Interim/temp contracts, interns and contractors are excluded. Calculation average: sum of number at month end divided by 12. Average remuneration per FTE employee k€ Remuneration is calculated based on total wages and direct social benefits, including company cars divided by the average number of employees (including Cinionic) Average training hours per employee # hours Total hours of learning or training followed / total number of employees at the end of the financial year Average training investment per employee € Total expenses for learning & development / total number of employees at the end of the financial year BarcoCFG 'Full name is CFG Barco (Beijing) Electronics Co., Ltd. BarcoCFG is the entity where Barco joined forces with China Film Group to address the Chinese cinema market. Barco holds a 49% stake in this entity at the end of December 2021. Book value per share Equity attributable to the Group divided by number of shares outstanding at balance sheet date. Capex (in % of sales) % Purchase of tangible and intangible assets as included in the statement of cash flow Community investment € Rough order of magnitude of the sum of money & goods invested in charity / community initiatives that were defined by Barco throughout the year, on a global scale. The reported amount is based on a non-exhaustive list of inputs from the dierent local teams. Countries with a manufacturing facility # Country where Barco has own production site(s) Barco Integrated report 2022 6 Glos sary GLO GLOSSARY Indicator Unit of measure Definition Customer Net Promoter Score (relationship NPS) # "Calculation of the Net Promotor (NPS) Score is based on the answer of customers to the question: ""On a scale from 0-10, how likely are you to recommend Barco to a friend or colleague?"" Detractors score 0-6, passives score 7-8, promotors score 9-10. Calculation of NPS result = % promotors - % detractors. The NPS score reported is the overall result of the yearly survey conducted in the fourth quarter of the year. The survey recipients are extracted from CRM customer data; product and mybarco.com registrations and are selected to get 100 responses per business units per region." Days payment outstanding (average payment term of suppliers) # calendar days Days payable outstanding calculated as Trade Payables / (Material cost + Services and other costs) x 365 Direct available net cash € Net financial cash excluding the cash in Cinionic. Dividend yield % Gross dividend as a percentage of the share price on 31 December. DPO # Days payable outstanding calculated as Trade Payables / (Material cost + Services and other costs) x 365 DSO # Days sales outstanding calculated as ((Trade debtors / (sales past quarter)) * 90 Earnings per share € Net income/(loss) attributable to the equity holder of the parent divided by weighted average of shares EBIT € Operating result (earnings before interest and taxes), calculated as gross profit less research & development expenses, sales and marketing expenses, general and administration expenses, other operating income (expense) - net and plus or minus adjusting items EBITDA € Adjusted EBIT + depreciation, amortization and impairments (if any). Employee Net Promoter Score # The employee net promotor score is derived from the engagement question “I would recommend the company to people I know as a great place to work” as part of the Employee Engagement survey, distributed among the white-collar population only. The net promotor score is based on the eNPS technique where scores between 0 to 6 (on 10) are considered “detractors”, score 7 & 8 as “passive” and 9 & 10 as “promotors”. eNPS score is promotors minus detractors. Employees per functional group General & Administration % of heads Number of permanent and fixed-term contracted employees on Barco payroll at the end of the year, in heads, working in general & administration (information technology, finance, general and divisional management, human resources, legal and investor relations), divided by the total number of permanent and fixed-term contracted employees on Barco payroll at the end of the year, in heads. Interim/temporary contracts, interns, contractors and Cinionic employees are excluded Employees per functional group operations % of heads Number of permanent and fixed-term contracted employees on Barco payroll at the end of the year, in heads, working in the operations department (including procurement, quality, production, customer service and customer projects), divided by the total number of permanent and fixed-term contracted employees on Barco payroll at the end of the financial year, in heads. Interim/temporary contracts, interns, contractors and Cinionic employees are excluded. Employees per functional group R&D % of heads Number of permanent and fixed-term contracted employees on Barco payroll at the end of the year, in heads, working in research & development, divided by the total number of permanent and fixed-term contracted employees on Barco payroll at the end of the year, in heads. Interim/temporary contracts, interns, contractors and Cinionic employees are excluded. Employees per functional group sales & marketing % of heads Number of permanent and fixed-term contracted employees on Barco payroll at the end of the year, in heads, working in sales & marketing, divided by the total number of permanent and fixed-term contracted employees on Barco payroll at the end of the year, in heads. Interim/ temporary contracts, interns, contractors and Cinionic employees are excluded. Employees per region % of heads Number of permanent and fixed-term contracted employees on Barco payroll at the end of the year, in heads, working in a legal entity in Europe, Americas or APAC, divided by the total number of permanent and fixed-term contracted employees on Barco payroll at the end of the year, in heads. Interim/temporary contracts, interns, contractors and Cinionic employees are excluded. Barco Integrated report 2022 7 Glos sary GLO GLOSSARY Indicator Unit of measure Definition Energy consumption in own operations (absolute) MWh Total energy consumption (MWh) of the considered Barco sites, covering both infrastructure energy consumption and owned/leased fleet energy consumption. Regarding infrastructure energy this covers both fossil fuel consumption (natural gas, fuel), purchased energy (grey or green electricity, district heating) as well as produced renewable electricity (e.g. by means of PV panels) Energy consumption in own operations (relative) MWh / mio € revenues Energy consumption in own operations on total Group sales. Energy eciency index of sold products relative versus base year 2015 # The energy eciency index of our products represents energy consumption/delivered capability of Barco’s major groups: projectors products in the Entertainment division and large video walls & LED products in the Enterprise division. The energy performance is defined as Watt divided by delivered capability. This indicator is weighted on revenues from the considered products and normalized to a 2015 baseline value (with default value 1.0). Equity method Method of accounting whereby an investment (in an associate) is initially recognized at cost and subsequently adjusted for any changes in the investor’s share of the associate’s net assets (i.e. equity). The income statement reflects the investor’s share in the net result of the investee. Free cashflow € 'Gross operating cash flow excluding share options recognized as cost + change in net working capital + Interest (expense)/income + income taxes + purchase of tangible and intangible fixed assets + proceeds on disposals of tangible and intangible fixed assets. Greenhouse gas emissions infrastructure Tonnes CO 2 e / mio € revenues Greenhouse gas emissions infrastructure on total sales. Infrastructure covers total energy emissions from infrastructure energy, refrigerant losses and waste generated at the facilities. Same scope applies as for Greenhouse gas emissions of our own operations. Greenhouse gas emissions logistics Tonnes CO 2 e / mio € revenues Greenhouse gas emissions logistics on total sales. Logistics covers all emissions from transport of goods (in- & outbound) paid for by Barco. Same scope applies as for Greenhouse gas emissions of our own operations. Greenhouse gas emissions mobility Tonnes CO 2 e / mio € revenues Greenhouse gas emissions mobility on total sales. Mobility covers owned/leased fleet emissions, commuting and business travel emissions. Same scope applies as for Greenhouse gas emissions of our own operations. Greenhouse gas emissions of our own operations (absolute) Tonnes CO 2 e Sum of total Greenhouse gas emissions from infrastructure, mobility and logistics in tonnes of CO2e on total sales for all production and research & development sites (in Belgium, China, Italy, Germany, India, Norway, Taiwan and US) covering in total minimum 85% of the Group’s total FTE. For more information on methodology, scope, baseline and calculation assumptions, we refer to our website. Greenhouse gas emissions of sold products (product use emissions) (relative) Tonnes CO 2 e / mio € revenues Total greenhouse gas emissions of Barco sold products in tonnes of CO2e / total Group sales (mio € revenues). For more information on methodology and scope, we refer to our website. Greenhouse gas emissions scope 1 (absolute) Tonnes CO 2 e Greenhouse gas emissions covering scope 1 as defined by the Greenhouse Gas Protocol in tonnes of CO2e. Scope 1 covers the direct emissions from combustion of fossil fuels at company facilities and by company vehicles and emissions from refrigerant losses at company facilities. Greenhouse gas emissions scope 2 (absolute) Tonnes CO 2 e Greenhouse gas emissions covering scope 2 as defined by the Greenhouse Gas Protocol. Scope 2 covers the direct emissions from purchased electricity and district heating. Note that the market-based approach is used here. Greenhouse gas emissions scope 3 incl. product use emissions (absolute) Tonnes CO 2 e Greenhouse gas emissions scope 3 as defined by the Greenhouse Gas Protocol covers the direct emissions from upstream activities (fuel and energy related activities, transportation and distribution, waste generated in operations, business travel, employee commuting) and downstream activities (use of sold products) in tonnes of CO2e Greenhouse gas emissions scope 3 incl. product use emissions (relative) Tonnes CO 2 e / mio € revenues Greenhouse gas emissions scope 3 incl. product use emissions on total sales (mio € revenues). Barco Integrated report 2022 8 Glos sary GLO GLOSSARY Indicator Unit of measure Definition Highest CEO compensation / Lowest employee compensation (euros/euros) ratio Highest FTE CEO compensation (excluding stock options) over lowest FTE employee compensation registered in the legal entity Barco nv in Belgium. Indirect costs/expenses € Research & development expenses, sales and marketing expenses and general and administration expenses; including depreciations and amortizations Innovation awards # Number of awards that recognize the innovative aspect of technology and/or solutions to create or enhance an outcome, awarded by an independent organisation with a global, well-known reputation Internal mobility (% of vacancies filled internally) % Number of internally recruited, filled in vacancies/total number of vacancies filled. Inventory turns # Inventory turns = 12 / [Inventory / (average monthly sales last 12 months x material cost of goods sold %)] Landfilled waste (absolute) Tonnes Total amount of waste sent to landfill at the considered Barco sites in tonnes of waste. Landfilled waste (relative) Tonnes / mio € revenues Landfilled waste on total Group sales. Lost time injury frequency rate (per 1 000 000 hours worked) employees # Number of lost-time injuries multiplied with 1,000,000 and divided by total hours worked by all employees. Lost-time injuries are accidents that result in at least one lost day of work. When recording lost-time injuries, we use applicable national definitions for incidents as work-related. Lost Time Injury Severity rate (per 1000 hours worked) employees # Number of lost days of work of all employees multiplied with 1,000 and divided by total hours worked by all employees. Material use (absolute) kg Weight of product mass or components placed on the market (excluding the weight of sold intercompany items) Material use (relative) kg / mio € revenues Material use / Total product & project sales. We refer to note 3 on p. 35 in finance report for total product and project sales of the financial year. Net financial cash/(debt) € Short term investments + Cash and cash equivalents + long-term financial receivables - long-term debts - current portion of long-term debts - short-term debts Nominal tax amount paid mio € Total taxes paid over the reporting paid as reported in the cash flow statement on the line 'Income taxes' Non-permanent workforce at the end of the financial year directly employed by Barco (heads, fixed-term contracts + temporary work + apprenticeship) # heads Number of fixed-term contracts and interim/temporary contracts directly employed by Barco at the end of the financial year, in heads. Permanent workforce, interns, contractors and Cinionic employees are excluded. Number of blue collars at the end of the financial year (incl. Cinionic) (FTEs) # FTEs Total blue-collar number of permanent and fixed-term contracts on Barco and Cinionic payroll at the end of the year, in fulltime equivalents. Interim/temp contracts, interns and contractors are excluded. Number of data / GDPR / privacy incidents reported to data protection authorities # Number of personal data breaches reported to the data protection authorities at the end of the financial year. Number of employees at the end of the financial year (FTEs) # FTEs Total number of permanent and fixed-term contracts on Barco payroll at the end of the year, in fulltime equivalents. Interim/temp contracts, interns and contractors and Cinionic employees are excluded. Number of employees at the end of the financial year (heads) # heads Total number of permanent and fixed-term contracts on Barco payroll at the end of the year, in heads. Interim/temp contracts, interns and contractors and Cinionic employees are excluded. Number of employees at the end of the financial year (incl. Cinionic), including split of white collars and blue collars # FTEs Total number of permanent and fixed-term contracts on Barco and Cinionic payroll at the end of the year, in fulltime equivalents. Interim/temp contracts, interns and contractors are excluded. Barco Integrated report 2022 9 Glos sary GLO GLOSSARY Indicator Unit of measure Definition Number of iGemba improvement suggestions per operator # Total number of iGemba improvement suggestions received in the considered year / total number of operators. iGemba is the name of Barco's continuous improvement system. An improvement suggestion is an idea, improvement, solution, ... that is registered by an operator on an iGemba improvement card. An operator is a blue-collar employee. Number of incidents of non-compliance regarding the health and safety impacts of products and services # Number of incidents of non-compliance registered in the field causing a health or safety impact for any stakeholder working with our products or using our services Number of incidents reported via ethics mailbox # Incident is every notification, complaint, question or request for ethical guidance, addressed to [email protected], regardless of whether the sender is known or anonymous Number of major (key, key+, core) suppliers (covering X% of production spend) # Number of key, key+ and core suppliers at the end of the financial year. Categorization of key, key+ and core suppliers is based upon supply risk and cost relevance to Barco. Number of nationalities in the global workforce # Total number of nationalities of the number of permanent and fixed-term contracted employees on Barco payroll at the end of financial year. Number of new (external) hires # heads Number of permanent + fixed-term contracted hires (externally recruited) on Barco payroll during year, in heads. Interim/temporary contracts, interns, contractors and Cinionic employees are excluded. Number of new patent filings # New patent applications filed in the indicated year. Number of non-executive Board members / Number of Board members excluding employee representatives ratio Ratio comparing non-executive board members over the board members (excluding possible employee representatives) Number of notifications about potential vulnerabilities (including duplicates) in products or services, reported by customers, ethical hackers and third-party pen-testers contracted by Barco # This is the number of notifications regarding security received via the following channels: (1) our PSIRT (Product Security Incident Response Team), reported by external experts and researchers, (2) our service desk, reported by customers, or (3) via penetration test reports (reported by third party experts, contracted by Barco). Number of patents at year-end # Total number of granted patents at year-end (of the indicated year). Number of product lines in scope of ISO 27001 # Product lines in scope of ISO27001 as published on our public certificate at the end of the financial year. Product lines are products found on the public Barco.com website. Number of supplier quality audits # Total number of supplier quality audits performed during reporting year by Barco personnel. Number of white collars at the end of the financial year (incl. Cinionic) # FTEs Total white-collar number of permanent and fixed-term contracts on Barco and Cinionic payroll at the end of the year, in fulltime equivalents. Interim/temp contracts, interns and contractors are excluded. Operating capital employed (including goodwill) € Operating capital employed + goodwill Operating capital employed (OCE) € Working capital + other long-term assets and liabilities Operating expenses (OPEX) € Research & development expenses, sales and marketing expenses and general and administration expenses; excluding depreciations and amortizations Order An order can only be recognized if a valid purchase order has been received from the invoice-to customer. An order is only valid if it is: - In writing. This includes electronic version of the purchase order out of the customer’s ERP system. - The contract needs to be signed by an authorized person from the business partner. Next to this, a minimum number of fields need to be mentioned on the order like customer name, address, reference to sales quotation or business partner sales agreement of Barco, etc. Barco Integrated report 2022 10 Glos sary GLO GLOSSARY Indicator Unit of measure Definition Orderbook Orderbook are previously received orders, which still fulfil all the conditions of an order, but are not delivered yet and hence not taken in revenue. Other long-term assets and liabilities € Other long-term assets & liabilities include the sum of other intangible assets, land and buildings, other tangible assets, deferred tax assets (net). We refer to note 9 and 10 for the amounts. Other working capital € Other working capital includes the net of other non-current assets, other amounts receivable, prepaid expenses and accrued income and other long-term liabilities, advances received from customers, tax payables, employee benefits liabilities, other current liabilities, accrued charges and deferred income and provisions Participation rate Annual General Meeting % The participation rate is the ratio between the number of shares which are present or represented at the shareholders meeting or have voted remotely prior to that meeting, and the total number of shares issued by the company. Permanent workforce at the end of the financial year (heads) # heads Number of employees on Barco payroll having a permanent employment contract at the end of the financial year, in heads. Fixed-term contracts/apprenticeships, interim/temporary contracts, interns, contractors and Cinionic employees are excluded. R&D spend mio € Indirect expense spent on Research and Development over the reporting period R&D spend (in % of sales) % Research and development spend in percentage of sale Rate of absenteeism % Total absentee days lost divided by the total days scheduled to be worked by employees during the reporting period, expressed as a percentage. Recycled & composted solid waste (absolute) Tonnes Total amount of recycled or composted waste at the considered Barco sites in tonnes of waste. Recycled & composted solid waste (relative) Tonnes / mio € revenues Total recycled or composted waste on total Group sales. Recycling & composting rate of solid waste % Tonnes recycled or composted waste/ total tonnes of solid waste generated at the considered Barco sites. Regional spread of major suppliers (covering x% of production spend) % Sum of production spend of major suppliers per region /total production spend of major suppliers. Production spend equals total cost of production materials. Major suppliers are key, key + and core suppliers. Categorization of key, key+ and core suppliers is based upon supply risk and cost relevance to Barco. Return on operating capital employed (ROCE) % Adjusted EBIT after tax relative to