Picanol NV

Interim / Quarterly Report • Aug 26, 2021

INTERIM REPORT Regulated information¹ Ieper, August 26, 2021, 8:00 am CET

PICANOL GROUP INTERIM REPORT FOR THE 6 MONTH PERIOD ENDED JUNE 30, 2021 2

¹ The enclosed information constitutes regulated information as defined in the Royal Decree of November 14, 2007, regarding the duties of issuers of financial instruments which have been admitted for trading on a regulated market.

² Note that Picanol Group published, in addition to this interim report, also a press release on the HY21 results. This press release can be consulted on our website www.picanolgroup.com.

INDEX

1.		MANAGEMENT REPORT3
	1.1.	KEY EVENTS 3
	1.2.	GROUP KEY FIGURES 4
	1.3.	OPERATING SEGMENTS PERFORMANCE REVIEW 5
2.		STATEMENT ON THE TRUE AND FAIR VIEW OF THE CONDENSED CONSOLIDATED FINANCIAL INFORMATION AND THE FAIR OVERVIEW OF THE MANAGEMENT REPORT7
3.		CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION AT JUNE 30, 20218
	3.1.	CONDENSED CONSOLIDATED INCOME STATEMENT8
	3.2.	CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 8
	3.3.	CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION9
	3.4.	CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY10
	3.5.	CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS11
	3.6.	NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL INFORMATION 12
4.		INDEPENDENT AUDITORS' REPORT ON THE REVIEW OF THE CONDENSED CONSOLIDATED FINANCIAL INFORMATION AS PER JUNE 30, 202129
5.		FINANCIAL GLOSSARY30
6.		ALTERNATIVE PERFORMANCE MEASURES 31

1. MANAGEMENT REPORT

1.1.KEY EVENTS

• In the spring of 2021, Proferro in Ieper commissioned a new automatic high bay warehouse. PsiControl is currently continuing to build its new production facility in Rasnov, Romania. The works should be completed by the end of 2021 (Machines & Technologies segment).
• In the first half of 2021, Tessenderlo Group filed the relevant applications in order to participate in the Belgian Capacity Remuneration Mechanism (CRM) tender for the construction of a second gas-fired power station of 900 MW in Tessenderlo (Belgium). If successful in the CRM auction, the new power plant (which involves an investment of approximately 500 million EUR) should be operational by November 1, 2025.
• Within the Agro segment, Tessenderlo Kerley International will build a new Thio-Sul® (ammonium thiosulfate) manufacturing plant in Geleen (the Netherlands). With its second Thio-Sul® plant in Europe, Tessenderlo Kerley International is further expanding its local presence in the liquid fertilizer market for precision farming. Construction works on the new liquid fertilizer plant are planned to start in April 2022. The factory is scheduled to be operational from the second quarter of 2023.
• Meanwhile, Tessenderlo Kerley International continues to study major Thio-Sul® investments in the Eastern European/CIS region to support qualitative and productivity increases of agriculture in that region.
• In the first quarter of 2021, Tessenderlo Group created a new growth unit, "Violleau", to support the growth of organic agricultural solutions in Europe. This growth unit will be part of the Bio-valorization segment.
• In March 2021, Picanol Group acquired a 10% minority stake in Rieter Holding AG (SWX: RIEN) for a total of 467,236 shares at a price of EUR 45.4 million. Rieter is the world's leading supplier of systems for spinning short staple fibers.

After the balance date:

• In August 2021, the group reached an agreement to divest the MPR and ECS activities (Industrial Solutions segment). The divestment comprises the main assets of these activities. The yearly contribution of MPR/ECS to the group's results was not significant. The sale is expected to be completed in the second half of 2021 and will lead to an insignificant result within EBIT adjusting items.
• In the third quarter of 2021, the business unit Mining & Industrial changed its name into Moleko (Industrial Solutions segment).

Update COVID-19:

▪ In light of the latest developments concerning the corona pandemic, Picanol Group continues to take all the necessary steps to ensure that we keep our people safe and keep our various plants and businesses running. All of the plants and activities are currently running in line with expectations and the impact of the COVID-19 pandemic on the condensed consolidated interim financial statements of the group in the first six months of 2021 was not significant. Activities could be further impacted in the coming weeks or months if too many employees are affected by COVID-19 and/or if access to raw materials and auxiliary materials or means of transportation becomes more complicated, or if customers were to reduce production or become unable to process products.

1.2.GROUP KEY FIGURES

(million EUR)	HY21	HY20	% change
Revenue	1,354.3	1,135.6	19%
Adjusted EBITDA3	236.0	195.5	21%
Adjusted EBIT4	140.9	98.8	43%
EBIT	143.0	99.3	44%
Profit/(loss) for the period	117.3	72.6	62%
Minority interest	41.8	36.0	16%
Profit/(loss) for the period attributable to the equity holders of the company	75.4	36.6	106%
Total comprehensive income attributable to the equity holders of the company	87.7	31.1	182%
Capital expenditure	48.1	46.0	5%
Cash flow from operating activities	187.0	156.2	20%
Net financial debt	81.7	97.1	-16%

(million EUR)	HY21	HY20	% change
Revenue	1,354.3	1,135.6	19%
Machines & Technologies	333.3	200.6	66%
Agro	373.5	362.2	3%
Bio-valorization	297.4	287.6	3%
Industrial Solutions	314.9	250.6	26%
T-Power	35.2	34.6	2%
Adjusted EBITDA	236.0	195.5	21%
Machines & Technologies	51.3	13.5	281%
Agro	75.2	84.5	-11%
Bio-valorization	41.8	45.3	-8%
Industrial Solutions	42.1	24.8	70%
T-Power	25.6	27.4	-7%
Adjusted EBIT	140.9	98.8	43%
Machines & Technologies	45.1	7.8	482%
Agro	41.2	50.7	-19%
Bio-valorization	23.5	26.7	-12%
Industrial Solutions	24.3	4.8	402%
T-Power	6.7	8.9	-25%
EBIT adjusting items	2.1	0.4	382%
EBIT	143.0	99.3	44%

REVENUE

HY21 revenue increased by 19% compared to the same period last year. Machines & Technologies realized a 66% revenue increase as the global machine market showed a strong recovery after the COVID-19 impacted first half of 2020. Excluding the foreign exchange effect, the revenue of Industrial Solutions increased by +26.8% thanks to the performance of DYKA Group. Agro revenue increased by +9.6%, the revenue of Bio-valorization increased by +6.4% while T-Power revenue remained stable (+1.7%).

ADJUSTED EBITDA

The HY21 Adjusted EBITDA amounts to 236.0 million EUR compared to 195.5 million EUR one year earlier, which implies an increase by 21%. The Adjusted EBITDA of segment Machines & Technologies increased by 37.9 million EUR (+281%) driven by the strong demand. The contribution to the Adjusted EBITDA of Industrial Solutions, when excluding the foreign exchange effect, increased by +18.0 million EUR (+72.8%), while a

³ Adjusted EBITDA equals adjusted EBIT plus depreciation and amortization.

⁴ Adjusted EBIT is considered by the group to be a relevant performance measure in order to compare results over the period 2020-2021 as it excludes EBIT adjusting items.

decrease by -1.8 million EUR (or -6.7%) could be noted in T-Power. The contributions of Bio-valorization (-1.7%) and Agro (-3.5%) were in line with last year.

PROFIT (+) / LOSS (-) FOR THE PERIOD ATTRIBUTABLE TO THE EQUITY HOLDERS OF THE COMPANY

The HY21 profit amounts to 75.4 million EUR compared to 36.6 million EUR in HY20. The profit was impacted by exchange gains and losses, mainly on non-hedged intercompany loans and cash and cash equivalents in USD. Excluding these exchange gains and losses, the profit for HY21 would have increased by 81%.

NET FINANCIAL DEBT

As per HY21, the group net financial debt decreased from 97.1 to 81.7 million EUR. Leverage amounts to 0.2x as per HY21, compared to 0.3x as per year end 2020. Within segment Machines & Technologies, the net financial debt increased by 69.3 million EUR as the available cash was used to purchase Tessenderlo Group shares for 45.5 million EUR and Rieter shares for 50.9 million EUR. Within Tessenderlo Group, the HY21 net financial debt includes the payment, made during the first half of 2021, of a financial guarantee of 16.3 million EUR. This financial guarantee, through a cash deposit, was paid to Elia (the Belgian transmission system operator) as part of the prequalification file leading to the potential participation in the Belgian CRM (Capacity Remuneration Mechanism) auction in September 2021 for the construction of a second gas-fired power station in Tessenderlo (Belgium). If not successful in the CRM auction, the guarantee is expected to be reimbursed before year-end.

1.3.OPERATING SEGMENTS PERFORMANCE REVIEW

MACHINES & TECHNOLOGIES
(million EUR)	HY21	HY20	% change
Revenue	333.3	200.6	66%
Adjusted EBITDA	51.3	13.5	281%
Adjusted EBITDA margin	15%	7%
Adjusted EBIT	45.1	7.8	482%
Adjusted EBIT margin	14%	4%

After the heavy impact of the COVID-19 pandemic in the first half of 2020, the recovery – which started in the second half of 2020 – continued in 2021. Both the weaving machines activities (Picanol) as well as the other industrial activities (Proferro, PsiControl) showed a strong revenue increase. HY21 Adjusted EBITDA increased by 281% compared to last year as fixed costs did not increase proportionally to sales. This strong improvement in earnings was achieved despite the negative impact of rising component prices that could not be fully translated into higher sales prices, partly due to the large order book.

AGRO
(million EUR)	HY21	HY20	% change
Revenue	373.5	362.2	3%
Adjusted EBITDA	75.2	84.5	-11%
Adjusted EBITDA margin	20%	23%
Adjusted EBIT, excl. fair value adjustment	59.8	69.3	-14%
Adjusted EBIT margin excl. fair value adjustment	16%	19%
Adjusted EBIT	41.2	50.7	-19%
Adjusted EBIT margin	11%	14%

When excluding the foreign exchange effect, revenue increased by +9.6%, thanks to an increase of volumes, which were also impacted by the start of the partnership agreement between Tessenderlo Kerley International and Kemira Oyj (Kemira), which was announced in 2020, under which Kemira produces premium SOP fertilizers (both standard and water-soluble grade) at its plant in Helsingborg (Sweden) and Tessenderlo Kerley International partially markets these products.

