AGFA-GEVAERT ANNUAL REPORT 2017

01. Letter to the Shareholders	4
Key Figures 2017	7
02. Company Profile	8
Agfa, all over the world	10
Highlights 2017	12
ANNUAL REPORT OF THE BOARD OF DIRECTORS TO THE SHAREHOLDERS OF AGFA-GEVAERT NV	14
NON-FINANCIAL REPORTING

03. Growth	15
04. Innovation	20
05. Sustainability	26
Sustainability Report	32

06. Working@Agfa

FINANCIAL REPORTING

07. Comments on the Financial Statements	56
Comments on the Consolidated Financial Statements	57
Comments on the Statutory Accounts of Agfa-Gevaert NV	61
08. Agfa Graphics	62
09. Agfa HealthCare	66
10. Agfa Specialty Products	72
11. Financial Statements	76
Opinion on the fair presentation in accordance	76
with the Royal Decree of November 14, 2007
Consolidated Financial Statements	77
Profit or Loss	77
Comprehensive Income	78
Financial Position	79
Changes in Equity	80
Cash Flows	81

Notes to the Consolidated Financial Statements	82
1. Reporting entity	82
2. Basis of preparation	82
3. Significant accounting policies	83
4. New standards and interpretations not yet adopted	103
5. Reportable segments	111
6. Acquisitions	116
7. Financial risk management	116
8. Information on the nature of expenses	130
9. Other operating income	131
10. Other operating expenses	131
11. Net finance costs	132
12. Income taxes	133
13. Intangible assets and goodwill	138
14. Property, plant and equipment	142
15. Investments in associates and financial assets	143
16. Inventories	144
17. Other tax receivables and other tax liabilities	144
18. Receivables under finance leases	144
19. Other receivables	146
20. Other assets	146
21. Cash and cash equivalents	146
22. Non-current assets held for sale	147
23. Equity	147
24. Employee benefits	151
25. Loans and borrowings	164
26. Provisions	166
27. Deferred revenue and advance payments	166
28. Other payables	167
29. Operating leases	167
30. Commitments and contingencies	167
31. Related party transactions	169
32. Earnings per share	170
33. Investments in subsidiaries and associates Agfa-Gevaert Group	171
34. Events subsequent to December 31, 2017	173
35. Information on the auditor's assignments and related fees	174
Auditor's report to the General Meeting	175
Statutory Accounts	181

	12. Corporate Governance Statement	184
	Board of Directors	185
	Composition of the Board of Directors	185
	CV's of the members of the Board of Directors	187
	Committees established by the Board of Directors	189
	Audit Committee	189
	Nomination and Remuneration Committee	189
	Management of the Company	190
	CEO and Executive Committee (ExCo)	190
	Internal control and risk management systems	190
	in relation to financial reporting
	Risk factors description	191
	Evaluation of the Board of Directors and its Committees	192
	Diversity	193
	Policy regarding the appropriation of the result	194
	Policy regarding the dealing in shares of the Company	194
	Information related to major events subsequent to December 31, 2017	194
	and information on circumstances that could significantly
	impact the development of the Group
	Information on the R&D activities	194
	Information related to the existence of branches of the Company	194
	Information related to the use of derivative financial instruments	194
	Non-financial information	194
	Auditor	195
	Information with regard to important participations	196
	Information related to the implementation of the EU takeover directive	196
	General information about the Company	197
	Availability of information	197
	13. Remuneration Report	198
	Remuneration policy	199
	Remunerations	201
	Board of Directors	201
	CEO	202
	ExCo	202
	Shares and options	202
	Severance	203
Glossary		204
	Overview Consolidated Statements 2013-2017	210
	Financial Position	210
	Profit or Loss	212
	Cash Flows	213
	Shareholder Information	214

Dear shareholder,

In 2017, most of the Agfa-Gevaert Group's growth engines – including Inkjet, HealthCare Information Solutions and several future-oriented activities of the Agfa Specialty Products business group – performed well. Nevertheless, the Agfa-Gevaert Group's revenue decreased by 3.7% (-2.9% excluding currency effects) to 2,443 million Euro. This top line decrease was attributable to adverse currency effects and to the decline in the traditional businesses, including Agfa HealthCare's hardcopy business, which felt the effects of the reorganization of its distribution channels in China. Excluding currency effects, the Group's revenue decline was limited to 2.9%. The top line trend clearly improved versus the previous year (-3.5%), showing a significant improvement in the fourth quarter.