operating capital employed (including goodwill). ROCE = EBIT(1- eective tax rate)/Operating capital employed (including goodwill). Revenues from products with Barco ECO label mio € revenues Total revenue coming from products sold having a Barco eco label > B (A, A+, A++). The eco-scoring methodology, which is validated against the ISO 14021 standard, is explained on our website. Split of shares per July20 At Barco’s Extraordinary General Shareholder’s Meeting, of 30 April 2020, the shareholders have approved the share split by a factor seven (7), eective as of 1 July 2020. The purpose of the share split is to enhance accessibility and to improve the liquidity of the Barco share. As a result of this share split, Barco’s total capital shall be represented by 91,487,438 shares as from 1 July 2020. Each of these shares confers one voting right at the General Meeting. The new split shares (please note: new ISIN code BE0974362940) are traded on the Euronext Brussels regulated market from 1 July 2020 onwards. Therefore, the earnings and diluted earnings per share as of 31 December 2019 and 2018 are for comparison reasons recalculated for the new number of shares. Subsidiaries Companies in which Barco exercises control. Barco Integrated report 2022 11 Glos sary GLO GLOSSARY Indicator Unit of measure Definition TFA € Tangible fixed assets Theoretical tax rate % The theoretical tax rate is the corporate tax rate applied in the country of origin of the parent legal entity (i.e. Belgium). The Belgian corporate tax rate as of 2020 is 25% (2019: 29.58%) Total amount of share buybacks undertaken # of shares # of shares bought back over the reporting year Total amount paid in dividends to shareholders k€ Amount of dividends (in cash/shares) to be distributed as proposed by the Board of Directors of Barco nv to the General Assembly. Total CEO Compensation k€ The remuneration package of the CEO(s) consists of all salaries, benefits, bonuses and value of employer pension contribution. We refer to note 2.B Remuneration of the CEO in CGR part of the integrated report. Total CEO compensation / Lowest employee compensation (Euros / Euros) ratio Total CEO compensation (excluding stock options) over lowest employee compensation registered in the legal entity Barco NV in Belgium. Total electricity consumption (absolute) MWh Total electricity consumption (MWh) of the considered Barco sites Total greenhouse gas emissions (absolute) Tonnes CO 2 e Total Greenhouse Gas emissions of the considered Barco sites and Barco sold products for the complete covered scope (own operations emissions + product use emissions) in tonnes of CO2e. Total greenhouse gas emissions (relative) Tonnes CO 2 e / mio € revenues Total Greenhouse Gas emissions on total Group sales. Total hazardous waste (absolute) Tonnes Total amount of hazardous solid waste generated at the considered Barco sites in tonnes of waste. Note that the classification of "hazardous" is dependent on the legal framework of the country considered. Total solid waste (absolute) Tonnes Total amount of solid waste generated at the considered Barco sites in tonnes of waste. Solid waste is all reported waste at the Barco sites in solid state, excluding liquid waste streams such as wastewater. Total solid waste (relative) Tonnes / mio € revenues Total solid waste on total Group sales. Total work-related fatalities (employees and contractors) # Number of deaths of persons at work or performing work related tasks, including employees and contractors Voluntary turnover rate % of heads Number of permanent and fixed-term contracted employees on Barco payroll that voluntary left Barco over the year / total number of permanent and fixed-term contracted employees on Barco payroll at year-end, in heads. Interim/temp contracts, interns, contractors and Cinionic employees are excluded. Water withdrawal (absolute) m³ Direct purchased water at the considered Barco sites in m³. Typically this is called "city water", "tap water", "mains water". It excludes water use from other sources (e.g. Captured rainfall or groundwater). Working capital (net) € Trade debtors + inventory - trade payables - other working capital Barco Integrated report 2022 12 Glos sary GLO GLOSSARY Barco Integrated report 2022 13 Glos sary GLO Barco 13 Glossary GLO barco.com Group management Beneluxpark 21 8500 Kortrijk – Belgium Tel.: +32 (0)56 23 32 11 Registered oce President Kennedypark 35 8500 Kortrijk – Belgium Tel.: +32 (0)56 23 32 11 VAT BE 0473.191.041 | RPR Gent, Section Kortrijk Stock exchange Euronext Brussels Financial information More information is available from the Group’s Investor Relations Department: Willem Fransoo Director Investor Relations Tel.: +32 (0)56 26 23 22 E-mail: [email protected] Copyright © 2023 Barco NV All rights reserved Realization Barco Corporate Marketing & Investor Relations Oce Focus Advertising Barco Beneluxpark 21 8500 Kortrijk – Belgium GLOSSARY 2022 Integrated annual report GRI Content index Reporting period, cycle and scope This integrated report provides an overview of our most relevant intentions, achievements and objectives in 2022, unless stated otherwise. The scope of the report is Barco worldwide (same as financial reporting), unless stated otherwise. The report is published annually, coinciding with the financial results. Date of previous report: Febuary 2022. GRI standards This report has been prepared in accordance with the GRI Universal Standards 2021. GRI Content index Pages without prefix refer to the Core integrated report. PPC refers Planet-People-Communities report. FIN refers to Finan- cial report. CCG refers to Corporate governance report. GRI refers to GRI index. IDP refers to the Integrated Data Pack. GLO refers to the Glossary. ASR refers to Assurance report. GRI Content index This is the GRI Content Index of Barco’s 2022 Integrated annual report. Other sections are available via the download center at ir.barco.com/2022. CORE MORE • Governance & risk report • Report on planet - people - communities • Financial report ANNEX • Integrated Data Pack • Glossary • Assurance report Barco Integrated report 2022 2 GRI Content index GRI GRI CONTENT INDEX NR. DISCLOSURE PAGE GRI 1 FOUNDATION 2021 Publish a GRI content index GRI/2-7 Statement of use GRI/2 GRI 2 GENERAL DISCLOSURES 2021 2-1 Organizational details 13, 15, 83, FIN/12, FIN/23-25 2-2 Entities included in the organization’s sustainability reporting FIN/23-25 2-3 Reporting period, frequency and contact point GRI/2, FIN/23-25, PPC/73 2-4 Restatements of information N/A 2-5 External assurance ASR 2-6 Activities, value chain, and other business relationships 9, 14-15, 49-64, 66-68, CGR/37, FIN/6, FIN/27, PPC/43 2-7 Employees 9, 67, IDP/9, PPC/24, PPC/33 2-8 Workers who are not employees N/A 2-9 Governance structure and composition 16 -17, CGR/4 -7, PPC/64 2-10 Nomination and selection of the highest governance body CGR/7 2-11 Chair of the highest governance body 7, 16, CGR/5-7 2-12 Role of the highest governance body in overseeing the management of impacts 39-40, CGR/8-11, CGR/35-47, PPC/5, PPC/65 2-13 Delegation of responsibility for managing impacts 16 -17, PPC/64 2-14 Role of the highest governance body in sustainability reporting PPC/64 2-15 Conflicts of interest CGR/28 2-16 Communication of critical concerns CGR/34-47 2-17 Collective knowledge of the highest governance body CGR/5-6 2-18 Evaluation of the performance of the highest governance body CGR/11 2-19 Remuneration policies CGR/12-27 2-20 Process to determine remuneration CGR/12-27 2-21 Annual total compensation ratio CGR/27, IDP/11 Barco Integrated report 2022 3 GRI Content index GRI GRI CONTENT INDEX NR. DISCLOSURE PAGE 2-22 Statement on sustainable development strategy PPC/3 2-23 Policy commitments 4-7, 18, PPC/3, PPC/25 2-24 Embedding policy commitments PPC/10-55 2-25 Processes to remediate negative impacts 31-35, 50-64, CGR/29-47, PPC/10-55 2-26 Mechanisms for seeking advice and raising concerns CGR/32, PPC/50-52 2-27 Compliance with laws and regulations CGR/46, PPC/35, PPC/42, PPC/46, PPC/49, PPC/52 2-28 Membership associations PPC/52 2-29 Approach to stakeholder engagement 39, PPC/5, 65 2-30 Collective bargaining agreements IDP/10 GRI 3 MATERIAL TOPICS 2021 3-1 Process to determine material topics 39, PPC/5, 65 3-2 List of material topics 39, PPC/5, 65 3-3 Management of material topics 31-35, 50-64, CGR/29-47, PPC/10-55 GRI 200 ECONOMIC TOPICS GRI 201 Economic Performance 2016 201-1 Direct economic value generated and distributed FIN/6, FIN/27-40 201-2 Financial implications and other risks and opportunities due to climate change CGR/45 201-3 Defined benefit plan obligations and other retirement plans FIN/77-79 201-4 Financial assistance received from government FIN/41, FIN/44 GRI 205 Anti-corruption 2016 205-1 Operations assessed for risks related to corruption CGR/46 205-2 Communication and training about anti-corruption policies and procedures CGR/46, PPC/51 205-3 Confirmed incidents of corruption and actions taken PPC/52 Barco Integrated report 2022 4 GRI Content index GRI GRI CONTENT INDEX NR. DISCLOSURE PAGE GRI 206 Anti-competitive behavior 2016 206-1 Legal actions for anti-competitive behavior, anti-trust, and monopoly practices PPC/52 GRI 207 Tax 2019 207-1 Approach to tax FIN/44, FIN/55-56 207-2 Tax governance, control, and risk management CGR/30-34 207-3 Stakeholder engagement and management of concerns related to tax FIN/87 207-4 Country-by-country reporting FIN/44, FIN/55-56, FIN/87 GRI 300 ENVIRONMENTAL TOPICS GRI 301 Materials 2016 301-1 Materials used by weight or volume GLO/5, IDP/6, PPC/22 GRI 302 Energy 2016 302-1 Energy consumption within the organization GLO/8, IDP/7, PPC/13 302-2 Energy consumption outside of the organization 26, GLO/8, IDP/7, PPC/18 302-3 Energy intensity 26, GLO/8, IDP/7, PPC/13 302-4 Reduction of energy consumption PPC/13, PPC/21 302-5 Reductions in energy requirements of products and services 26, GLO/8, IDP/6, PPC/21 GRI 303 Water and euents 2018 303-3 Water withdrawal GLO/12, IDP/8 GRI 305 Emissions 2016 305-1 Direct (Scope 1) GHG emissions GLO/8, IDP/7, PPC/16 305-2 Energy indirect (Scope 2) GHG emissions GLO/8, IDP/7, PPC/13 305-3 Other indirect (Scope 3) GHG emissions GLO/8, IDP/7, PPC/16, PPC/18 305-4 GHG emissions intensity 26, GLO/8, IDP/7, PPC/12 305-5 Reduction of GHG emissions 26, PPC/12-13, PPC/16, PPC/18 Barco Integrated report 2022 5 GRI Content index GRI GRI CONTENT INDEX NR. DISCLOSURE PAGE GRI 306 Waste 2020 306-2 Management of significant waste-related impacts PPC/15, PPC/19, PPC/22-23 306-3 Waste generated GLO/12, IDP/7, PPC/15, PPC/19 306-4 Waste diverted from disposal GLO/11, IDP/8, PPC/15 306-5 