The Adjusted EBITDA, when excluding the foreign exchange effect, remained in line with prior year (-3.5%). The segment was significantly impacted by the increase of raw material prices, such as sulfur, and also by increased transportation costs. While the Adjusted EBITDA of Tessenderlo Kerley International remained stable, the Adjusted EBITDA of NovaSource increased thanks to higher volumes. The Adjusted EBITDA of Crop Vitality decreased as higher sales volumes were more than offset by lower margins.

BIO-VALORIZATION
(million EUR)	HY21	HY20	% change
Revenue	297.4	287.6	3%
Adjusted EBITDA	41.8	45.3	-8%
Adjusted EBITDA margin	14%	16%
Adjusted EBIT, excl. fair value adjustment	24.5	28.1	-13%
Adjusted EBIT margin excl. fair value adjustment	8%	10%
Adjusted EBIT	23.5	26.7	-12%
Adjusted EBIT margin	8%	9%

Bio-valorization revenue, when excluding the foreign exchange effect, increased by +6.4%, mainly thanks to favorable market conditions and an improved product mix.

Adjusted EBITDA slightly decreased to 41.8 million EUR (or remained stable when excluding the foreign exchange effect) as favorable market circumstances for fats and proteins were offset by lower margins of some gelatin products.

INDUSTRIAL SOLUTIONS
(million EUR)	HY21	HY20	% change
Revenue	314.9	250.6	26%
Adjusted EBITDA	42.1	24.8	70%
Adjusted EBITDA margin	13%	10%
Adjusted EBIT, excl. fair value adjustment	28.4	10.1	181%
Adjusted EBIT margin excl. fair value adjustment	9%	4%
Adjusted EBIT	24.3	4.8	402%
Adjusted EBIT margin	8%	2%

Industrial Solutions revenue, when excluding the foreign exchange effect, increased by +26.8%, mainly thanks to the increase of volumes and sales prices within DYKA Group. While HY20 DYKA Group volumes were negatively impacted by the corona pandemic, HY21 included the full HY contribution of the production plant in La Chapelle-Saint-Ursin in France, which was only acquired during HY20. Also, the growth of the product portfolio positively impacted DYKA Group sales volumes.

The Adjusted EBITDA increased to 42.1 million EUR or increased by +72.8% when excluding the foreign effect, being impacted by the increase of DYKA Group sales volumes, by an improved product mix and by a further increase of production efficiency based on investments made. The significant increase of raw material purchase costs was offset by timely pricing management. Also the cessation of S8 Engineering had a positive impact on the HY21 evolution of the Adjusted EBITDA, while the Adjusted EBITDA of the other activities remained stable.

T-POWER
(million EUR)	HY21	HY20	% change
Revenue	35.2	34.6	2%
Adjusted EBITDA	25.6	27.4	-7%
Adjusted EBITDA-margin	73%	79%
Adjusted EBIT	6.7	8.9	-25%
Adjusted EBIT-margin	19%	26%

T-Power contributed 35.2 million EUR to the HY21 revenue and 25.6 million EUR to the HY21 Adjusted EBITDA of the group. These results were in line with expectations, as T-Power fulfilled all tolling agreement requirements. The Adjusted EBITDA decrease was mainly due to the ongoing development expenses for the construction of a second gas-fired power station in the Belgian municipality of Tessenderlo. At the beginning of July 2020, Tessenderlo Group started filing the relevant applications in order to participate in the Belgian Capacity Remuneration Mechanism (CRM) tender.

2. STATEMENT ON THE TRUE AND FAIR VIEW OF THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS AND THE FAIR OVERVIEW OF THE MANAGEMENT REPORT

Mr. Stefaan Haspeslagh (Chairman) and Mr. Luc Tack (Managing Director) certify, on behalf and for the account of Picanol Group, that, to their knowledge,

• a) the condensed consolidated interim financial statements, which have been prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the European Union, give a true and fair view of the financial position, income statement, statement of comprehensive income and statement of cash flows of the company, and the entities included in the consolidation as a whole,
• b) the management report includes a fair overview of the information required under Article 13, §5 and §6 of the Royal Decree of November 14, 2007, on the obligations of issuers of financial instruments admitted to trading on a regulated market.

3. CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS JUNE 30, 2021

3.1.CONDENSED CONSOLIDATED INCOME STATEMENT

(million EUR)	Notes	HY21	HY20
Revenue	6	1,354.3	1,135.6
Cost of sales		-1,025.6	-855.0
GROSS PROFIT		328.7	280.7
Distribution expenses		-65.3	-59.0
Administrative expenses		-66.7	-67.5
Sales and marketing expenses		-38.3	-38.0
Other operating income and expenses		-17.4	-17.3
Adjusted EBIT	6	140.9	98.8
EBIT adjusting items	8	2.1	0.4
EBIT (PROFIT/(LOSS) FROM OPERATIONS)		143.0	99.3
Finance (costs)/income – net	9	4.0	-10.3
Share of result of equity accounted investees, net of income tax		0.2	-1.2
PROFIT (+) / LOSS (-) BEFORE TAX		147.3	87.8
Income tax expense	10	-30.0	-15.2
PROFIT (+) / LOSS (-) FOR THE PERIOD		117.3	72.6
Profit (+) / loss (-) for the period. attributable to the non-controlling interest		41.8	36.0
PROFIT (+) / LOSS (-) FOR THE PERIOD. ATTRIBUTABLE TO THE EQUITY HOLDERS OF THE COMPANY		75.4	36.6
Basic earnings per share (in EUR)	15	4.3	2.1
Diluted earnings per share (in EUR)	15	4.3	2.1

3.2.CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(million EUR)	Notes	HY21	HY20
PROFIT (+) / LOSS (-) FOR THE PERIOD		117.3	72.6
Translation differences		10.0	-3.2
Net change in fair value of derivative financial instruments, before tax		1.1	-0.2
Income tax on other comprehensive income		-0.3	0.1
Share in other comprehensive income of joint ventures accounted for using the equity method		0.0	-0.1
Items of other comprehensive income that are or may be reclassified subsequently to profit or loss:		10.8	-3.4
Remeasurements of the net defined benefit liability, before tax	17	15.2	-7.6
Income tax on other comprehensive income		-1.0	0.2
Items of other comprehensive income that will not be reclassified subsequently to profit or loss:		14.2	-7.3
Other comprehensive income, net of income tax		25.0	-10.7
TOTAL COMPREHENSIVE INCOME		142.3	61.9
Total comprehensive income attributable to the non-controlling interest		54.6	30.7
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO THE EQUITY HOLDERS OF THE COMPANY		87.7	31.1

The accompanying notes are an integral part of these condensed consolidated interim financial statement.

3.3. CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(million EUR)	Notes	30/06/2021	31/12/2020
TOTAL NON-CURRENT ASSETS		1,693.0	1,651.6
Property, plant and equipment	12	1,068.2	1,061.8
Goodwill		42.1	42.1
Intangible assets	12	434.4	469.8
Investments accounted for using the equity method	7	71.8	20.0
Other investments and guarantees	6	27.8	10.3
Deferred tax assets		31.3	33.2
Trade and other receivables		17.5	14.4
TOTAL CURRENT ASSETS		1,191.5	1,111.1
Inventories	13	378.3	393.4
Trade and other receivables	13	449.4	342.2
Current tax assets	10	2.9	9.3
Short term investments	14/16	40.0	20.0
Cash and cash equivalents	14/16	319.2	345.9
Assets held for sale	7	1.9	0.3
TOTAL ASSETS		2,884.5	2,762.7
Equity attributable to equity holders of the company		898.3	816.3
Issued capital		21.7	21.7
Share premium		1.5	1.5
Reserves & retained earnings		875.0	793.0
Non-controlling interest	19	662.4	647.6
TOTAL EQUITY		1,560.6	1,463.8
TOTAL NON-CURRENT LIABILITIES		776.2	822.5
Loans and borrowings	16	379.8	393.2
Employee benefits	17	63.6	71.2
Provisions		134.1	141.8
Trade and other payables		4.3	14.5
Derivative financial instruments	18	22.9	25.3
Deferred tax liabilities		171.6	176.5
TOTAL CURRENT LIABILITIES		547.7	476.3
Bank overdrafts	16	0.0	0.0
Loans and borrowings	16	61.1	69.7
Trade and other payables	13	450.4	374.0
Derivative financial instruments	18	10.4	11.8
Current tax liabilities		5.6	3.7
Employee benefits	17	1.6	1.8
Provisions		18.5	15.1
Liabilities associated with assets held for sale	7	0.2
TOTAL EQUITY AND LIABILITIES		2,884.5	2,762.7

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

3.4. CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(million EUR)	Note	Issued capital	Share premium	Other reserves and retained earnings	Translation differences	Equity attributable to equity holders of the company	Non-controlling interest	Total equity
Balance on January 1, 2021		21.7	1.5	836.2	-43.2	816.3	647.6	1,463.8
Profit (+) / loss (-) for the period				75.4		75.4	41.8	117.3
Other comprehensive income:
- Translation differences					5.1	5.1	4.9	10.0
- Remeasurements of the net defined benefit liability, net of tax	17			6.8		6.8	7.4	14.2
- Net change in fair value of derivative financial instruments, net of tax				0.4		0.4	0.4	0.8
- Other movements				0.0		0.0	0.0	0.0
Comprehensive income, net of income taxes		0.0	0.0	82.6	5.1	87.7	54.6	142.3
Transactions with owners, recorded directly in equity
- Shares issued				0.0		0.0		0.0
- Dividends						0.0		0.0
- Acquisition of NCI without a change in control	19			-2.8	-2.9	-5.7	-39.8	-45.5
Total contributions by and distributions to owners		0.0	0.0	-2.8	-2.9	-5.7	-39.8	-45.5
Balance on June 30, 2021		21.7	1.5	916.0	-41.0	898.3	662.4	1,560.6