Although adverse raw material effects weighed on the Group's profitability, targeted efficiency measures allowed the Group to keep its gross profit margin almost stable at 33.3% of revenue in 2017.

Agfa Graphics

The prepress segment suffered from competitive pressure in the offset markets, market-driven volume declines, and increasing aluminum prices. Within prepress, the sustainable chemistry-free solutions performed well. Agfa Graphics strives to strengthen its market position in this area with the recently introduced ECO³ program, which aims at giving customers access to a range of value-added software solutions that will reduce costs, while improving quality and productivity. Mainly due to adverse raw material effects and competitive pressure effects, Agfa Graphics' gross profit margin slightly decreased by 0.8% point to 29.0%.

Agfa HealthCare

Most of Agfa HealthCare's growth engines performed well in 2017. The HealthCare Information Solutions range reported continuous top line and order book growth. The Imaging IT Solutions range saw a temporary revenue slowdown in the first nine months, but performed strongly in the fourth quarter. The continuously strong order intake for the Enterprise Imaging platform ensures recurring medium and long-term top line growth in this area. Agfa HealthCare's top line decrease was largely due to the continuous market-driven volume decline for classic X-ray products and the decision to reorganize the hardcopy distribution channels in China. The effects of this reorganization started to abate in the third quarter, resulting in a normal hardcopy top line evolution in the fourth quarter.

Agfa HealthCare's gross profit margin reached 39.7%. As the success of the Enterprise Imaging platform incites Agfa HealthCare to speed up investments in its sales and service organization, its recurring EBITDA margin decreased by 0.9% point.

Agfa Specialty Products

Agfa Specialty Products' top line grew by 8.3% to 195 million Euro. Particularly strong sales figures were reported by the Printed Circuit Board business, Synaps Synthetic Paper and the Specialty Chemicals business (including Orgacon Electronic Materials).

2017 was the year in which we celebrated the 150th anniversary of the foundation of the Aktiengesellschaft für Anilinfabrikation (Corporation for aniline production) in Rummelsberg near Berlin in 1867. The memorial logo that you see at the back cover of this report was and is still being used on many occasions to draw the attention of our stakeholders on this unique achievement. The legacy of expertise and know-how that we built in this period spanning three centuries, is the foundation for the next phase in the future of our company. Our ability to adapt our company, our structures and our strategies, has brought us where we are today. With a healthy financial position, a good profitability and a renewed and innovative portfolio we are ready for the next 150 years in the history of our company.

In this respect, the past year has been the first year of a two-year transition period. Having overachieved on our profitability targets in 2016, we have taken a number of initiatives to prepare the Group for future growth by addressing the complexity of the company and the top line decline.

Firstly, we started preparations to reorganize our HealthCare IT activities into a stand-alone legal entity structure within the Group. We are convinced that – when completed – the project will allow both the HealthCare IT activities and the remaining part of the Group to pursue growth in the years to come.

Also in HealthCare IT, we are investing in the sales and service organization to accelerate sales growth of our highly innovative Enterprise Imaging platform. These efforts are starting to bear fruit and our Imaging IT business is now on the verge of a breakthrough.

Thirdly, we reorganized the Agfa HealthCare business group's hardcopy distribution channels in China, which weighed strongly on our hardcopy top line in 2017. This situation is under control and the effects of the reorganization are starting to abate.

The fourth initiative is situated in the Agfa Graphics business group. In 2017, the inkjet segment posted double-digit growth, as we started to benefit from the inkjet portfolio rationalization we conducted in the past few years. Inspired by the success of the measures in inkjet, we decided to conduct a similar product portfolio exercise in the prepress segment, which is suffering from market-driven volume decreases, price erosion and aluminum price increases. More in particular, we decided to stop certain reseller activities in the USA. We are convinced that this decision will allow us to better focus on Graphics' core businesses.

These investments in the future of our company will have an impact on our profitability in the coming quarters. However, we are convinced that they will allow us to transform the Agfa-Gevaert Group into a more agile company that will be able to pursue growth in the years to come.

The Group expects continued success for most of its growth engines in 2018, but the top line will be influenced by Agfa Graphics' decision to rationalize its prepress product portfolio.