Waste directed to disposal GLO/5, GLO/9, GLO/11, IDP/8, PPC/15 GRI 308 Supplier Environmental Assessment 2016 308-1 New suppliers that were screened using environmental criteria GLO/4, IDP/12, PPC/46 GRI 400 SOCIAL TOPICS GRI 401 Employment 2016 401-1 New employee hires and employee turnover IDP/9 GRI 403 Occupational Health & Safety 2018 403-1 Occupational health and safety management system GLO/5, PPC/29 403-2 Hazard identification, risk assessment, and incident investigation PPC/29 403-3 Occupational health services PPC/29 403-4 Worker participation, consultation, and communication on occupational health and safety GLO/5, IDP/10, PPC/29 403-5 Worker training on occupational health and safety IDP/9, PPC/29-30 403-6 Promotion of worker health PPC/29 403-7 Prevention and mitigation of occupational health and safety impacts directly linked by business relationships PPC/41 403-9 Work-related injuries IDP/9, PPC/30 GRI 404 Training and Education 2016 404-1 Average hours of training per year per employee 27, IDP/9, PPC/31-32 404-2 Programs for upgrading employee skills and transition assistance programs PPC/31 404-3 Percentage of employees receiving regular performance and career development reviews IDP/9 Barco Integrated report 2022 6 GRI Content index GRI GRI CONTENT INDEX NR. DISCLOSURE PAGE GRI 405 Diversity and equal opportunity 2016 405-1 Diversity of governance bodies and employees 27, GLO/5, IDP/10, PPC/33 GRI 406 Non-discrimination 2016 406-1 Incidents of discrimination and corrective actions taken PPC/52 GRI 413 Local communities 2016 413-1 Operations with local community engagement, impact assessments, and development programs IDP/12, PPC/53-54 GRI 414 Supplier social assessment 2016 414-1 New suppliers that were screened using social criteria GLO/4, IDP/12, PPC/45-46 GRI 415 Public policy 2016 415-1 Political contributions PPC/52 GRI 416 Customer health and safety 2016 416-1 Assessment of the health and safety impacts of product and service categories PPC/40-42 416-2 Incidents of non-compliance concerning the health and safety impacts of products and services IDP/11, PPC/42 GRI 418 Customer privacy 2016 418-1 Substantiated complaints concerning breaches of customer privacy and losses of customer data GLO/9, IDP/11, PPC/50 Barco Integrated report 2022 7 GRI Content index GRI GRI CONTENT INDEX Barco Integrated report 2021 8 GRI Content index GRI barco.com Group management Beneluxpark 21 8500 Kortrijk – Belgium Tel.: +32 (0)56 23 32 11 Registered oce President Kennedypark 35 8500 Kortrijk – Belgium Tel.: +32 (0)56 23 32 11 VAT BE 0473.191.041 | RPR Gent, Section Kortrijk Stock exchange Euronext Brussels Financial information More information is available from the Group’s Investor Relations Department: Willem Fransoo Director Investor Relations Tel.: +32 (0)56 26 23 22 E-mail: [email protected] Copyright © 2023 Barco NV All rights reserved Realization Barco Corporate Marketing & Investor Relations Oce Focus Advertising Barco Beneluxpark 21 8500 Kortrijk – Belgium GRI CONTENT INDEX PwC Bedrijfsrevisoren BV - PwC Reviseurs d'Entreprises SRL - Financial Assurance Services Maatschappelijke zetel/Siège social: Culliganlaan 5, B-1831 Diegem Vestigingseenheid/Unité d'établissement: Sluisweg 1 bus 8, B-9000 Gent T: +32 (0)9 268 82 11, F: +32 (0)9 268 82 99, www.pwc.com BTW/TVA BE 0429.501.944 / RPR Brussel - RPM Bruxelles / ING BE43 3101 3811 9501 - BIC BBRUBEBB / BELFIUS BE92 0689 0408 8123 - BIC GKCC BEBB STATUTORY AUDITOR'S REPORT TO THE GENERAL SHAREHOLDERS’ MEETING OF BARCO NV ON THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 We present to you our statutory auditor’s report in the context of our statutory audit of the consolidated financial statements of Barco NV (the “Company”) and its subsidiaries (jointly “the Group”). This report includes our report on the consolidated accounts, as well as the other legal and regulatory requirements. This forms part of an integrated whole and is indivisible. We have been appointed as statutory auditor by the general meeting d.d. 29 April 2021, following the proposal formulated by the board of directors and following the recommendation by the audit committee and the proposal formulated by the works’ council. Our mandate will expire on the date of the general meeting which will deliberate on the annual financial statements for the year ended 31 December 2023. We have performed the statutory audit of the Company’s consolidated financial statements for 5 consecutive years. Report on the consolidated accounts Unqualified opinion We have performed the statutory audit of the Group’s consolidated financial statements, which comprise the consolidated balance sheet as at 31 December 2022, the consolidated statement of income, the statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies and other explanatory information, and which is characterised by a consolidated balance sheet total of EUR’000 1,147,405 and a net profit attributable to the equity holder of the parent of EUR‘000 75,219. In our opinion, the consolidated financial statements give a true and fair view of the Group’s net equity and consolidated financial position as at 31 December 2022, and of its consolidated financial performance and its consolidated cash flows for the year then ended, in accordance with International Financial Reporting Standards as adopted by the European Union and with the legal and regulatory requirements applicable in Belgium. Basis for unqualified opinion We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Belgium. Furthermore, we have applied the International Standards on Auditing as approved by the IAASB which are applicable to the year-end and which are not yet approved at the national level. Our responsibilities under those standards are further described in the “Statutory auditor’s responsibilities for the audit of the consolidated accounts” section of our report. We have fulfilled our ethical responsibilities in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Belgium, including the requirements related to independence. We have obtained from the board of directors and Company officials the explanations and information necessary for performing our audit. 2 of 7 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Impairment testing of goodwill - Note 8 Description of key audit matter The carrying value of the Group’s goodwill amounts to EUR’000 105,612 at 31 December 2022. These assets are subject to impairment testing on an annual basis or more frequently if there are indicators of impairment. We consider this matter as key to our audit because the determination of whether or not an impairment charge is necessary involves significant judgement in estimating the future results of the business. How our audit addressed the key audit matter We evaluated the appropriateness of the Group’s accounting policies and assessed compliance with the policies in accordance with IFRS. We evaluated management’s annual impairment testing and assessment of the indicators of impairment and challenged impairment calculations by assessing the future cash flow forecasts used in the models, and the process by which they were drawn up, including comparing them to the latest budgets approved by the board of directors. We understood and challenged: ● Assumptions used in the Group’s budget and internal forecasts and the long-term growth rates by comparing them to economic and industry forecasts; ● The discount rate by assessing the cost of capital and other inputs including benchmarking with comparable organisations; ● The historical accuracy of budgets to actual results to determine whether cash flow forecasts are reliable based on past experience; ● The mechanics of the underlying calculations. In performing the above work, we utilised our internal valuation experts to provide challenge and external market data to assess the reasonableness of the assumptions used by management. We evaluated the sensitivity analysis around the key drivers within the cash flow forecasts to ascertain the extent of change in those assumptions and also considered the likelihood of such a movement in those key assumptions arising. 3 of 7 Whilst recognizing that cash flow forecasting, impairment modelling and valuations are all inherently judgmental, we found that the assumptions used by management were within an acceptable range of reasonable estimates. Valuation of deferred taxes and valuation allowance on deferred tax assets related to tax losses carried forward and tax credits - Note 10 Description of key audit matter Deferred tax assets on tax losses carried forward and tax credits amounts to EUR’000 31,641 (note 10). The valuation of the deferred tax positions at Barco involved significant judgement, more specifically in the determination of the recognition of deferred tax assets related to tax losses carried forward and tax credits. The estimation of the future taxable basis is highly judgemental as well as the assessment of the impact of tax laws and regulations, tax planning action and strategies, rulings and transfer pricing. The valuation and recoverability of deferred tax assets is key to our audit due to the magnitude of the amount recognized for these assets and because the assessment requires management estimates, mainly on the assumptions regarding expected future market and economic conditions and tax laws and regulation. How our audit addressed the key audit matter We challenged the assumptions made to assess the recoverability of deferred tax assets related to tax losses carried forward and tax credits and the timing of the reversal of deferred tax positions. During our procedures, we used amongst others budgets, forecasts and tax laws and in addition we assessed the historical accuracy of management’s assumptions. We involved tax specialists in our audit. An important management judgement was the period over which taxable profits can be reliably estimated and consequently, no deferred tax assets are recognised for tax losses used in any period beyond. We verified that the deferred tax position was calculated at the enacted tax rate for the year in which the deferred tax position is expected to reverse. We also assessed the adequacy and completeness of the Company’s disclosure included in Note 10 in respect of deferred taxes. We found management’s judgements in respect of the Group’s deferred tax positions to be consistent and in line with our expectations. Responsibilities of the board of directors for the preparation of the consolidated financial statements The board of directors is responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union and with the legal and regulatory requirements applicable in Belgium, and for such internal control as the board of directors determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. 