(million EUR)	Note	Issued capital	Share premium	Other reserves and retained earnings	Translation differences	Equity attributable to equity holders of the company	Non-controlling interest	Total equity
Balance on January 1, 2020		21.7	1.5	744.4	5.5	773.1	659.9	1,433.0
Profit (+) / loss (-) for the period				36.6		36.6	36.0	72.6
Other comprehensive income:
- Translation differences				-0.9	-1.2	-2.1	-1.1	-3.2
- Remeasurements of the net defined benefit liability, net of tax	17			-3.3		-3.3	-4.0	-7.3
- Net change in fair value of
derivative financial instruments, net of tax				-0.1		-0.1	-0.1	-0.1
- Other movements				0.0		0.0	0.0	0.0
Comprehensive income, net of income taxes		0.0	0.0	32.3	-1.2	31.1	30.7	61.9
Transactions with owners, recorded directly in equity
- Shares issued
- Dividends				-3.5		-3.5		-3.5
- Acquisition of NCI without a change in control	19			1.2		1.2	-20.5	-19.3
Total contributions by and distributions to owners		0.0	0.0	-2.3	0.0	-2.3	-20.5	-22.9
Balance on June 30, 2020		21.7	1.5	774.3	4.3	801.9	670.0	1,471.9

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

3.5. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(million EUR)	Notes	HY21	HY20
PROFIT (+) / LOSS (-) FOR THE PERIOD		117.3	72.6
Depreciation, amortization and impairment losses on tangible and intangible assets	6	95.1	97.1
Changes in provisions		-4.2	-3.6
Finance costs	9	11.7	17.5
Finance income	9	-15.7	-7.2
Loss/(profit) on sale of non-current assets		-1.1	-1.3
Share of result of equity accounted investees, net of income tax		-0.2	1.2
Income tax expense	10	30.0	15.2
Changes in inventories	13	25.7	24.8
Changes in trade and other receivables	13	-103.2	-25.5
Changes in trade and other payables	13	61.2	-15.8
Write-offs on inventories	6	-4.9	5.4
Other cash flows from operating activities		0.0	-7.0
Cash from operating activities		211.6	173.4
Income tax paid	10	-24.6	-17.3
Dividends received		0.1	0.1
Cash flow from operating activities		187.0	156.2
Acquisition of property, plant and equipment	6/12	-47.8	-45.0
Acquisition of intangible assets	6/12	-0.2	-1.0
Acquisition of subsidiaries net of cash acquired	7	0.0	-5.7
Acquisition of equity accounted investees	7	-50.9	-2.0
Cash deposit paid for prequalification CRM auction (T-Power)	6	-16.3
Proceeds from the sale of property, plant and equipment		0.6	5.1
Proceeds from te sale of subsidiaries, net of cash disposed of		0.0	-0.1
Increase in short term investments	14/16	-40.0
Decrease in short term investments	14/16	20.0
Cash flow from investing activities		-134.6	-48.7
Acquisition of non-controlling interest	19	-45.5	-19.3
Payment of lease liabilities	16	-11.2	-11.5
Proceeds from new borrowings	16	11.5	0.3
(Reimbursement) of borrowings	16	-34.1	-37.6
Interest paid		-5.9	-5.4
Interest received		2.5	1.4
Dividends paid		0.0	-3.5
Other cash flows from financing activities		2.2	-0.7
Cash flow from financing activities		-80.5	-76.4
Net increase / (decrease) in cash and cash equivalents	14/16	-28.2	31.1
Effect of exchange rate differences	14/16	1.4	-1.3
Cash and cash equivalents less bank overdrafts at the beginning of the period	14/16	345.9	290.2
Cash and cash equivalents less bank overdrafts at the end of the period	14/16	319.2	320.0

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

1.	REPORTING ENTITY13
2.	STATEMENT OF COMPLIANCE 13
3.	SIGNIFICANT ACCOUNTING POLICIES 13
4.	CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS 13
5.	RISKS AND UNCERTAINTIES 14
6.	SEGMENT REPORTING17
7.	ACQUISITIONS, DISPOSALS AND ASSETS QUALIFIED AS HELD FOR SALE 20
8.	EBIT ADJUSTING ITEMS21
9.	FINANCE COSTS AND INCOME22
10.	INCOME TAX EXPENSE22
11.	SEASONALITY OF OPERATIONS 22
12.	PROPERTY, PLANT AND EQUIPMENT AND OTHER INTANGIBLE ASSETS 22
13.	WORKING CAPITAL23
14.	CASH AND CASH EQUIVALENTS23
15.	EARNINGS PER SHARE 23
16.	LOANS AND BORROWINGS 24
17.	EMPLOYEE BENEFITS 24
18.	FINANCIAL INSTRUMENTS25
19.	NON-CONTROLLING INTEREST 26
20.	CONTINGENCIES26
21.	RELATED PARTIES 27
22.	SUBSEQUENT EVENTS 28

1. REPORTING ENTITY

Picanol nv (hereafter referred to as 'the company'), the parent company, is a company domiciled in Belgium. The condensed consolidated interim financial statements for the six month period ended June 30, 2021, comprises the company, its subsidiaries (together referred to as 'the group') and the group's interests in jointly controlled entities and associates.

2. STATEMENT OF COMPLIANCE

This condensed consolidated interim financial statements for the six month period ended June 30, 2021, have been prepared in accordance with International Financial Reporting Standard (IFRS) IAS 34 Interim Financial Reporting, as adopted for use by the European Union. It does not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the group as at and for the year ended December 31, 2020, which have been prepared in accordance with IFRS. The condensed consolidated financial information is denominated in EUR, the functional currency of the group, and rounded in million EUR.

This condensed consolidated interim financial statements was approved by the Board of Directors on August 25, 2021. This condensed consolidated interim financial statements have been reviewed, not audited.

3. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies used by the group in the present condensed consolidated interim financial statements are consistent with those used in the preparation of the consolidated financial statements as at and for the year ended December 31, 2020.

There are no new or amended standards or interpretations that are effective for the first time for the interim report for the six-month period ended June 30, 2021, that had a significant impact on the condensed consolidated interim financial statements.

For the six-month period ended June 30, 2021, the group has not early adopted any standard, interpretation or amendment that has been issued, but is not yet effective. The group is currently assessing the new rules, and at this stage, is not expecting any of these new rules to have a significant impact on the financial statements of the group.

The following exchange rates have been used in preparing the condensed consolidated interim financial statements:

		Closing rate	Average rate
1 EUR equals:	2021	2020	2021	2020
Brazilian real	5.90	6.37	6.49	5.41
Chinese yuan	7.67	8.02	7.79	7.75
Pound sterling	0.85	0.89	0.86	0.87
Romanian lei	4.92	4.86	4.90	4.81
Turkish lira	10.32	9.11	9.52	7.14
US dollar	1.18	1.22	1.20	1.10

4. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

The preparation of the condensed consolidated interim financial statements in conformity with IFRS as adopted for use by the European Union requires management to make judgments, estimates and assumptions that affect the application of the accounting policies, the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated interim financial statements and the reported amounts of revenue and expenses during the reporting period. Management bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making the reported amounts of revenue and expenses that may not be readily apparent from other sources. Actual results could differ from those estimates.

The areas of judgements, estimates and assumptions used in preparing the condensed consolidated interim financial statementsfor June 30, 2021, are the same as those applied and disclosed in the consolidated financial statements at December 31, 2020 with the exception of the judgment on the accounting treatment to be applied to the investment in Rieter (see note 7. Acquisitions).

5. RISKS AND UNCERTAINTIES

Under the explicit understanding that this is not an exhaustive list, the main risk factors and uncertainties for the group for the second semester of 2021 are listed below. Additional risks of which the group is not aware may possibly exist. There may also be risks that the group currently believes to be unimportant, but which can still have an adverse effect. The order in which the individual risks are presented is neither indicative of their likelihood to occur, nor of the severity or significance of the individual risks. Please note that in the 2020 annual report additional risks were included. For a more detailed overview of the major risks for the group, we refer to our 2020 annual report.

▪ Risk of an outbreak of an epidemic with a large geographical reach or pandemic

Due to its global presence, the group may be subject to the consequences of the local or worldwide spread of viruses that pose a risk to public health and may be serious and unexpected. Such outbreaks may have an impact on social life and the economy. The group believes that it is difficult to estimate the impact that the regional spread of viruses or a pandemic could have on the economies in which we operate, and therefore the impact that these factors could have on our financial results.

Since the first quarter of 2020, the COVID-19 pandemic has not only negatively affected social lives, but also the global economy. The group has taken all the necessary steps to ensure that it keeps its people safe and keep its plants and businesses running. This is because the group provides support for vital services and the flow of crucial goods. Subsidiary Tessenderlo Group supplies the basic chemicals for the production of drinking water based on side streams in the form of hydrochloric acid from the production of sulfate of potash (SOP). In addition, the group produces gelatin for medical and food applications, electricity, crop nutrition and crop protection products for agriculture and plastic pipe systems for maintaining drinking water supply systems and polluted water evacuation, while Akiolis protects the meat chain (in France).

The impact of the COVID-19 pandemic on the condensed consolidated interim financial statements of the group in the first six months of 2020 was not significant. The main impacts were:

• In February 2020, a disruption of production occurred at the Chinese plant in Nehe (PB Leiner) and Suzhou (segment Machines & Technologies), negatively impacting its volumes in the first half of 2020.
• In March/April 2020, a disruption of production occurred at Picanol's plant in Ieper (Belgium), at DYKA Group's plant in Sainte-Austreberthe (France), as well as a temporary closure of a number of John Davidson Pipes sales branches (United Kingdom).

These impacts did not occur in the first half of 2021.

However, both in the first semester of 2020 and 2021, travelling was restricted in many countries and major events, such as trade fairs, were cancelled.

Also in the first half of 2021, access to raw materials and auxiliary materials or means of transportation has become more complicated, although all plants and activities continued to run in line with expectations.