The Group sticks to the ambition to target the recurring EBITDA margin around 10% of revenue on average in the years to come. However, in 2018 profitability will be impacted by the above-mentioned investments in the future of the company and by adverse raw material effects. Hence, this year's recurring EBITDA margin is expected not to be above the margin reached in 2017.

We sincerely thank our customers and our distributors for the confidence they showed in our Company. We are committed to continue to serve all of them with the most advanced, high-quality and reliable products and services. We also wish to thank our employees for their strong contribution to the success of the Company and in realizing the 2017 results.

Furthermore, we thank our shareholders for their support and their confidence. The good results of our growth engines demonstrate that we are following the right track for the successful transformation of the Company. For the continuation of our strategy, we will need all existing financial resources. Therefore, the Board of Directors will propose to the Annual General Assembly of Shareholders not to pay a dividend for 2017.

Julien De Wilde Christian Reinaudo Chairman of the Board of Directors CEO of the Agfa-Gevaert Group

MILLION EURO	2013	2014	2015	2016	2017
PROFIT OR LOSS
Revenue	2,865	2,620	2,646	2,537	2,443
Change vs. previous year	(7.3)%	(8.6)%	1.0%	(4.1)%	(3.7)%
Graphics	1,491	1,355	1,358	1,267	1,195
Share of group sales	52.0%	51.7%	51.3%	49.9%	48.9%
HealthCare	1,160	1,069	1,099	1,090	1,053
Share of group sales	40.5%	40.8%	41.5%	43.0%	43.1%
Specialty Products	214	197	189	180	195
Share of group sales	7.5%	7.5%	7.2%	7.1%	8.0%
Gross profit	834	807	842	857	814
Results from operating activities	163	136	161	166	138
Net finance costs	(71)	(59)	(74)	(51)	(39)
Income tax expense	(43)	(18)	(16)	(35)	(53)
Profit (loss) for the period	49	59	71	80	45
Attributable to owners of the Company	41	50	62	70	37
Attributable to non-controlling interests	8	9	9	10	8
Restructuring/non-recurring expenses	19	(16)	(19)	(42)	(31)
Recurring EBIT	144	152	180	208	169
Recurring EBITDA	224	222	240	265	222
CASH FLOW
Net cash from (used in) operating activities	107	151	149	142	39
Capital expenditures (1)	(40)	(37)	(37)	(44)	(46)
STATEMENT OF FINANCIAL POSITION - DECEMBER 31
Equity	368	146	268	252	307
Net financial debt	217	126	58	(18)	18
Current assets minus current liabilities (2)	699	550	567	568	563
Total assets	2,568	2,548	2,402	2,352	2,233
SHARE INFORMATION (EURO)
Earnings per share (eps)	0.25	0.30	0.37	0.42	0.22
Net operating cash flow per share	0.64	0.90	0.89	0.85	0.23
Gross dividend	0	0	0	0	0
Book value per share	2.19	0.87	1.36	1.50	1.83
Number of ordinary shares outstanding at year-end	167,751,190	167,751,190	167,751,190	167,751,190	167,751,190
Weighted average number of ordinary shares	167,751,190	167,751,190	167,751,190	167,751,190	167,751,190
EMPLOYEES (AT YEAR END)
Full time equivalent permanent (active)	11,047	10,506	10,241	10,042	9,840

(1) For intangible assets and property, plant and equipment.

(2) During 2016, the Group has consistently applied its accounting policies used in previous years, except for the presentation of trade receivables, trade payables, receivables under finance lease and other assets. As of December 31, 2016 the Group classifies these balances as non-current assets/liabilities to the extent they are due to be settled more than twelve months after the reporting period. Comparative information for the year 2015 has been restated. Furthermore the Group has changed the accounting treatment of defined contribution plans with return guaranteed by law. As a result, the net liability for post-employment benefits at December 31, 2016 has increased by four million euro, impacting other comprehensive income for the same amount. More information is provided in the notes to the Consolidated Financial Statements.

Company profile

The Agfa-Gevaert Group develops, produces and distributes an extensive range of analog and digital imaging systems and IT solutions, mainly for the printing industry and the healthcare sector, as well as for specific industrial applications.