4 of 7 In preparing the consolidated financial statements, the board of directors is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the board of directors either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Statutory auditor’s responsibilities for the audit of the consolidated financial statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. In performing our audit, we comply with the legal, regulatory and normative framework applicable to the audit of the consolidated financial statements in Belgium. A statutory audit does not provide any assurance as to the Group’s future viability nor as to the efficiency or effectiveness of the board of directors’ current or future business management at Group level. Our responsibilities in respect of the use of the going concern basis of accounting by the board of directors are described below. As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the consolidated accounts, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control; • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control; • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the board of directors; • Conclude on the appropriateness of the board of directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our statutory auditor’s report to the related disclosures in the consolidated accounts or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our statutory auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern; 5 of 7 • Evaluate the overall presentation, structure and content of the consolidated accounts, including the disclosures, and whether the consolidated accounts represent the underlying transactions and events in a manner that achieves fair presentation; • Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. We communicate with the audit committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the audit committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the audit committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter. Other legal and regulatory requirements Responsibilities of the board of directors The board of directors is responsible for the preparation and the content of the directors’ report on the consolidated financial statements, the report on non-financial information and the other information included in the annual report on the consolidated financial statements. Statutory auditor’s responsibilities In the context of our mandate and in accordance with the Belgian standard which is complementary to the International Standards on Auditing (ISAs) as applicable in Belgium, our responsibility is to verify, in all material respects, the directors’ report on the consolidated financial statements, the separate report on non-financial information and the other information included in the annual report on the financial statements and to report on these matters. Aspects related to the directors’ report on the consolidated financial statements and to the other information included in the annual report on the consolidated financial statements In our opinion, after having performed specific procedures in relation to the directors’ report on the consolidated financial statements, this directors’ report is consistent with the consolidated financial statements for the year under audit and is prepared in accordance with article 3:32 of the Companies' and Associations' Code. 6 of 7 In the context of our audit of the consolidated financial statements, we are also responsible for considering, in particular based on the knowledge acquired resulting from the audit, whether the directors’ report on the consolidated financial statements and the other information included in the annual report on the consolidated financial statements is materially misstated or contains information which is inadequately disclosed or otherwise misleading. In light of the procedures we have performed, there are no material misstatements we have to report to you. The non-financial information required by virtue of article 3:32, §2 of the Companies’ and Associations’ Code is included in the directors’ report on the consolidated financial statements. The Company has prepared the non-financial information, based on Global Reporting Initiative Standards. However, in accordance with article 3:80, §1, 5° of the Companies’ and Associations’ Code, we do not express an opinion as to whether the non-financial information has been prepared in accordance with the Global Reporting Initiative Standards as disclosed in the consolidated financial statements. Statement related to independence ● Our registered audit firm and our network did not provide services which are incompatible with the statutory audit of the consolidated accounts, and our registered audit firm remained independent of the Group in the course of our mandate. ● The fees for additional services which are compatible with the statutory audit of the consolidated accounts referred to in article 3:65 of the Companies' and Associations' Code are correctly disclosed and itemized in the notes to the consolidated accounts. European Uniform Electronic Format (“ESEF”) In accordance with the standard on the draft verification of the compliance of the financial statements with the European Uniform Electronic Format (hereinafter “ESEF”), we must verify whether the ESEF format is in accordance with the regulatory technical standards established by the European Delegate Regulation No. 2019/815 of 17 December 2018 (hereinafter: “Delegated Regulation”). The board of directors is responsible for the preparation, in accordance with ESEF requirements, of the consolidated financial statements in the form of an electronic file in ESEF format (hereinafter “consolidated financial statements”) included in the annual financial report. Our responsibility is to obtain sufficient appropriate evidence to conclude that the format and marking language of the digital consolidated financial statements comply in all material respects with the ESEF requirements under the Delegated Regulation. The annual financial report and the digital consolidated financial statements have not yet been submitted to us at the date of this report. If, in our audit of the digital consolidated financial statements, we determine that there is a material misstatement, we will be required to report the matter to the board of directors and request the latter to make any necessary changes. If this does not happen, we will be forced to adjust this report due to the fact that the format of and the marking of information in the digital consolidated financial statements included in the annual financial statements report of Barco NV conform in all material respects with the ESEF requirements under the Delegated Regulation. 7 of 7 Other statements ● This report is consistent with the additional report to the audit committee referred to in article 11 of the Regulation (EU) N° 537/2014. Ghent, 8 February 2023 The statutory auditor PwC Reviseurs d'Entreprises SRL / PwC Bedrijfsrevisoren BV Represented by Peter Opsomer Réviseur d’Entreprises / Bedrijfsrevisor PwC Bedrijfsrevisoren bv - PwC Reviseurs d'Entreprises srl - Risk Assurance Services Maatschappelijke zetel/Siège social: Woluwe Garden, Culliganlaan 5, B-1831 Diegem T: +32 (0)2 710 4211, F: +32 (0)2 710 4299, www.pwc.com BTW/TVA BE 0429.501.944 / RPR Brussel - RPM Bruxelles / ING BE43 3101 3811 9501 - BIC BBRUBEBB / BELFIUS BE92 0689 0408 8123 - BIC GKCC BEBB To the Board of Directors of Barco NV INDEPENDENT LIMITED ASSURANCE REPORT ON A SELECTION OF SUSTAINABILITY KPI’S IN THE INTEGRATED ANNUAL REPORT 2022 OF BARCO NV This report has been prepared in accordance with the terms of our contract dated 6 December 2022 (the “Agreement”), whereby we have been engaged to issue an independent limited assurance report in connection with a selection of sustainability KPIs, marked with a checkmark (), in the Integrated Annual Report as of and for the year ended 31 December 2022 of Barco NV and its subsidiaries (the “Report”). The Directors’ Responsibility The Directors of Barco NV (“the Company”) are responsible for the preparation and presentation of the selection of sustainability KPIs for the year 2022, marked with a checkmark () in the Report (the “Subject Matter Information”), in accordance with the criteria disclosed in the Report (the “Criteria”). This responsibility includes the selection and application of appropriate methods for the preparation of the Subject Matter Information, for ensuring the reliability of the underlying information and for the use of assumptions and estimates for individual sustainability disclosures which are reasonable in the circumstances. Furthermore, the responsibility of the Directors includes the design, implementation and maintenance of systems and processes relevant for the preparation of the Subject Matter Information that is free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an independent conclusion about the Subject Matter Information based on the procedures we have performed and the evidence we have obtained. We conducted our work in accordance with the International Standard on Assurance Engagements 3000 (Revised) “Assurance Engagements other than Audits or Reviews of Historical Financial Information” (ISAE 3000), issued by the International Auditing and Assurance Standards Board. This standard requires that we comply with ethical requirements and that we plan and perform the engagement to obtain limited assurance as to whether any matters have come to our attention that cause us to believe that the Subject Matter Information has not been prepared, in all material respects, in accordance with the Criteria. 