It remains difficult to estimate the future impact of the pandemic on the economies where the group is active, and hence the impact these factors might have on the financial results. Activities could be further impacted in the coming months if too many employees are impacted by COVID-19 and/or if access to raw materials and auxiliary materials or means of transportation becomes even more complicated, or if customers are no longer able to process or resell our products. Changes in market demand and customer behavior can impact the group's future sales, negatively impacting its results and cash flows.

The group also reviewed the areas involving significant accounting estimates and key judgments to assess the continuous impact of the COVID-19 pandemic. There were no significant changes in the assumptions and accounting estimates, to support the reported amounts of assets and liabilities, compared to those used in the 2020 consolidated financial statements. As the COVID-19 pandemic further evolves, potential changes in these views might occur in the second half of 2021.

The group's financial position is considered to be solid with a net financial debt of 81.7 million EUR as per June 30, 2021 (implying a leverage of only 0.2x) and the group has access to committed bi-lateral agreements (till December 2024) which are not used as per June 2021 (note 16 - Loans and borrowings). The COVID-19 impact on the 2020 and the 2021 first half year condensed consolidated interim financial statements was not significant, however the continued pandemic and related uncertainty might negatively impact the group's results in future periods. The group is holding on to the priorities set in prior year to keep its people safe and its plants and businesses running.

▪ The group is exposed to climate risks

Particularly in the operating segments Agro and Industrial Solutions, exceptional weather conditions, such as sustained heat waves, flooding or natural disasters can have an important impact on the operational results.

▪ The group is exposed to the risk of information technology failures

The group increasingly makes use of information technology systems to process, transmit and store electronic information and as such, to operate efficiently and interface. A significant portion of the communication between the group's personnel, customers and suppliers depends on information technology. The group is dependent on information systems to manage inventory, accounting, purchasing and sales applications and to maintain cost efficient operations. As with all large systems, the group's information systems may be vulnerable to a variety of interruptions due to events beyond its control, including, but not limited to, natural disasters, terrorist attacks, telecommunication failures, computer viruses, hackers or other security issues. These or other similar interruptions may disrupt the group's business, results of operation or financial condition.

▪ The group depends on the availability of sufficient volumes of raw materials with the required specifications at competitive prices

The group depends on the availability of sufficient volumes of raw materials, which meet the required specifications, against competitive prices. While the group sources most of its raw materials from multiple suppliers, some raw materials are sourced from only few suppliers. As such, the group relies on a number of third party suppliers and other business partners. If the market prices fall below the agreed minimum prices, the group may be required to purchase products at above-market prices.

▪ If the group is unable to sell, store, re-utilize or dispose of certain components that it produces, it may be required to limit or reduce its overall production levels

The group's operations are dependent on its ability to sell, store, re-utilize or otherwise dispose of certain components (such as by-products and co-products) which are produced in the course of the production process of various products. There can be no assurance that the group will be able to do this in the future and will not be required to reduce its overall production levels or invest in new treatment processes.

▪ The group's results are dependent on weather conditions and are subject to seasonality

Several of the group's activities are dependent on weather conditions. The group also has activities which are also subject to seasonality, whereby products are sold within a short timeframe. Products of the group's Agro operating segment must be supplied to the customers during the planting season. Bad weather conditions can disrupt this process, reduce the possibility to apply product and/or reduce the need for products. The group also sells products in the construction markets in several countries in the northern hemisphere, which are typically affected by winter weather conditions (operating segment Industrial Solutions).

▪ The group's current and future investments and/or constructions are subject to the risk of delays, cost overruns and other complications, and may not achieve the expected returns

The group currently has new projects which are under construction or in ramp-up phase. In addition, the group is implementing a number of major investment projects that are key to its strategy. These projects may be delayed, exceed the budget or the utilized technology may prove to be inadequate or may fail to reach the expected return.

▪ The group is exposed to an energy off-take agreement

The group sold the majority of its PVC/Chlor-Alkali activities in the third quarter of 2011. The electricity purchase agreement relating to that activity was not part of the sale transaction and therefore the group is still under an obligation to purchase certain quantities of electricity. As the group no longer needs the electricity for its own use, it needs to sell the electricity on the market until the end of the contract. The value of the contract is depending on the current and future difference between market electricity prices and the generation cost based on market gas prices, and on the effect of the hourly pricing optimization as foreseen in the contract. Based on today's electricity prices and the current price of electricity futures, the contract has a negative value in the condensed consolidated interim financial statements as per June 30, 2021 (-16.1 million EUR).

▪ The group's results are sensitive to commodity prices

The group is sensitive to commodity prices. As the group is a diversified specialty group that is worldwide active in many areas of agriculture, food, water management, efficient (re)use of natural resources and other industrial markets, the impact of changes of some raw material prices might have a significant impact on the results of individual activities, however is not expected to have a material impact on the results of operating segments or the group.

▪ The group may be exposed to product liability and warranty claims, including but not limited to liability in respect of food safety

The group's products are subject to increasingly stringent industry, regulatory and customer requirements. The activities of the group may expose the group to product liability and warranty claims. The products manufactured by the group are used in various downstream applications including, but not limited to, the food, cosmetics, nutraceutical and pharmaceutical industry and may contain undetected errors or defects, which may lead, for example, to product recalls, increased customer service and support, payment of monetary damages to customers, lawsuits and loss of customers. In addition, the group cannot exclude that customers incorrectly apply the group's products.

▪ The group may not be able to recruit and retain key personnel

The group may not be able to recruit and retain competent personnel for key roles. The group's success depends to a significant extent upon its ability to attract and retain qualified management, scientific, technical, marketing and sales personnel and upon the continued contributions of such personnel. The group's employees may voluntarily terminate their employment at any time. There is no guarantee that the group will be successful in attracting and/or retaining qualified employees to replace existing employees or to further support its growth strategy. The loss of the services of key personnel or the inability to attract additional qualified personnel may have a material adverse effect on the business and its expertise, results of operation or financial condition. Potential impacts might include: loss of knowledge of key systems and specialized skills resulting in a skills and competency gap, high staff turnover, customer dissatisfaction, failure to meet business objectives, increased re-hiring costs, loss of customers because of the customer-employee relationships. Although the group believes that it is well positioned to attract and retain skilled and experienced personnel, there can be no assurance that it will be able to do so. The inability to do so could have a material adverse effect on the group's business, results of operation or financial condition.

▪ The group may be exposed to circumstances of geo-political nature

The group could be impacted by the political uncertainty caused by circumstances of geo-political nature that could have an impact on the consumer trust.

▪ Risk related to the development of the economic and business cycle

The future results of the group's Machines & Technologies segment are highly dependent on the evolution of the textile industry. Unexpected changes in the economic climate, customers' investment cycles, important developments in production and market acceptance of technologies may affect these industries and, consequently, the group's results.

▪ The group is exposed to risks associated with growth economies

A substantial part of the activities of Picanol (Machines & Technologies segment) can be attributed to emerging markets in Asia and South America. Picanol's activities in these markets are subject to the usual risks associated with doing business in developing economies, such as political and economic uncertainties, currency controls, exchange rate fluctuations and shifts in government policy.

▪ The group is exposed to a variety of financial risks such as credit risk, liquidity risk, currency risk and interest risk

▪ Credit risk

The maximum exposure to credit risk amounts to 853.4 million EUR as of June 30, 2021. This amount mainly consists of current and non-current trade and other receivables, including trade receivables classified as held for sale (467.8 million EUR), the loan granted by Tessenderlo Kerley, Inc. to Jupiter Sulphur LLC (10.2 million EUR), the financial guarantee (16.3 million EUR) included in other investments and guarantees, which was paid to Elia (the Belgian transmission system operator) as part of the prequalification file leading to the potential participation in the Belgian CRM (Capacity Remuneration Mechanism) auction in September 2021 for the construction of a second gas-fired power station in Tessenderlo (Belgium), short term investments (40.0 million EUR) and cash and cash equivalents (319.2 million EUR).

▪ Liquidity risk

The group limits this risk through a series of actions:

• The setup of a factoring program at the end of 2009, which is put on hold since 2015.
• A capital increase of 174.8 million EUR on December 19, 2014, within Tessenderlo Group.
• The issuance in July 2015 of two series of bonds, with a maturity of 7 years (the '2022 bonds') and 10 years (the '2025 bonds'). The total issue amount was 250.0 million EUR, of which 192.0 million EUR for the 2022 bonds and 58.0 million EUR for the 2025 bonds.
• The refinancing of T-Power nv in 2019, bringing the new term loan facility to 193.0 million EUR reimbursable in the period June 2019-June 2026.
• The replacement of the syndicated facility agreement in December 2015 by 5 year committed bilateral credit lines for a total amount of 142.5 million EUR (of which part can be drawn in USD) with four banks. These facilities were renewed for 5 years in December 2019, have no financial covenants and ensure maximum flexibility for the different activities. There have been no withdrawals as per June 30, 2021.
• The group uses a commercial paper program of maximum 200.0 million EUR.
• Picanol nv has non-committed credit lines for 57.1 million EUR excluding bank guarantees or 64.1 million EUR including bank guarantees.

▪ Currency risk

The currencies given rise to this risk is primarily USD (US Dollar). This exposure is mainly due to intragroup loans and cash and cash equivalents which are not hedged.

▪ Interest risk

The financial debt position is funded by fixed and variable interest rate instruments. The variable interest rate instruments are, for the majority, hedged through forward rate agreements. The bonds, issued in July 2015 for an amount of 192.0 million EUR with a maturity of 7 years and 58.0 million EUR with a maturity of 10 years, are the main fixed interest rate instruments with an interest rate of 2.875% and 3.375% respectively. The T-Power nv loan (128.7 million EUR as per June 30, 2021) is a variable interest rate instrument, for approximately 80% hedged through a series of interest rate swaps.

6. SEGMENT REPORTING

The group has 5 operating segments based on the principal business activities, economic environments and value chains in which they operate, as defined under IFRS 8 Operating Segments. The customers and main markets of these segments are different. The 5 operating segments fulfill the quantitative thresholds and are reported separately. The information provided below is consistent with the information that is available and evaluated regularly by the Chief Operating Decision Maker (the Executive Committee).