Global production and sales network

Agfa's headquarters and parent company are located in Mortsel, Belgium. The Group's operational activities are divided in three independent business groups: Agfa Graphics, Agfa HealthCare and Agfa Specialty Products. All business groups have strong market positions, well-defined strategies and full responsibilities, authority and accountability.

Agfa's largest production and research centers are located in Belgium, the United States, Canada, Germany, France, the United Kingdom, Austria, China and Brazil. Agfa is commercially active worldwide through wholly owned sales organizations in more than 40 countries. In countries where Agfa does not have its own sales organization, the market is served by a network of agents and representatives.

Agfa Graphics

Agfa Graphics is a leading supplier to the printing industry, offering innovative and reliable solutions. Commercial, newspaper and packaging printers around the globe rely on Agfa Graphics for the most extensive range of integrated solutions, from computer-to-plate systems with digital offset plates over color management and workflow optimization software to pressroom chemicals. Agfa Graphics' sustainable innovations offer printing companies benefits in terms of ecology, economy, and extra convenience – or ECO³. The business group supplies sign & display printing companies with a range of highly productive and versatile wide-format inkjet printers and dedicated inks, in addition to workflow software, cutting machines and inkjet media. Agfa Graphics develops high-performance inkjet inks & fluids for various industrial inkjet printing systems and applications, enabling industrial manufacturers to integrate print into their existing production processes.

Agfa HealthCare

Agfa HealthCare is a leading provider of diagnostic imaging and healthcare IT solutions for hospitals and care centers around the world. The business group is a major player on the diagnostic imaging market, providing analog and digital technology, as well as IT solutions to meet the needs of specialized clinicians. The business group is also a key player on the healthcare information solutions market, integrating the administrative, financial and clinical workflows of individual hospitals and hospital groups. Today, care organizations in over 100 countries rely on Agfa HealthCare's leading technologies, solutions and services to optimize their efficiency and improve patient care.

Agfa Specialty Products

Agfa Specialty Products develops, manufactures and markets a wide variety of products. Its customers are large businessto-business companies in niche industry markets. On the one hand, the business group produces classic film-based products, such as film for non-destructive testing and aerial photography, as well as microfilm and film for the production of printed circuit boards. On the other hand, Agfa Specialty Products targets promising growth markets with innovative solutions. This portfolio includes conductive polymers, materials for the production of high-security ID documents, membranes for hydrogen production, backsheets for solar panels and synthetic papers that show increasing market acceptance.

Agfa, all over the world

AGFA'S MAJOR MANUFACTURING AND R&D CENTERS

"Agfa is committed to its mission: to be the partner of choice in imaging and information systems in all the markets in which it operates, be it the graphics industry, the healthcare sector or the industrial specialty markets. We do this by offering leading edge technologies, affordable solutions, innovative ways of working, based on our in-depth understanding of the businesses and individual needs of our customers. Investing in innovation and delivering top quality solutions are key in this. Operating in a responsible, sustainable and transparent way is as important. We are convinced that this is the right approach for the long-term success of our Company."

CHRISTIAN REINAUDO, CEO OF THE AGFA-GEVAERT GROUP

AGFA GRAPHICS AGFA HEALTHCARE

AGFA SPECIALTY PRODUCTS

MANUFACTURING

R&D

SHANGHAI WUXI (PRINTING) WUXI (IMAGING) CHINA

Highlights 2017

JANUARY

Agfa Graphics launches Jeti Ceres RTR3200 LED, its dedicated roll-to-roll printer with UV LED curing. The printer combines high production speeds with industry-leading image quality and low ink consumption.

FEBRUARY

The KLAS research firm honors Agfa HealthCare's XERO Viewer with a Category Leader Award in the Universal Image Viewer category.

APRIL

At the SNEC 2017 event in Shanghai, Agfa Specialty Products launches UNIQOAT, its next generation high reflective backsheet product range, used in the photovoltaic solar module industry.

APRIL

Agfa Specialty Products is awarded an order for its PETix film solution that is used as core material for the production of the new electronic identification (eID) card of Ecuador providing it with adequate durability.

APRIL

Medius Klinik Nurtingen becomes first hospital in Germany to achieve EMRAM Stage 6 with ORBIS HIS. EMRAM is a maturity model that measures in eight stages, the adoption and utilisation of EMR functions required to achieve a paperless environment.