2 of 3 The procedures performed in a limited assurance engagement vary in nature and timing from, and are less in extent than for, a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had a reasonable engagement been performed. The selection of such procedures depends on our professional judgement, including the assessment of the risks of material misstatement of the Subject Matter Information in accordance with the Criteria. The scope of our work comprised the following procedures: ● assessing and testing the design and functioning of the systems and processes used for data- gathering, collation, consolidation and validation, including the methods used for calculating and estimating the Subject Matter Information as of and for the year ended 31 December 2022 presented in the Report; ● conducting interviews with responsible officers; ● reviewing, on a limited test basis, relevant internal and external documentation; ● performing an analytical review of the data and trends in the information submitted for consolidation; ● considering the disclosure and presentation of the Subject Matter Information. The scope of our work is limited to assurance over the selection of sustainability KPIs for the year 2022, marked with a checkmark () in the Report. Our assurance does not extend to information in respect of earlier periods or to any other information included in the Report. Our Independence and Quality Control Our engagement has been carried out in compliance with the legal requirements in respect of auditor independence, particularly in accordance with the rules set down in articles 12, 13, 14, 16, 20, 28 and 29 of the Belgian Act of 7 December 2016 organizing the audit profession and its public oversight of registered auditors, and with other ethical requirements of the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code), which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour. Our firm applies International Standard on Quality Control 1 and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. 3 of 3 Conclusion Based on the procedures we have performed and the evidence we have obtained, nothing has come to our attention that causes us to believe that the Subject Matter Information within your Report as of and for the year ended 31 December 2022 has not been prepared, in all material respects, in accordance with the Criteria disclosed in the Report. Other ESG related information The other information comprises all of the ESG related information in the Report other than the Subject Matter Information and our assurance report. The directors are responsible for the other ESG related information. As explained above, our assurance conclusion does not extend to the other ESG related information and, accordingly, we do not express any form of assurance thereon. In connection with our assurance of the Subject Matter Information, our responsibility is to read the other ESG related information and, in doing so, consider whether the other ESG related information is materially inconsistent with the Subject Matter Information or our knowledge obtained during the assurance engagement, or otherwise appears to contain a material misstatement of fact. If we identify an apparent material inconsistency or material misstatement of fact, we are required to perform procedures to conclude whether there is a material misstatement of the Subject Matter Information or a material misstatement of the other information, and to take appropriate actions in the circumstances. Other matter - Restriction on Use and Distribution of our Report Our report is intended solely for the use of the Company, in connection with their Report as of and for the year ended 31 December 2022 and should not be used for any other purpose. We do not accept or assume and deny any liability or duty of care to any other party to whom this report may be shown or into whose hands it may come. Diegem, 8 February 2023 PwC Bedrijfsrevisoren BV/Reviseurs d'Entreprises SRL Represented by Marc Daelman 1 Registered auditor 1 Marc Daelman BV, Director, represented by its permanent representative Marc Daelman PwC Bedrijfsrevisoren BV - PwC Reviseurs d'Entreprises SRL - Financial Assurance Services Maatschappelijke zetel/Siège social: Culliganlaan 5, B-1831 Diegem Vestigingseenheid/Unité d'établissement: Sluisweg 1 bus 8, B-9000 Gent T: +32 (0)9 268 82 11, F: +32 (0)9 268 82 99, www.pwc.com BTW/TVA BE 0429.501.944 / RPR Brussel - RPM Bruxelles / ING BE43 3101 3811 9501 - BIC BBRUBEBB / BELFIUS BE92 0689 0408 8123 - BIC GKCC BEBB STATUTORY AUDITOR'S REPORT TO THE GENERAL SHAREHOLDERS’ MEETING OF BARCO NV ON THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022 We present to you our statutory auditor’s report in the context of our statutory audit of the consolidated financial statements of Barco NV (the “Company”) and its subsidiaries (jointly “the Group”). This report includes our report on the consolidated accounts, as well as the other legal and regulatory requirements. This forms part of an integrated whole and is indivisible. We have been appointed as statutory auditor by the general meeting d.d. 29 April 2021, following the proposal formulated by the board of directors and following the recommendation by the audit committee and the proposal formulated by the works’ council. Our mandate will expire on the date of the general meeting which will deliberate on the annual financial statements for the year ended 31 December 2023. We have performed the statutory audit of the Company’s consolidated financial statements for 5 consecutive years. Report on the consolidated accounts Unqualified opinion We have performed the statutory audit of the Group’s consolidated financial statements, which comprise the consolidated balance sheet as at 31 December 2022, the consolidated statement of income, the statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies and other explanatory information, and which is characterised by a consolidated balance sheet total of EUR’000 1,147,405 and a net profit attributable to the equity holder of the parent of EUR‘000 75,219. In our opinion, the consolidated financial statements give a true and fair view of the Group’s net equity and consolidated financial position as at 31 December 2022, and of its consolidated financial performance and its consolidated cash flows for the year then ended, in accordance with International Financial Reporting Standards as adopted by the European Union and with the legal and regulatory requirements applicable in Belgium. Basis for unqualified opinion We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Belgium. Furthermore, we have applied the International Standards on Auditing as approved by the IAASB which are applicable to the year-end and which are not yet approved at the national level. Our responsibilities under those standards are further described in the “Statutory auditor’s responsibilities for the audit of the consolidated accounts” section of our report. We have fulfilled our ethical responsibilities in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Belgium, including the requirements related to independence. We have obtained from the board of directors and Company officials the explanations and information necessary for performing our audit. 2 of 7 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Impairment testing of goodwill - Note 8 Description of key audit matter The carrying value of the Group’s goodwill amounts to EUR’000 105,612 at 31 December 2022. These assets are subject to impairment testing on an annual basis or more frequently if there are indicators of impairment. We consider this matter as key to our audit because the determination of whether or not an impairment charge is necessary involves significant judgement in estimating the future results of the business. How our audit addressed the key audit matter We evaluated the appropriateness of the Group’s accounting policies and assessed compliance with the policies in accordance with IFRS. We evaluated management’s annual impairment testing and assessment of the indicators of impairment and challenged impairment calculations by assessing the future cash flow forecasts used in the models, and the process by which they were drawn up, including comparing them to the latest budgets approved by the board of directors. We understood and challenged: ● Assumptions used in the Group’s budget and internal forecasts and the long-term growth rates by comparing them to economic and industry forecasts; ● The discount rate by assessing the cost of capital and other inputs including benchmarking with comparable organisations; ● The historical accuracy of budgets to actual results to determine whether cash flow forecasts are reliable based on past experience; ● The mechanics of the underlying calculations. In performing the above work, we utilised our internal valuation experts to provide challenge and external market data to assess the reasonableness of the assumptions used by management. We evaluated the sensitivity analysis around the key drivers within the cash flow forecasts to ascertain the extent of change in those assumptions and also considered the likelihood of such a movement in those key assumptions arising. 3 of 7 Whilst recognizing that cash flow forecasting, impairment modelling and valuations are all inherently judgmental, we found that the assumptions used by management were within an acceptable range of reasonable estimates. Valuation of deferred taxes and valuation allowance on deferred tax assets related to tax losses carried forward and tax credits - Note 10 Description of key audit matter Deferred tax assets on tax losses carried forward and tax credits amounts to EUR’000 31,641 (note 10). The valuation of the deferred tax positions at Barco involved significant judgement, more specifically in the determination of the recognition of deferred tax assets related to tax losses carried forward and tax credits. The estimation of the future taxable basis is highly judgemental as well as the assessment of the impact of tax laws and regulations, tax planning action and strategies, rulings and transfer pricing. The valuation and recoverability of deferred tax assets is key to our audit due to the magnitude of the amount recognized for these assets and because the assessment requires management estimates, mainly on the assumptions regarding expected future market and economic conditions and tax laws and regulation. How our audit addressed the key audit matter We challenged the assumptions made to assess the recoverability of deferred tax assets related to tax losses carried forward and tax credits and the timing of the reversal of deferred tax positions. During our procedures, we used amongst others budgets, forecasts and tax laws and in addition we assessed the historical accuracy of management’s assumptions. We involved tax specialists in our audit. An important management judgement was the period over which taxable profits can be reliably estimated and consequently, no deferred tax assets are recognised for tax losses used in any period beyond. We verified that the deferred tax position was calculated at the enacted tax rate for the year in which the deferred tax position is expected to reverse. We also assessed the adequacy and completeness of the Company’s disclosure included in Note 10 in respect of deferred taxes. We found management’s judgements in respect of the Group’s deferred tax positions to be consistent and in line with our expectations. Responsibilities of the board of directors for the preparation of the consolidated financial statements The board of directors is responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union and with the legal and regulatory requirements applicable in Belgium, and for such internal control as the board of directors determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. 