• 'Machines & Technologies': covers the production, development and sale of high-tech weaving machines and other "original equipment manufacturers" industrial products. This segment includes the Weaving Machines (Picanol), Foundry and Mechanical Finishing (Proferro), and Electronics Development and Production (PsiControl) activities. These components are not considered to be separate operating segments.
• 'Agro': includes production, trading and distribution of crop nutrients and crop protection products and includes the following businesses: Crop Vitality, Tessenderlo Kerley International and NovaSource. These activities individually meet the definition of a business segment and were aggregated under the operating segment "Agro" in line with the stipulations under IFRS 8.12. This aggregation was possible because these activities sell the same or similar products, their production process is similar and these activities have the same or the same type of customers, while the distribution method of the products is also similar. In addition, there is close cooperation between these activities and management makes decisions that simultaneously have an impact on the various activities.
• 'Bio-valorization': includes collecting and processing of animal by-products; production and distribution of gelatins and collagen peptides and rendering, production and sales of proteins and fats and includes the following businesses: PB Leiner and Akiolis. These activities individually meet the definition of a business

segment and were aggregated under the segment "Bio-valorization" in line with the stipulations under IFRS 8.12. This aggregation was possible because these activities sell the same or similar products, their production process is similar and these activities have the same or the same type of customers, while the distribution method of the products is also similar. In addition, there is close cooperation between these activities and management makes decisions that simultaneously have an impact on the various activities.

• 'Industrial Solutions': includes all possible water applications (water transport, water treatment, leaching, recovery of water from industrial processes). This segment includes the following distinguishable commercial names: DYKA Group (with DYKA, JDP and BT Nyloplast), Mining and Industrial, Performance Chemicals and MPR/ECS. These components are not considered to be separate operating segments.
• 'T-Power': includes a gas-fired 425 MW power plant in Tessenderlo (Belgium). A tolling agreement was concluded with RWE group for a period of 15 years (until 2026) for the full capacity of the plant, with an optional 5-year extension thereafter.

The costs included within Adjusted EBIT, related to the corporate activities, are allocated to the different operating segments they support. Transfer prices between operating segments are in a manner similar to transactions with third parties. The measure of segment profit/loss is Adjusted EBIT, which is consistent with information that is monitored by the chief operating decision maker.

The group is a diversified industrial group that is worldwide active in many areas of mechanical engineering, agriculture, food, water management, efficient re(use) of natural resources and other industrial markets. The products of the group are used in various applications, industrial and consumption markets. Although a leadership position is occupied by the group in a number of diverse markets, the diversification of the group's revenue makes the group not reliant on major customers.

The majority of the group's revenue consists of the sale of goods. Products are generally sold directly or through distributorsto the customers. Revenue is therefore recognized when the goods are delivered to the customers, where the point of recognition is dependent on the contract sales terms, known as the International Commercial terms (Incoterms). The group also recognizes revenue from the sale of services. These mainly relate the collection of organic materials within Akiolis (operating segment Bio-valorization), and water treatment services at industrial mining, refinery and oil and gas exploration water treatment locations within MPR and ECS (operating segment Industrial Solutions). In this case, the revenue is recognized when the customers obtain control of the services, predominantly at a point in time. For revenue out of projects, the amount of revenue is measured by reference to the progress made towards complete satisfaction of the performance obligation. These projects generally have a lifetime of less than one year.

The major line items of the income statement and statement of financial position are shown per operating segment in the table below. The income statement information is for the six-month period ended June 30, while information from the statement of financial position is compared to December 31, 2020, figures.

		Machines & Technologies		Agro		Bio-valorization		Industrial Solutions		T-Power	Non-	allocated	Picanol Group
(million EUR)	2021	2020	2021	2020	2021	2020	2021	2020	2021	2020	2021	2020	2021	2020
Revenue (internal and external)	333.3	200.6	373.9	362.8	297.4	287.6	315.1	250.9	35.2	34.6	0.0	0.0	1,355.0	1,136.5
Revenue (internal)			0.4	0.6	0.0		0.2	0.3	0.0				0.7	0.9
Revenue	333.3	200.6	373.5	362.2	297.4	287.6	314.9	250.6	35.2	34.6			1,354.3	1,135.6
Of which:
- At a point in time	333.3	200.6	373.5	362.2	297.4	287.6	314.9	249.6	35.2	34.6	0.0	0.0	1,354.3	1,134.6
- Over time			0.0		0.0		0.0	1.0	0.0				0.0	1.0
Adjusted EBIT	45.1	7.8	41.2	50.7	23.5	26.7	24.3	4.8	6.7	8.9			140.9	98.8
Adjusted EBITDA	51.3	13.5	75.2	84.5	41.8	45.3	42.1	24.8	25.6	27.4			236.0	195.5
Return on revenue (Adjusted EBITDA/revenue)	15.4%	6.7%	20.1%	23.3%	14.1%	15.8%	13.4%	9.9%	72.7%	79.2%			17.4%	17.2%
Segment assets	270.4	212.4	804.2	831.8	486.2	470.8	427.8	397.3	347.5	365.4	58.4	55.7	2,394.4	2,333.3
Derivative financial instruments											0.0	0.0	0.0	0.0
Investments accounted for using the equity method	50.9	0.0	15.0	14.2	5.9	5.7	0.0	0.0	0.0	0.0	0.0	0.0	71.8	20.0
Other investments and guarantees									16.3		11.5	10.3	27.8	10.3
Deferred tax assets											31.3	33.2	31.3	33.2
Short term investments											40.0	20.0	40.0	20.0
Cash and cash equivalents											319.2	345.9	319.2	345.9
Total assets	321.3	212.4	819.2	846.1	492.1	476.5	427.8	397.3	363.8	365.4	460.4	465.1	2,884.5	2,762.7
Segment liabilities	161.1	114.6	74.0	78.2	155.2	156.3	109.8	87.2	8.6	8.9	169.7	177.0	678.2	622.2
Derivative financial instruments											33.3	37.1	33.3	37.1
Loans and borrowings											440.9	463.0	440.9	463.0
Deferred tax liabilities											171.6	176.5	171.6	176.5
Total equity											1,560.6	1,463.8	1,560.6	1,463.8
Total Equity and Liabilities	161.1	114.6	74.0	78.2	155.2	156.3	109.8	87.2	8.6	8.9	2,376.0	2,317.4	2,884.5	2,762.7
Capital expenditures: property, plant and equipment and intangible assets (note 12)	6.9	4.9	10.5	12.7	20.5	17.9	9.0	7.5	1.0	2.1	0.2	0.9	48.1	46.0
Depreciation, amortization and impairment losses on tangible assets, goodwill and intangible assets	6.2	5.7	33.9	33.8	18.3	18.6	17.8	20.4	18.8	18.6	0.0	0.0	95.1	97.1
Reversal/(additional) inventory write-offs	3.6	-3.0	0.8	-0.8	1.2	-1.3	-0.6	-0.3					4.9	-5.4

The increase of the segment assets and libailities in Machines & Technologies is caused by higher trade receivables, and -payables and higher inventory levels due to the increased volumes and also caused by delays in boat shipments resulting from the current supply chain disruptions.

Investments accounted for using the equity method in segment Machines & Technologies are the Rieter shares purchased in March 2021 (see note 7 "Acquisitions and disposals").

The T-Power Other investments and guarantees for 16.3 million EUR relate to a financial guarantee, which was paid to Elia (the Belgian transmission system operator) as part of the prequalification file leading to the potential participation in the Belgian CRM (Capacity Remuneration Mechanism) auction in September 2021 for the construction of a second gas-fired power station in Tessenderlo (Belgium). If successful in this auction, the Group will build a new gas-fired power plant, which should be operational by November 1, 2025. Penalties are due in case of delays or missing capacities during pre-delivery period, while penalties are also due in case of unavailable capacities during the delivery period, for which the guarantee is provided as financial security. If not successful in the CRM auction, the guarantee is expected to be reimbursed before year-end. The cash deposit will not accumulate interest. The cash guarantee is included in "Other investments and guarantees" in the statement of financial position.

The increase of the Industrial Solutions segment assets and liabilities is mainly linked to the increase of trade receivables and payables, which were impacted by a higher activity, by timing and by the increase of raw material purchase costs.

Non-allocated segment liabilities mainly include environmental provisions recognized for the plants in Belgium (Ham, Tessenderlo, Vilvoorde) and France (Loos).

In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of customers. Non-current segment assets (property, plant and equipment, goodwill, intangible assets and related non-current assets qualified as held for sale) are based on the geographical location of the assets.

	Revenue by market		Non-current segment assets
(million EUR)	30/06/2021	30/06/2020	30/06/2021	31/12/2020
Europe	655.5	561.2	990.6	1,008.0
North-America	356.1	345.1	483.9	495.0
South-America	41.8	37.9	50.7	50.6
Asia	270.8	164.5	12.2	12.5
Other	30.1	26.9	7.9	7.6
Total	1,354.3	1,135.6	1,545.3	1,573.8

The decrease of the non-current segment assets in Europe is mainly due to the amortization of the fair value adjustments of T-Power nv, acquired in 2018. The purchase price allocation resulted in the recognition of a customer list for an amount of 163.7 million EUR and represented the fair value of a tolling agreement which was concluded with RWE group for a period of 15 years (until June 2026) for the full capacity of the plant. This customer list is being amortized over the remaining duration of the tolling agreement.

The decrease of the non-current segment assets in North America is due to the amortization of the fair value adjustments on the tangible and intangible assets of Tessenderlo Group in the US (-18.6 million EUR). This is partially offset by the strengthening of the USD (the USD/EUR closing rate was 1.2271 as per year-end 2020 compared to 1.1884 as per June 2021).