MAY

Agfa Graphics introduces a LED version of the Jeti Tauro wide-format printer. The Jeti Tauro H2500 LED features continuous and automated feeding of a wide range of flexible and rigid media.

MAY

The European Digital Press Association (EDP) awards Agfa Graphics for its UV LED inks. With these inks, customers can produce high-quality prints on a wide variety of rigid and flexible substrates.

MAY

The Agfa-Gevaert Group kicks off the 150 Years of Agfa celebrations at the head office in Mortsel, Belgium.

JUNE

Agfa Specialty Products announces that it successfully developed and delivered the voting cards for the General Parliament elections in Malta. The company's polyester-based PETix PPF solution replaced the traditional laminated paper voting cards.

AUGUST

Agfa Graphics acquires Watford (UK)-based software developer and reseller Bodoni Systems.

SEPTEMBER

Agfa HealthCare and Fédération des Hôpitaux Luxembourgeois sign a contract for the installation of a national-level Enterprise Imaging platform in Luxembourg. The solution will make all patient images accessible from any hospital in the country, while respecting patient rights and confidentiality.

NOVEMBER

Agfa and Bilcare announce that they have jointly developed a range of PVC-based security card solutions with higher durability thanks to the use of PETix overlay film.

NOVEMBER

Agfa HealthCare and UMass Memorial announce the successful commencement of the Enterprise Imaging platform Go-Live.

DECEMBER

Adventist HealthSystem leverages investment in Agfa HealthCare technology to improve care quality by implementing 80 DR upgrades at 18 sites.

Annual Report of the Board of Directors to the Shareholders of Agfa-Gevaert NV

The Board of Directors of Agfa-Gevaert NV has the honor to present you the combined annual report for the financial year ending December 31, 2017, in accordance with articles 96 and 119 of the Belgian Code of Companies. This annual report includes a corporate governance statement and a remuneration report.

Growth

For over 150 years, Agfa-Gevaert has been one of the world leaders in the imaging industry. Since the beginning of this century, however, the industry has been undergoing radical changes. In this period, its analog, film based core technology is largely digitized.

This fundamental transformation process has had a lot of implications for the organization, the business model, the innovation policy and the human resources of the Company. The transition of the analog film technology to digital solutions is an undeniable fact, although some branches of industry and regions move faster than others. In the graphics industry and the healthcare sector, the analog film markets continue to shrink. This trend was even accelerated by the high raw material prices – silver in particular – in the period 2010-2012. Obviously, it was imperative to adapt the cost structure of our film manufacturing sites to these structural changes in the film industry.

Due to the global economic crisis, the importance of the emerging countries for the growth strategy of Agfa's digital solutions has further increased. Again, this urges Agfa to adapt its human resources, product portfolio and cost structure to these demanding markets. Despite the adverse economic conditions, Agfa-Gevaert has drawn up a targeted growth strategy which is to be realized through organic growth, and – wherever possible – through targeted and well-considered acquisitions.

In the knowledge that its traditional markets are declining, Agfa strives to use its experience and expertise that it has been building over the years, to enter into and grow further in new business domains.

We Embody Print

Notwithstanding the digitization of our daily lives, print continues to play a crucial role and the power of print remains unequalled. Even though it is and will be challenged in different ways and to different degrees depending on segment and region, print is here to stay and will continue to evolve and grow in the future, generating plenty of business opportunities.

Info printing: offset will remain the dominant technology for years to come

The info printing segment of the graphics industry is the habitat of newspaper printers and commercial printers, which produce amongst others magazines, brochures and books.

Despite a stagnation of the info print volumes the consumption of printing plates in mature markets is supported by the increased use of colors and the trend towards more local versions of newspapers and magazines. The info printing market is evolving at high pace. While printers in some emerging countries are still converting their prepress operations from computer-to-film (CtF) to computer-to-plate (CtP) technology, digital printing presses are beginning to find their way to commercial printers in developed countries.

Meanwhile, newspapers and magazine publishers also adapt their content to meet the expectations of the users of digital devices, such as smartphones and tablets. In spite of the increasing competition of digital printing technologies on the one hand and digital media on the other hand, offset will remain the dominant technology in the info printing segment for years to come. Printing houses continue to invest in new, conventional offset equipment, offering higher efficiency and an improved return on investment. The high costs and the limited range of applications of the current generation of digital printing alternatives also lead to offset printing still being the preferred technology for higher volume info printing.