4 of 7 In preparing the consolidated financial statements, the board of directors is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the board of directors either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Statutory auditor’s responsibilities for the audit of the consolidated financial statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. In performing our audit, we comply with the legal, regulatory and normative framework applicable to the audit of the consolidated financial statements in Belgium. A statutory audit does not provide any assurance as to the Group’s future viability nor as to the efficiency or effectiveness of the board of directors’ current or future business management at Group level. Our responsibilities in respect of the use of the going concern basis of accounting by the board of directors are described below. As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the consolidated accounts, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control; • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control; • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the board of directors; • Conclude on the appropriateness of the board of directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our statutory auditor’s report to the related disclosures in the consolidated accounts or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our statutory auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern; 5 of 7 • Evaluate the overall presentation, structure and content of the consolidated accounts, including the disclosures, and whether the consolidated accounts represent the underlying transactions and events in a manner that achieves fair presentation; • Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. We communicate with the audit committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the audit committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the audit committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter. Other legal and regulatory requirements Responsibilities of the board of directors The board of directors is responsible for the preparation and the content of the directors’ report on the consolidated financial statements, the report on non-financial information and the other information included in the annual report on the consolidated financial statements. Statutory auditor’s responsibilities In the context of our mandate and in accordance with the Belgian standard which is complementary to the International Standards on Auditing (ISAs) as applicable in Belgium, our responsibility is to verify, in all material respects, the directors’ report on the consolidated financial statements, the separate report on non-financial information and the other information included in the annual report on the financial statements and to report on these matters. Aspects related to the directors’ report on the consolidated financial statements and to the other information included in the annual report on the consolidated financial statements In our opinion, after having performed specific procedures in relation to the directors’ report on the consolidated financial statements, this directors’ report is consistent with the consolidated financial statements for the year under audit and is prepared in accordance with article 3:32 of the Companies' and Associations' Code. 6 of 7 In the context of our audit of the consolidated financial statements, we are also responsible for considering, in particular based on the knowledge acquired resulting from the audit, whether the directors’ report on the consolidated financial statements and the other information included in the annual report on the consolidated financial statements is materially misstated or contains information which is inadequately disclosed or otherwise misleading. In light of the procedures we have performed, there are no material misstatements we have to report to you. The non-financial information required by virtue of article 3:32, §2 of the Companies’ and Associations’ Code is included in the directors’ report on the consolidated financial statements. The Company has prepared the non-financial information, based on Global Reporting Initiative Standards. However, in accordance with article 3:80, §1, 5° of the Companies’ and Associations’ Code, we do not express an opinion as to whether the non-financial information has been prepared in accordance with the Global Reporting Initiative Standards as disclosed in the consolidated financial statements. Statement related to independence ● Our registered audit firm and our network did not provide services which are incompatible with the statutory audit of the consolidated accounts, and our registered audit firm remained independent of the Group in the course of our mandate. ● The fees for additional services which are compatible with the statutory audit of the consolidated accounts referred to in article 3:65 of the Companies' and Associations' Code are correctly disclosed and itemized in the notes to the consolidated accounts. European Uniform Electronic Format (“ESEF”) In accordance with the standard on the draft verification of the compliance of the financial statements with the European Uniform Electronic Format (hereinafter “ESEF”), we must verify whether the ESEF format is in accordance with the regulatory technical standards established by the European Delegate Regulation No. 2019/815 of 17 December 2018 (hereinafter: “Delegated Regulation”). The board of directors is responsible for the preparation, in accordance with ESEF requirements, of the consolidated financial statements in the form of an electronic file in ESEF format (hereinafter “consolidated financial statements”) included in the annual financial report. Our responsibility is to obtain sufficient appropriate evidence to conclude that the format and marking language of the digital consolidated financial statements comply in all material respects with the ESEF requirements under the Delegated Regulation. The annual financial report and the digital consolidated financial statements have not yet been submitted to us at the date of this report. If, in our audit of the digital consolidated financial statements, we determine that there is a material misstatement, we will be required to report the matter to the board of directors and request the latter to make any necessary changes. If this does not happen, we will be forced to adjust this report due to the fact that the format of and the marking of information in the digital consolidated financial statements included in the annual financial statements report of Barco NV conform in all material respects with the ESEF requirements under the Delegated Regulation. 7 of 7 Other statements ● This report is consistent with the additional report to the audit committee referred to in article 11 of the Regulation (EU) N° 537/2014. Ghent, 8 February 2023 The statutory auditor PwC Reviseurs d'Entreprises SRL / PwC Bedrijfsrevisoren BV Represented by Peter Opsomer Réviseur d’Entreprises / Bedrijfsrevisor PwC Bedrijfsrevisoren bv - PwC Reviseurs d'Entreprises srl - Risk Assurance Services Maatschappelijke zetel/Siège social: Woluwe Garden, Culliganlaan 5, B-1831 Diegem T: +32 (0)2 710 4211, F: +32 (0)2 710 4299, www.pwc.com BTW/TVA BE 0429.501.944 / RPR Brussel - RPM Bruxelles / ING BE43 3101 3811 9501 - BIC BBRUBEBB / BELFIUS BE92 0689 0408 8123 - BIC GKCC BEBB To the Board of Directors of Barco NV INDEPENDENT LIMITED ASSURANCE REPORT ON A SELECTION OF SUSTAINABILITY KPI’S IN THE INTEGRATED ANNUAL REPORT 2022 OF BARCO NV This report has been prepared in accordance with the terms of our contract dated 6 December 2022 (the “Agreement”), whereby we have been engaged to issue an independent limited assurance report in connection with a selection of sustainability KPIs, marked with a checkmark (), in the Integrated Annual Report as of and for the year ended 31 December 2022 of Barco NV and its subsidiaries (the “Report”). The Directors’ Responsibility The Directors of Barco NV (“the Company”) are responsible for the preparation and presentation of the selection of sustainability KPIs for the year 2022, marked with a checkmark () in the Report (the “Subject Matter Information”), in accordance with the criteria disclosed in the Report (the “Criteria”). This responsibility includes the selection and application of appropriate methods for the preparation of the Subject Matter Information, for ensuring the reliability of the underlying information and for the use of assumptions and estimates for individual sustainability disclosures which are reasonable in the circumstances. Furthermore, the responsibility of the Directors includes the design, implementation and maintenance of systems and processes relevant for the preparation of the Subject Matter Information that is free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an independent conclusion about the Subject Matter Information based on the procedures we have performed and the evidence we have obtained. We conducted our work in accordance with the International Standard on Assurance Engagements 3000 (Revised) “Assurance Engagements other than Audits or Reviews of Historical Financial Information” (ISAE 3000), issued by the International Auditing and Assurance Standards Board. This standard requires that we comply with ethical requirements and that we plan and perform the engagement to obtain limited assurance as to whether any matters have come to our attention that cause us to believe that the Subject Matter Information has not been prepared, in all material respects, in accordance with the Criteria. 