7. ACQUISITIONS, DISPOSALS AND ASSETS QUALIFIED AS HELD FOR SALE

In March 2021, Picanol Group acquired a minority stake of 10% in Rieter Holding AG (CH) for a price of 45.4 million EUR (or a price per share of 107.5 CHF). Rieter is the world's leading supplier of systems for short-staple fiber spinning. The company develops and manufactures machinery, systems and components used to convert natural and man-made fibers into yarns. With this financial participation, Picanol Group wants to further diversify its activities in the textile industry. During 2021, Picanol Group inceased it's share to 10.9% which brings the total amount invested to 50.9 million EUR. Together with Symphony Mills, which is also controlled by Picanol's reference shareholder, Mr Luc Tack, the ownership% amounts to 14.7% on June 30, 2021. Based on a share price on June 30 of CHF 180.8, the fair value of the Rieter shares amount to 75.3 million EUR which is 24.4 million more than the book value.

Picanol Group analysed the accounting treatment to be applied to the investment in Rieter and particularly the classification in "investments in associates" (IAS28) versus "other equity investments" (IFRS9). In accordance with IAS28 it is assumed that a Group does not exercise significant influence if the share holding percentage is less than 20%, unless significant influence can be clearly demonstrated. The existence of significant influence by an entity is usually evidenced in one or more of the following ways: (a) representation on the Board of Directors or equivalent governing body of the investee; (b) participation in policy-making processes, including participation in decisions about dividends or other distributions; (c) material transactions between the entity and its investee; (d) interchange of managerial personnel; or (e) provision of essential technical information.

Picanol Group is represented on Rieter's Board of Directors by 2 directors out of 8 which has led to the conclusion that on June 30, 2021, Picanol has significant influence over Rieter. The representation on Rieter's Board of Directors does not arise from a contractual right but is subject to an annual vote by Rieter's shareholders' meeting. Picanol Group will re-evaluate on December 31, 2021, it's conclusion regarding the existence of siginificant influence.

In the first semester 2020, the group completed the acquisition of a production plant in La Chapelle-Saint-Ursin (France). On May 1, 2020, the group obtained 100% control over these activities through a new created company DYKA Tube SAS and integrated the plant within the DYKA Group activity (operating segment Industrial Solutions). As of the acquisition date, the group recognized the fair value of the identifiable assets acquired and the liabilities assumed. Fair value adjustments, on which deferred tax assets and liabilities were recognized, mainly related to property, plant and equipment and inventories. The group did not obtain, within one year to the acquisition, new information about facts and circumstances that existed at the date of acquisition, which would have resulted in a revision of the acquisition accounting. The contribution to the group's first half year 2021 revenue amounts to approximately 15 million EUR (first half year 2020: not significant), while the contribution to the group's result was insignificant in both the first half of 2020 and 2021.

Disposals

There were no disposals in the first half of 2021.

Assets qualified as held for sale

In August 2021, the group came to an agreement to divest the MPR and ECS activities (operating segment Industrial Solutions). The divestment comprises the main assets of these activities. The yearly contribution of MPR and ECS to the group's results was not significant. In accordance with IFRS 5 Non-current assets held for sale and discontinued operations, the assets of the disposal groups were recognized, as per June 30, 2021 at the lower of their carrying amount and the fair value less cost to sell. As the expected sales price exceeded the carrying amount, no impairment loss was deemed necessary. The assets are presented in the statement of financial position as "Assets classified as held for sale" (3.7 million EUR) and "Liabilities associated with assets classified as held for sale" (0.2 million EUR), and include "Property, plant and equipment" (0.6 million EUR), "Goodwill" (2.2 million EUR), current "Trade and other receivables" (1.0 million EUR) and current "Trade and other payables" (0.2 million EUR). The sales are expected to be completed in the second half of 2021 and will lead to an insignificant result, which will be included within EBIT adjusting items.

The assets held for sale at June 30, 2021 also include the remaining assets (land & buildings) of Burcklé (segment Machines & Technologies) for 0.3 million EUR.

8. EBIT ADJUSTING ITEMS

The first half year 2021 EBIT adjusting items amount to 2.1 million EUR and mainly include:

• The result on the sale of several individual, non-significant assets, mainly land and buildings, for which the proceeds of the sale and the remaining carrying amount were insignificant.
• Changes to existing provisions, including the impact of the increase in discount rate applied to the environmental provisions.
• The impact and revaluation of an electricity purchase agreement, for which the own-use exemption under IAS 39 is not applicable anymore.
• Several other individually less significant items.

9. FINANCE COSTS AND INCOME

Net finance costs and income amount to 4.0 million EUR as per June 30, 2021, compared to -10.3 million EUR as per June 30, 2020, and mainly include:

• Borrowing costs for -4.9 million EUR (HY20: -4.9 million EUR) including the accrued interest charges on the bonds issued in 2015 with a maturity of 7 years and 10 years (-3.3 million EUR), the interest expenses on the term loan facility of T-Power nv, and the interest expenses on lease liabilities (in accordance with IFRS 16 Leases).
• Net foreign exchange gains and losses for +7.3 million EUR (HY20: -6.8 million EUR), mainly explained by unrealized foreign exchange gains and losses on intercompany loans and cash and cash equivalents (mainly in USD), which are not hedged.
• The depreciation of the fair value adjustment on the bonds for +1.3 million EUR.

10. INCOME TAX EXPENSE

Income taxes amounted to -30.0 million EUR in the first half of 2021, compared with -15.2 million EUR in tax charges in the same period last year and mainly relates to the operations in the United States and Belgium.

The income taxes paid in HY21 amount to -24.6 million EUR (HY20: -17.3 million EUR), while the income tax receivable, mainly in the United States and Belgium, decreased from 9.3 million EUR as per December 31, 2020, to 2.9 million EUR as per June 30, 2021.

Deferred tax assets on fiscal losses carried forward are recognized for 33.3 million EUR (December 2020: 33.5 million EUR). These are mainly recognized on Tessenderlo Group nv for an amount of 12.1 million EUR and in France for a total of 18.3 million EUR. The other deferred tax assets on fiscal losses carried forward recognized amount to 2.9 million EUR. As per June 2021, total tax losses and tax credits carried forward in Tesssenderlo Group nv amount to approximately 187 million EUR, while these amount to approximately 49 million EUR in France.

11. SEASONALITY OF OPERATIONS

Picanol Group demonstrates a limited seasonality pattern at group level for revenue and operating profitability level as expressed by Adjusted EBITDA. The degree of seasonality at group level is primarily determined by selling to customers in several end markets, including food, pet food, construction, agriculture and water treatment. Two important end markets which demonstrate seasonal characteristics are construction and agriculture. The group sells into the construction markets through its operating segment Industrial Solutions in several countries in the northern hemisphere, which are typically impacted by winter weather conditions in the first and fourth quarter. Agriculture related sales made in the operating segment Agro are influenced by the planting seasons, especially the spring planting season. Most of the sales of Crop Vitality – being part of the Agro operating segment – are in the United States, and this normally leads to higher sales and operating profitability in the first half of the year. Agro is the largest contributor to the group operating profitability, which explains why group operating profitability is typically higher in the first half year.

12. PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS

For the six-month period ended June 30, 2021, the group's capital expenditure amounted to 48.1 million EUR (HY20: 46.0 million EUR). The investments in tangible fixed assets and intangible assets per operating segment are explained in note 6 – Segment reporting.

The majority of the capital expenditure relates to:

• investments in a new high bay warehouse for Proferro in Ieper and a new production site for PsiControl in Romenia (operating segment Machines & Technologies);
• investments in the valuation of gelatin side streams and in the optimization of the valorization of animal by-products (operating segment Bio-valorization);
• investments in additional storage capacity within the operating segment Agro;

• investments in production efficiency improvements within DYKA group (operating segment Industrial Solutions);

• advance payments made for the construction of a new Thio-Sul manufacturing plant (operating segment Agro);

• the replacement of equipment and vehicles, which were previously leased, through purchase.

13. WORKING CAPITAL

Working capital
(million EUR)	30/06/2021	31/12/2020	30/06/2020
Inventories	378.3	393.4	352.9
Current trade and other receivables	449.4	342.2	381.3
Current trade and other payables	-450.4	-374.0	-329.9
Working capital	377.3	361.6	404.3

The working capital decreased from 404.3 million EUR as per June 30, 2020, to 377.3 million EUR as per June 30, 2021. Inventories as per June 30 are lower compared to December 31, 2020, as inventory is built up in the second half of the year for the upcoming planting season within the operating segment Agro. Trade receivables as per June 30, 2021 were not only impacted by seasonality, but also by higher sales volumes and prices, driven by the increase of raw material purchase costs within the operating segments Machines & Technologies, Agro and Industrial Solutions. The increase in trade payables can mainly be explained by timing and increasing raw material purchase costs. The increase in other payables can be explained by the accrued charges (10.5 million EUR) for a long-term incentive plan for members of senior management. This long-term incentive plan covers a 3 year period (calendar years 2019-2021), with pay-out in April 2022, based on pre-set performance metrics of the group, and was recognized within non-current other payables as per December 31, 2020.

The group expects to recover or settle the inventory, available as per June 30, 2021, within the next twelve months, except for the inventory of non-strategic spare parts (15.6 million EUR as per HY21, compared to 17.3 million EUR as per December 31, 2020). These parts will be used whenever deemed necessary.

14. CASH AND CASH EQUIVALENTS

Cash and cash equivalents amount to 319.2 million EUR as per June 30, 2021 (compared to 345.9 million EUR as per 31/12/2020). These include amounts in USD equaling 30.4 million EUR (compared to 27.8 million EUR on December 31, 2020).

As per June 30, 2021, an investment in short term bank notes is outstanding for a total of 40.0 million EUR. The counterparty is a highly rated international bank. The notes have an original duration of 9 months (maturing in December 2021 and in January 2022). As these notes have an initial maturity of more than three months, they are not included within "Cash and cash equivalents", but in "Short term investments".

15. EARNINGS PER SHARE

Basic earnings per share

	HY21	HY20
Adjusted weighted average number of ordinary shares at June 30	17,700,000	17,700,000
Profit (+) / loss (-) attributable to equity holders of the company (million EUR)	75.4	36.6
Basic earnings per share (in EUR)	4.3	2.1

Diluted earnings per share

The diluted earnings per share of Picanol Group is equal to the basic earnings per share, both for HY20 and for HY21.