Sign & Display and Industrial printing: inkjet technology is gaining market share

In the sign & display industry, the traditional printing technologies are under pressure from wide-format inkjet technology. New businesses start with digital printing and existing printing businesses install advanced digital systems, in addition to or in replacement of their traditional technologies. The new technologies help them to boost their efficiency and expand the range of services for their customers. It is commonly accepted that inkjet has won the battle to become the technology of choice for the major part of the industry. Although electronic billboards are also in the ascendant, Agfa Graphics is confident that wide-format inkjet technology will continue its steady growth in the years to come. For industrial printing applications, it is believed that the push of innovative inkjet technologies will be even stronger. After all, glasswork, furniture, flooring, curtains, packaging and labels cannot be replaced by electronic alternatives. Furthermore, inkjet technology makes it possible to work faster and more flexibly.

Agfa Graphics' strategy: Innovation, Growth, Cost Efficiency

To be successful in the challenging graphic industry, Agfa Graphics has drawn a clear strategy, based on three pillars: innovation, growth and cost efficiency.

Innovation

Agfa Graphics continually invests in improving and extending its innovative product offering and its technology position in the fields of prepress and inkjet.

In prepress, Agfa Graphics' market-driven innovations are focused on the ECO³ framework: ecology, economy and extra convenience. The business group invests in efficient and powerful solutions that allow customers to improve their competitiveness, achieve profitable growth and decrease their ecological footprint. In inkjet, Agfa Graphics invests in improving and extending its broad range of versatile, high-speed and high-quality wide-format systems and in its extensive range of inks for industrial inkjet applications. Developing high-quality, high-productivity, yet affordable inkjet solutions is key.

Growth

Agfa Graphics is convinced that the prepress market will see further consolidation waves in the years to come. As one of the market leaders in CtP printing plates, the business group aims to be the driving force behind the consolidation, and to expand its share in a market under pressure. Agfa Graphics also anticipates similar consolidation dynamics in the market for wide-format inkjet systems and strives to expand its market share in this segment. With its range of wide-format solutions, Agfa Graphics has the ambition to become a top three player in the UV-inkjet based sign & display market. Furthermore, the business group aims to establish a viable position with its digital printing inks for industrial applications.

Cost efficiency

Customers rightly demand the highest quality at competitive prices. Therefore, cost efficiency is one of Agfa Graphics' major focus points.

A lot of effort goes into structural reforms in its operations, supply chain and distribution channels. The business group continually adapts its operational structure to the evolution in its markets.

Agfa HealthCare: Care You Can See TM

Care providers continuously aim for better quality, faster service, and increased patient satisfaction. At the same time, however, multiple societal drivers pressure them to do this at a lower cost. Although certain governments are scaling down their healthcare budgets, it is generally acknowledged that digitization and IT are essential to balance quality of care, patient safety and cost-efficiency.

A key driver for the transformation of healthcare is the evolution of the world population. According to forecasts of the United Nations, the world population could grow to over 9.7 billion by 2050. Furthermore, it is expected that by 2050, the percentage of people aged 60 and above could increase from ca. 24% today to ca. 33% in more developed regions and from ca. 10% to ca. 20% in less developed regions. As the need for care is highly correlated with age, this evolution puts pressure on healthcare systems all over the globe to increase productivity in order to manage the growing patient flow in a cost-efficient manner.

Related with the ageing population and the dramatic changes in people's lifestyles is the rapid development of chronic diseases, which results in a paradigm shift from curative healthcare to preventive healthcare and a growing volume of medical diagnostic imaging procedures. Conscious of the need to find solutions that combine quality with cost effectiveness, governments and local authorities are promoting the introduction of digital technologies, IT, e-health solutions and integrated care solutions. This is not only the case in the Western world, but also in emerging markets with strong economic growth rates.

IT systems that acquire and bundle all relevant patient data, deliver them to the medical staff in a well-organized manner and support the medical decision processes, have become a cornerstone of today's healthcare provision.