2 of 3 The procedures performed in a limited assurance engagement vary in nature and timing from, and are less in extent than for, a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had a reasonable engagement been performed. The selection of such procedures depends on our professional judgement, including the assessment of the risks of material misstatement of the Subject Matter Information in accordance with the Criteria. The scope of our work comprised the following procedures: ● assessing and testing the design and functioning of the systems and processes used for data- gathering, collation, consolidation and validation, including the methods used for calculating and estimating the Subject Matter Information as of and for the year ended 31 December 2022 presented in the Report; ● conducting interviews with responsible officers; ● reviewing, on a limited test basis, relevant internal and external documentation; ● performing an analytical review of the data and trends in the information submitted for consolidation; ● considering the disclosure and presentation of the Subject Matter Information. The scope of our work is limited to assurance over the selection of sustainability KPIs for the year 2022, marked with a checkmark () in the Report. Our assurance does not extend to information in respect of earlier periods or to any other information included in the Report. Our Independence and Quality Control Our engagement has been carried out in compliance with the legal requirements in respect of auditor independence, particularly in accordance with the rules set down in articles 12, 13, 14, 16, 20, 28 and 29 of the Belgian Act of 7 December 2016 organizing the audit profession and its public oversight of registered auditors, and with other ethical requirements of the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code), which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour. Our firm applies International Standard on Quality Control 1 and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. 3 of 3 Conclusion Based on the procedures we have performed and the evidence we have obtained, nothing has come to our attention that causes us to believe that the Subject Matter Information within your Report as of and for the year ended 31 December 2022 has not been prepared, in all material respects, in accordance with the Criteria disclosed in the Report. Other ESG related information The other information comprises all of the ESG related information in the Report other than the Subject Matter Information and our assurance report. The directors are responsible for the other ESG related information. As explained above, our assurance conclusion does not extend to the other ESG related information and, accordingly, we do not express any form of assurance thereon. In connection with our assurance of the Subject Matter Information, our responsibility is to read the other ESG related information and, in doing so, consider whether the other ESG related information is materially inconsistent with the Subject Matter Information or our knowledge obtained during the assurance engagement, or otherwise appears to contain a material misstatement of fact. If we identify an apparent material inconsistency or material misstatement of fact, we are required to perform procedures to conclude whether there is a material misstatement of the Subject Matter Information or a material misstatement of the other information, and to take appropriate actions in the circumstances. Other matter - Restriction on Use and Distribution of our Report Our report is intended solely for the use of the Company, in connection with their Report as of and for the year ended 31 December 2022 and should not be used for any other purpose. We do not accept or assume and deny any liability or duty of care to any other party to whom this report may be shown or into whose hands it may come. Diegem, 8 February 2023 PwC Bedrijfsrevisoren BV/Reviseurs d'Entreprises SRL Represented by Marc Daelman 1 Registered auditor 1 Marc Daelman BV, Director, represented by its permanent representative Marc Daelman PwC Bedrijfsrevisoren BV - PwC Reviseurs d'Entreprises SRL - Financial Assurance Services Maatschappelijke zetel/Siège social: Culliganlaan 5, B-1831 Diegem Vestigingseenheid/Unité d'établissement: Sluisweg 1 bus 8, B-9000 Gent T: +32 (0)9 268 82 11, F: +32 (0)9 268 82 99, www.pwc.com BTW/TVA BE 0429.501.944 / RPR Brussel - RPM Bruxelles / ING BE43 3101 3811 9501 - BIC BBRUBEBB / BELFIUS BE92 0689 0408 8123 - BIC GKCC BEBB STATUTORY AUDITOR’S REPORT TO THE GENERAL SHAREHOLDERS’ MEETING, IN ACCORDANCE WITH ARTICLE 12 OF THE ROYAL DECREE OF 14 NOVEMBER 2007, REGARDING THE COMPLIANCE OF THE CONSOLIDATED FINANCIAL STATEMENTS IN THE FORM OF AN ELECTRONIC FILE OF BARCO NV AS AT 31 DECEMBER 2022 WITH THE ESEF (EUROPEAN SINGLE ELECTRONIC FORMAT) REQUIREMENTS AND TAXONOMY UNDER THE DELEGATED REGULATION (EU) 2019/815 _______________ Mission In accordance with article 12 of the Royal Decree of 14 November 2007, the statutory auditors' mission is to report on the format and XBRL marking language of the digital consolidated financial statements in the form of an electronic file (hereinafter “digital consolidated financial statements”) in accordance with the ESEF requirements and taxonomy (more specifically the provisions in force as laid down in the ESEF Regulatory Technical Standard, “ESEF RTS” under Delegated Regulation (EU) 2019/815 dated 17 December 2018) applicable to the digital consolidated financial statements as at 31 December 2022. This report follows our statutory auditor’s report to the general shareholders meeting of Barco NV in the context of the consolidated annual accounts for the year ended 31 December 2022 due to the untimely receipt of the digital consolidated financial statements. Responsibilities of the board of directors The board of directors is responsible for the preparation of the digital consolidated financial statements as included in the annual financial report in accordance with the ESEF requirements (“ESEF RTS”) applicable to the digital consolidated financial statements as at 31 December 2022. This responsibility includes the selection and application of the most appropriate methods to prepare the digital consolidated financial statements. In addition, the responsibility of the board of directors includes designing, implementing and maintaining systems and processes relevant to the preparation of the digital consolidated financial statements that are free from material misstatement resulting from fraud or errors. The board of directors should verify that the digital consolidated financial statements are consistent with the human-readable consolidated financial statements. Statutory auditor’s responsibility Our responsibility is to express a conclusion as to whether the format and the marking language XBRL of the digital consolidated financial statements of Barco NV per 31 December 2022 complies in all material respects with the ESEF technical regulatory standards under Delegated Regulation (EU) 2019/815 based on the work we perform. We conducted our work in accordance with International Standard on Assurance Engagements (ISAE) 3000 (Revised) “Assurance Engagements other than Audits or Reviews of Historical Financial Information”. This standard requires that we comply with ethical requirements and that we plan and perform the engagement to obtain reasonable assurance about whether nothing has come to our attention that causes us to believe that the digital consolidated financial statements are, in all materiality, in that respect would not have been prepared in accordance with the ESEF technical regulatory standards applied by the Company. 2 of 3 The selection of the procedures performed depends on our judgment and assessment of the risk of material misstatement in the digital consolidated financial statements and in the statements of the board of directors. The entirety of the work performed by us consisted of, among other things, the following procedures: ● Verify that the digital consolidated financial statements in XHTML format have been prepared in accordance with Article 3 of the Delegated Regulation; ● Obtain an understanding of the processes of the Company's practice in the XBRL marking language of its digital consolidated financial statements and of the internal controls relevant to the certification, in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the internal controls that are designed to provide reasonable assurance about whether the XBRL marking language of the digital consolidated financial statements complies in all material respects with the ESEF regulatory technical standards; ● Obtaining sufficient appropriate audit evidence about the effective operation of controls relevant to the XBRL marking language of the digital consolidated financial statements of Barco NV per 31 December 2022; ● Reconciliation of the marked data with the audited consolidated financial statements of Barco NV per 31 December 2022; ● Assessing the completeness and fairness of the marking language of the digital consolidated financial statements prepared by the Company; ● Assessing the appropriateness of the Company's use of the XBRL elements of the ESEF taxonomy and assessing the creation of the extension taxonomy. Our independence and quality control We have complied with the independence requirements and other ethical requirements of the legislation and regulations in force in Belgium that apply in the context of our assignment. These are founded on the fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behavior. Our firm applies the International Standard on Quality Control (ISQC) n°1, Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance Related Services Engagements, and accordingly, maintains a comprehensive system of quality management including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements Our opinion In our opinion, based on the procedures performed, the format and the marking language of the digital consolidated financial statements as included within the annual financial report of Barco NV per 31 December 2022 complies in all material respects with the ESEF requirements under the Delegated Regulation (EU) 2019/815. 3 of 3 We do not express an audit opinion, a review conclusion or any other assurance conclusion on the consolidated financial statements themselves in this report. Our audit opinion on the Group's consolidated financial statements is set out in the statutory auditor's report dated 8 February 2023. Other matter The consolidated financial statements of Barco NV (the “Company”) and its subsidiaries (jointly “the Group”) have been prepared by the board of directors of the Company on 8 February 2023 and has been subject to a statutory audit. Our statutory auditor's report (signed on 8 February 2023) includes an unqualified opinion on the true and fair view of the Group's equity and consolidated financial position as of 31 December 2022, as well as its consolidated results and its consolidated cash flows for the year then ended, in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and with the legal and regulatory requirements applicable in Belgium. 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