16. LOANS AND BORROWINGS

(million EUR)	30/06/2021	31/12/2020
Non-current loans and borrowings	379.8	393.2
Current loans and borrowings	61.1	69.7
Total loans and borrowings	440.9	463.0
Cash and cash equivalents	-319.2	-345.9
Short term investments	-40.0	-20.0
Net loans and borrowings	81.7	97.1

As per June 30, 2021, the group net financial debt amounted to 81.7 million EUR (implying a leverage of 0.2x), compared to 97.1 million EUR by the end of 2020.

The non-current loans and borrowings include two series of bonds, issued in July 2015, with a maturity of 7 years (the "2022 bonds") and 10 years (the "2025 bonds"), both with a fixed rate of 2.875% and 3.375% respectively. These bonds do not contain any covenants. In 2020, the group repurchased "2022 bonds" for a nominal amount of 0.1 million EUR at a price of 101.5%. Interest charges, payable in July 2021, have been accrued for an amount of 6.5 million EUR as per June 30, and are included in current "Trade and other payables" in the statement of financial position.

The T-Power term loan facility agreement amounts to 128.7 million EUR as per June 30, 2021 (December 31, 2020: 141.5 million EUR). The T-Power nv assets and shares are serving as guarantee for the loan. The term loan credit facility contains a covenant stating a minimum required debt service cover ratio (based on the last 12 months cash flow available for debt service). This covenant has been complied with as per June 30, 2021.

The lease liability, in accordance with IFRS 16 Leases, amounts to 57.8 million EUR (December 31, 2020: 56.3 million EUR), of which 38.7 million EUR is included in non-current and 19.1 million EUR in current loans and borrowings.

Picanol nv (segment Machines & Technologies) took up a straight loan of 10 million EUR to finance short term working capital needs.

Tessenderlo Kerley, Inc. has a loan outstanding of 5.7 million EUR, of which 0.8 million EUR is current. The loan has a maturity of 10 years (2018-2028) at a fixed rate of 3.95%. The financed Phoenix headquarters building (Arizona, United States) is serving as guarantee for the loan.

Tessenderlo Group nv has a loan outstanding to finance the purchase of vehicles within the operating segment Bio-valorization, which were previously leased. The loan has a maturity of 5 years (2020-2025) at a fixed rate of 0.33% and has no financial covenants. As per June 30, 2021, 6.3 million EUR remains outstanding of which 1.7 million EUR is current.

The group has access to a Belgian commercial paper program of 200.0 million EUR which remained unused at the end of June 2021 (while 19.0 million EUR was used at December 31, 2020, included in current loans and borrowings).

There has been no drawdown as per June 30, 2021 on the 5 year committed bi-lateral credit lines, which were renewed for 5 years in December 2019. The amount of the committed credit lines amounts to 142.5 million EUR (of which part can be drawn in USD).

17. EMPLOYEE BENEFITS

The application of IAS 19 Employee benefits as per June 30, 2021 led to an increase of equity, before tax, by 15.2 million EUR and is mainly the result of an increase of the rate used to discount the obligations (weighted average discount rate of 1.0% as per June 30, 2021 compared to 0.7% at year-end 2020) and a higher than expected return on the Belgian and UK plan assets. The defined benefit liability recognized in the statement of financial position decreased to 53.1 million EUR per June 30, 2021 (61.0 million EUR as per December 31, 2020), while a UK net pension asset is recognized for 11.7 million EUR (5.1 million EUR as per December 31, 2020).

18. FINANCIAL INSTRUMENTS

The fair value of non-current loans and borrowings at fixed interest rate, measured at amortized cost, is in line with the fair value as disclosed in the consolidated financial statements as per December 31, 2020. The fair value of trade and other receivables, other investments and guarantees, short term investments, cash and cash equivalents, current loans and borrowings, and trade and other payables approximate their carrying amount.

The following table shows the carrying amounts of derivative financial instruments measured at fair value in the statement of financial position including their levels in the fair value hierarchy:

	June 30, 2021
(million EUR)		Carrying amount balance sheet			Fair value hierarchy
	Current assets	Non current assets	Current liabilities	Non current liabilities	Level 1	Level 2	Level 3	Total
Foreign currency swaps	0.0	-	-0.0	-	-	0.0	-	-0.0
Interest rate swaps	-	-	-6.0	-11.1	-	-17.1	-	-17.1
Electricity forward contracts	-	-	-4.3	-11.8	-	-	-16.1	-16.1
Total	0.0	-	-10.4	-22.9	-	-17.1	-16.1	-33.3

	December 31, 2020
(million EUR)	Carrying amount balance sheet					Fair value hierarchy
	Current assets	Non current assets	Current liabilities	Non current liabilities	Level 1	Level 2	Level 3	Total
Foreign currency swaps	0.0	-	-0.0	-	-	-0.0	-	-0.0
Interest rate swaps	-	-	-6.7	-14.3	-	-21.0	-	-21.0
Electricity forward contracts	-	-	-5.1	-11.0	-	-	-16.1	-16.1
Total	0.0	-	-11.8	-25.3	-	-21.0	-16.1	-37.1

The derivative financial instruments as per June 30, 2021, mainly relate to:

• the interest rate swaps of T-Power nv for an amount of -17.1 million EUR (December 31, 2020: -21.0 million EUR);
• an electricity forward contract, with maturity date in June 2026, for an amount of -16.1 million EUR (December 31, 2020: -16.1 million EUR).

The decrease of the fair value of the interest rate swaps is mainly related to the half yearly payments for forward rate agreements reaching their maturity date. The settlement of the agreements resulted in a cash out of -3.5 million EUR as per June 30, 2021 and is included in the line "Interest paid" in the condensed consolidated statement of cash flows. The effective portion of the change in fair value is recognized in the hedging reserves (Other comprehensive income).

The fair value of the electricity forward contract is calculated as per June 30, 2021 based on a valuation model, leading to a net fair value of -16.1 million EUR, in line with the fair value as per December 31, 2020. Because of significant unobservable inputs, a level 3 fair value measurement is applied for the fair value measurement of the electricity purchase agreement ('PPA' - Purchase Power Agreement), for which the own-use exemption under IFRS 9 is not applicable anymore. The value of the contract is depending on the future difference between market electricity prices and the generation cost based on market gas prices (the "sparkspread"), and on the effect of the hourly pricing optimization as foreseen in the contract. If the 2024 key assumptions would also have been applied for the remaining period till June 2026, a period for which no market data is available, the fair value of the contract (2021-June 2026) would have amounted to -28.1 million EUR. The valuation techniques and unobservable date used for measuring the fair value of the contract are in line with those used in the consolidated financial statements as per December 31, 2020. Also the sensitivity of the valuation to changes in the principal assumptions is in line with the one disclosed in the consolidated financial statements as per December 31, 2020. We refer to the 2020 consolidated financial statements for more information on the fair value calculation of the electricity forward contract.

19. NON-CONTROLLING INTEREST

During the first half of 2021, Picanol, through its subsidiary Verbrugge nv, acquired 1,316,165 shares of Tessenderlo Group for a total value of 45.5 million EUR (at an average share price of 34.6 EUR). This resulted in a decrease of the non-controlling interest with 3.0% from 53.2% per December 31, 2020, to 50.1% per June 30, 2021.

In accordance with article 7:53 of the Belgian Code of Companies and Associations, Tessenderlo Group has introduced a loyalty voting right for each fully paid-up share that has continuously been registered in the share register on the name of the same shareholder for at least two years. In its last transparency notification in June 2021, Verbrugge nv and Symphony Mills nv announced that they jointly owned 67.9% of the voting rights of Tessenderlo Group.

There are no restrictions on dividend distribution for example from specific debt covenants imposed on Tessenderlo Group.

		Non-controlling interest percentage
	Country	30/06/2021	31/12/2020
Tessenderlo Group nv	BE	50.1%	53.2%

Summary financial information of subsidiaries with a non-controlling interest at 100% as per June 30, 2021:

	As reported	Fair value	After fair value
(million EUR)		adjustments	adjustment
FIXED ASSETS	1,120.2	400.8	1,521.0
Goodwill	33.9	-33.9	0.0
Intangible assets	120.9	312.2	433.2
Tangible fixed assets	870.5	122.5	992.9
Other fixed assets	94.9	0.0	94.9
CURRENT ASSETS	941.8	0.0	941.8
Inventories	287.3	0.0	287.3
Other current assets	654.5	0.0	654.5
NON CURRENT LIABILITIES	660.7	105.7	766.4
Deferred tax liabilities	66.6	100.7	167.2
Loans and borrowings	373.2	5.0	378.3
Other liabilities > 1 year	220.9	0.0	220.9
CURRENT LIABILITIES	375.5	0.0	375.5
Net assets	1,025.7	295.1	1,320.9
Non-controlling interest %			50.1%
Non-controlling interest			662.4

For more information on the financial statements of Tessenderlo Group, we refer to the annual report which is published on the website www.tessenderlo.com.

20. CONTINGENCIES

The group is confronted with a number of claims or potential claims and disputes, which are a consequence of the daily operational activities. To the extent such claims and disputes are such that it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and when a reliable estimate can be made of the amount of the obligation, suitable provisions have been made.

It is the group's policy to recognize environmental provisions in the balance sheet, when the group has a present obligation (legal or constructive) as a result of a past event, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and when a reliable estimate can be made of the amount of the obligation.

These provisions are reviewed periodically and adjusted, if necessary, as assessments and work proceeds and additional information becomes available. Environmental liabilities can change substantially due to the emergence of additional information on the nature or extent of the contamination, a change in legislation or other factors of a similar nature.

While it is not feasible to predict the outcome of all pending environmental exposures, it cannot be excluded that there will be a need for future provisions for environmental costs which, in management's opinion, based on information currently available, would not have a material effect on the group's financial position, but could be material to the group's results in any one accounting period.

Acquisition, investment and joint-venture agreements as well as divestments may contain habitual provisions leading to price adjustments. In addition, for divestments, proper consideration has been given to provisions for possible indemnifications payable to the acquirer, if any, including matters in the area of health, environment, tax, product liability, restructuring, competition, pensions and share incentives. Based on information currently available, the possibility of any significant cash outflow is considered to be remote.