Agfa HealthCare's strategy: drive the digitization, improve patient care through integration

Imaging

Agfa HealthCare strives to leverage its favorable point of departure in radiology departments to assist existing and new customers in their transition to state-of-the-art digital radiography and IT systems. Agfa HealthCare continues to invest in the further expansion of its already broad portfolio of digital radiography solutions to cover the needs of all care providers, from independent imaging centers and small hospitals in emerging countries to leading university hospitals with multiple imaging departments. With its solutions – as well as with its support and service – the business group wishes to give every care organization the opportunity to migrate to digital imaging. With its state-of-the-art and cost-effective systems for digital radiography and its efficiency enhancing software solutions, Agfa HealthCare helps, within the framework of value-based care, to keep medical imaging affordable for its customers while improving the delivery of daily care.

IT

Imaging IT Solutions

It is Agfa HealthCare's ambition to be the partner of choice for all types of customers, from small hospitals that want to install digital workflow in their radiology departments to large regional hospital networks in search of optimizing their productivity across their facilities. The business group strives to actively support all its customers to manage their digital imaging workflow. Furthermore, Agfa HealthCare develops vendor neutral solutions that image-enable the Electronic Health Record (EHR), thus enabling efficient multi-disciplinary collaboration, speeding up diagnosis, and ultimately improving patient care.

Increased focus by care providers on patient outcomes, cost, and efficient delivery models continue to demand innovative approaches to clinical workflow solutions. Advances in Augmented Intelligence (AI), mobility, and cloud computing are promising to redefine patient and clinician experience and challenge traditional care delivery models. Patients demand interaction that is insightful, personal, tailored to their care, and responsive to their needs. Agfa HealthCare's Enterprise Imaging platform enhances multi-disciplinary collaboration leveraging cloud and mobile technologies, enhances clinical intelligence by leveraging AI and cognitive technologies to help improve the delivery of patient care and efficiency for clinicians. It enables a broad return on investment (ROI) in a number of ways: documenting all imaging procedures to support the hospital's quality and reimbursement evaluations; reducing the overhead associated with uploading images at the point of care through task-based standardization; decreasing unnecessary repetition of imaging exams; consolidating all images from any source, department, device, in a single repository; driving clinical collaboration, and more.

Healthcare Information Solutions

With its Hospital Information and Clinical Information Systems (HIS/CIS) and its enterprise content management (ECM) systems, Agfa HealthCare supports hospitals in managing their administrative, financial and clinical workflows. The strategy in Healthcare Information Solutions is twofold.

On the one hand, Agfa HealthCare will further enrich its solutions with clinical functionalities and mobile workflows to meet the needs of even the most demanding customers. On the other hand, the business group strives to consolidate its position in its current markets and to gradually introduce its solutions into additional countries.

Integrated Care

Today, caregivers and care providers must be able to see, communicate and reach beyond the walls of the facility, before the patient arrives and after the patient has been released. In order to deal with the major demographic challenges in modern society and to keep healthcare sustainable, Agfa HealthCare strives to play an important role in the ascent of integrated care solutions. These solutions integrate all healthcare providers, social care organizations, patients, and other stakeholders of whole regions and countries in a virtual network. They collect and analyze data from all stakeholders in order to predict and prevent possible healthcare-related complications, including over and under capacity in hospitals and medical errors. They can play a major role in the management of chronic diseases and they can make it possible to detect developing health issues in a population in an early stage. In the future, integrated care solutions will help to keep healthcare costs under control, improve the operational efficiencies of care providers and to improve patient care and satisfaction.

Agfa Specialty Products: Expertise and Innovation

For most industrial applications, classic film-based technologies are being replaced by digital alternatives. While some industries may be ahead of others, in general the decline of the film business is continuing steadily. In order to tackle the challenges in its markets, Agfa Specialty Products developed a clear two-track strategy.

Firstly, Agfa Specialty Products aims at consolidating its position in the Classic Film market segments, which still account for a large part of the business group's recurring revenues. In order to be able to continue selling its film products in the declining markets, Agfa Specialty Products focuses on cost efficiency and lean manufacturing without compromising on quality. Offering the customers a good product at a competitive price is key. For this purpose, Agfa Specialty Products also entered into long-term supply agreements for film and chemicals with selected business partners.

Secondly, Agfa Specialty Products is investing in the creation and expansion of future-oriented product families, based on its know-how related to polyester formulation, coating and chemicals. The activities of its business units, Functional Foils and Advanced Coatings & Chemicals, are gradually generating a substantial and profitable flow of revenues to complement the recurring revenues from the more traditional film-based consumables. In this context, the business group will continue to invest in research and development, marketing and production capabilities.