Some plants of the group need to comply with the European regulations to cover operational emissions for products exposed to carbon leakage. In a case of a deficit, additional emission allowances will be purchased. There were no purchases of additional emission allowances during the first half of 2021. The surplus or deficit of emission allowances over the next year may vary, depending on several factors such as future production volumes, process optimizations and energy efficiency improvements. The carrying amount of emission allowances included in intangible assets amounts to 1.8 million EUR as per June 30, 2021 (December 31, 2020: 3.2 million EUR).

21. RELATED PARTIES

Picanol Group has a related party relationship with its subsidiaries, joint ventures, its main shareholder, directors and its Executive Committee. The Belgian pension fund "OFP Pensioenfonds", which covers the postemployment benefit obligation of the employees of Tessenderlo Group nv and Tessenderlo Chemie International nv, is also considered to be a related party.

The controlling shareholder of the Picanol Group is Mr. Luc Tack who holds 89.3% of the Picanol shares through Symphony Mills nv and Artela nv. In accordance with article 7:53 of the Belgian Code of Companies and Associations, the extraordinary meeting of shareholders of March 16, 2020 has decided to introduce a loyalty voting right for each fully paid-up share that has continuously been registered in the share register on the name of the same shareholder for at least two years. As per the last transparency notification, published on March 31, 2020, Artela nv and Symphony Mills nv were holding respectively 68.5% and 25.8% of the voting rights.

The group purchased and sold goods and services to related parties in which the group holds a 50% equity interest (investment in joint ventures). Such transactions were conducted at terms comparable to transactions with third parties.

Premiums for an amount of 1.1 million EUR were paid to the Belgian pension fund, "OFP Pensioenfonds". Liabilities related to employee benefits schemes as per June 30, 2021, include 8.7 million EUR related to the "OFP Pensioenfonds" (December 31, 2020: 13.1 million EUR).

The following transactions have taken place with the joint ventures, the controlling shareholder, the members of the Executive Committee and the Board of Directors:

Transactions with joint ventures (for the six-month period ended June 30, except for balance sheet comparatives at December 31)
(million EUR)	2021	2020
Transactions with joint-ventures – Sales	0.0	0.2
Transactions with joint-ventures – Purchases	14.6	11.0
Non-current assets	10.2	10.5
Current assets	0.9	0.7
Current liabilities	5.9	1.2

Transactions with joint ventures:

The non-current assets (10.2 million EUR) refer to a 12.1 million USD loan, given by Tessenderlo Kerley Inc. to the joint-venture Jupiter Sulphur LLC. The non-current loan is interest bearing (3.0%). In 2020, the duration of the loan was extended till December 2026. Jupiter Sulphur LLC obtained the same amount from the other jointventure partner. In 2021, the already incurred related interest income was included in the outstanding amount. The granted loan is included in "Other investments and guarantees" in the group's consolidated statement of financial position.

The current liabilities include the group's share of unpaid share capital (3.0 million EUR) of the 50% joint-venture PB Shengda (Zhejiang) Biotechnology Co., Ltd between Tessenderlo Group and Zhejiang Shengda Ocean Co., Ltd, a Chinese state-owned company.

A dividend was received from from joint ventures for an amount of 0.1 million EUR in the first half of 2021 (HY20: nihil).

Transactions with the controlling shareholder:

The transactions with the controlling shareholder are commercial transactions related to the sales of weaving machines and spareparts to companies linked to the main shareholder. These transactions were not significant in the first half of 2021 and 2020.

Transactions with the members of the Executive Committee:

The Executive Committee is composed by the CEO, Luc Tack, the Executive Directors (currently Findar BV, represented by Stefaan Haspeslagh) as well as any other member appointed by the Board of Directors (no one at this stage), and did not change compared to last year.

(million EUR)	HY21	HY20
Short-term employee benefits	1.9	1.5
Post-employment benefits	0.0	0.0
Total	1.9	1.5

Short-term employee benefits include salaries and bonuses estimated for the period (both including social security contributions), car leases and other allowances where applicable. The post-employment benefits include the periodic pension costs of the pension plan, calculated by an actuary. There was no new issuance of warrants in HY21.

Transactions with the members of the Board of Directors:

There was no change in the directors' remunerations as compared with the disclosures made in the 2020 annual report.

22. SUBSEQUENT EVENTS

In August 2021, the group came to an agreement to sell the assets of the MPR activity to ORG Chem Group LLC (United States). In accordance with IFRS 5 Non-current assets held for sale and discontinued operations, the assets and liabilities of these disposal groups were presented as assets classified as held for sale and liabilities associated with assets classified as held for sale as per June 30, 2021 (note 7 - Acquisitions, disposals and assets classified as held for sale). The proceeds of the sale are insignificant. The sale is expected to be completed in the second half of 2021, and will lead to an insignificant result, which will be included in EBIT Adjusting items. The yearly contribution of MPR to the group's revenue and results was not significant.

In August 2021, the group came to an agreement to sell the remaining ECS assets to IHD Liquids Management LLC (United States). Following a fire incident in 2020 all assets were already impaired in the 2020 consolidated financial statements. The proceeds of the sale are insignificant. The sale is expected to be completed in the second half of 2021. The yearly contribution of ECS to the group's revenue and results was not significant.

On August 16, Picanol Group issued a press release as a reaction on the press release published by Rieter Holding AG on the same day. We refer to our website for further details: www.picanolgroup.com.

4. INDEPENDENT AUDITORS' REPORT ON THE REVIEW OF THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS AS PER JUNE 30, 2021

Statutory auditor's report to the Board of Directors of Picanol nv on the review of the condensed consolidated interim financial information as at June 30, 2021, and for the six-month period then ended

Introduction

We have reviewed the accompanying condensed consolidated statement of financial position of Picanol nv as at June 30, 2021, the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of changes in equity and the condensed consolidated statement of cash flows for the six-month period then ended, and notes to the condensed consolidated interim financial statements ("the condensed consolidated interim financial statements").The Board of Directors is responsible for the preparation and presentation of these condensed consolidated interim financial statements in accordance with IAS 34, "Interim Financial Reporting" as adopted by the European Union. Our responsibility is to express a conclusion on these condensed consolidated interim financial statements based on our review.

Scope of Review

We conducted our review in accordance with the International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated interim financial information as at June 30, 2021 and for the six-month period then ended is not prepared, in all material respects, in accordance with IAS 34, "Interim Financial Reporting" as adopted by the European Union.

Zaventem, August 25, 2021

KPMG Bedrijfsrevisoren - Réviseurs d'Entreprises Statutory Auditor represented by

Patrick De Schutter Bedrijfsrevisor / Réviseur d'Entreprises

5. FINANCIAL GLOSSARY

Adjusted EBIT

Earnings before interests, taxes and EBIT adjusting items.

Adjusted EBITDA

Earnings before interests, taxes and EBIT adjusting items plus depreciation and amortization.

Basic earnings per share (Basic EPS)

Profit (+)/loss (-) for the period attributable to equity holders of the company divided by the weighted average number of ordinary shares outstanding during the period.

Capital expenditure

Amount of money spent to upgrade, acquire or maintain property, plant and equipment (PP&E) and intangible assets.

Diluted earnings per share (Diluted EPS)

Profit (+)/loss (-) for the period attributable to equity holders of the company divided by the fully diluted weighted average number of ordinary shares outstanding during the period.

Diluted weighted average number of ordinary shares

Weighted average number of ordinary shares, adjusted by the effect of warrants on issue.

EBIT

Profit(+)/loss(-) from operations.

EBIT adjusting items

EBIT adjusting items are those items that in management's judgment need to be disclosed by virtue of their size or incidence. Such items are disclosed in the notes to the financial statements. Transactions which may be recognized as EBIT adjusting items are principally related to restructuring, impairment losses, provisions, gains or losses on significant disposals of assets or subsidiaries and the effect of the electricity purchase agreement.

Leverage

Net financial debt divided by Adjusted EBITDA over the last 12 months.

Net financial debt

Non-current and current loans and borrowings minus cash and cash equivalents and bank overdrafts.

Other operating income and expenses

Other operating income and expenses include items which cannot be directly allocated to a line item of the consolidated income statement based on their function and that in management's judgement do not need to be disclosed separately by virtue of their size or incidence. Transactions which may be recognized as other operating income and expenses are mainly costs arising from research and development projects, tax charges other than income taxes, such as withholding taxes and regional taxes, the recognition or reversal of impairment losses on trade receivables, and several individually insignificant items within several subsidiaries of the group.

Weighted average number of ordinary shares

Number of shares outstanding at the beginning of the period, adjusted by the number of shares cancelled, repurchased or issued during the period multiplied by a time-weighting factor.

Working capital

The sum of inventories, current trade and other receivables minus current trade and other payables.

6. ALTERNATIVE PERFORMANCE MEASURES

The following alternative performance measures are considered to be relevant in order to compare the results over the 6 month period ended June 30, 2020, and June 30, 2021, and can be reconciled to the condensed consolidated interim financial statements as follows:

Reconciliation from Adjusted EBIT to EBIT

(million EUR)	HY21	HY20
Adjusted EBIT	140.9	98.8
EBIT adjusting items	2.1	0.4
EBIT (Profit (+) / loss (-) from operations)	143.0	99.3

Reconciliation from Adjusted EBITDA to EBIT

(million EUR)	HY21	HY20
Adjusted EBITDA	236.0	195.5
EBITDA adjusting items	2.1	0.8
EBITDA	238.1	196.4
Depreciation	-95.1	-96.6
Impairment losses	0	-0.5
EBIT (Profit (+) / loss (-) from operations)	143.0	99.3

Reconciliation leverage

(million EUR)	30/06/2021	31/12/2020
Non-current loans and borrowings	379.8	393.2
Current loans and borrowings	61.1	69.8
Short term investments	-40.0	-20.0
Cash and cash equivalents	-319.2	-345.9
Net financial debt	81.7	97.1
Adjusted EBITDA	402.2	361.7
Leverage (net financial debt / Adjusted EBITDA last 12 months)	0.2	0.3