Innovation

Agfa considers innovation as key to realizing its growth strategy, which is described in the previous chapter of this report. Every year, Agfa spends between five and six percent of its revenue on R&D. In recent years, the Company also received loans or grants from various international and national organizations and governments to support its R&D strategy. This enabled Agfa to invest in new R&D infrastructure, to start up new projects and to attract new researchers.

Agfa Graphics

In 2017, Agfa Graphics further extended and improved its very broad portfolio of prepress and inkjet products and solutions.

Prepress

In prepress, Agfa Graphics is a major innovator in the field of digital printing plate technology, equipment and software. In the past decade, the business group has established a position as technology leader in chemistry-free computer-to-plate (CtP) technology. This technology reduces the environmental footprint of its users and enhances the efficiency and convenience of their prepress activities.

Agfa Graphics has a long record of accomplishment when it comes to sustainable development, witness its industry-leading chemistry-free printing plate Azura.

With its recently launched ECO³ program, the business group leverages three key benefits that characterize its nextgeneration innovations for the printing industry: economy, ecology, and extra convenience – or ECO³ in short. These three E's will bring more value to all aspects of a printing business.

Indeed, the focus of the ECO³ program not only lies on the company's well-known strong portfolio in the prepress area, yet equally on quality, productivity and efficiency improvements in the pressroom environment.

At the end of 2017, Agfa Graphics released a true printing power combo in the shape of the software packages PressTune and InkTune. They will add value by reducing costs, both in the prepress and press environment, while improving quality and productivity. PressTune is a comprehensive and unique print standardization tool that ensures color matching to specifications and color consistency throughout the press run. Through a trend analysis of production, it allows printers to track, manage and improve press and operator performance. As such, it reduces make-ready time up to 40% and cuts down waste during the print run by 5%. InkTune applies intelligent processes that fine-tune press settings in order to increase the profitability of press operations. It reduces ink consumption by up to 30% while maintaining or even increasing print quality. It also improves color stability on the press, as well as image quality and consistency, and it leads to higher printing speeds and faster drying times. The two software packages work their magic best when combined.

Staying true to its commitment to clients' cutting-edge needs, Agfa Graphics has released the next generation of its StoreFront software. This cloud-based web-to-print solution enables print buyers to place orders online 24/7 and the new StoreFront 4.0 now features responsive stores for optimal ease of use, a 'save for quote' functionality for convenient pricing information and advanced packaging algorithms for cost-effective shipping.

Security printing

In 2017, Agfa Graphics released new versions of two elements within its Arziro ecosystem for the general security printing market. Arziro Design 3.0 drives comprehensive and flexible security printing, offering new security design features and integration with Arziro Authenticate 2.0 – the updated version of Agfa Graphics' ultra-safe, encrypted distribution platform.

Inkjet

The Jeti Tauro H2500 LED is the flagship in Agfa Graphics' wide-format UV-inkjet printer portfolio. This 2.5 meter wide hybrid UV-inkjet printer with an integrated roll-to-roll system features continuous and automated feeding of a wide range of flexible and rigid media, including several types of corrugated board. Since 2017, the Jeti Tauro relies on LED-curing technology as an alternative for the high energy-consuming mercury bulb lamps. The Avinci DX3200 printer for high-quality, vibrant soft signage printing was launched at ISA 2017. This new dye sublimation printer is a dedicated, highly productive soft signage engine and is designed to bring remarkable print quality on polyester-based fabrics.

Agfa Graphics introduced the new Jeti Ceres RTR3200 LED high-speed roll-to-roll printer for mid- to high-end applications. Responding to the needs of high-output printing service providers, this dedicated roll-to-roll printer with UV LED curing offers extremely rapid results and stunning image quality on a wide variety of flexible media. The engine's optional white printing features and primer capability can be combined for a new level of image vivacity, dimension and durability.

With Asanti 3.0 – the latest version of Agfa Graphics' automated production hub and workflow tool for sign & display printers – Agfa offers wide-format printers new functionalities, more integration possibilities and added automation. Combining these innovations with Agfa's signature color management solution, automatic preflighting and a new intuitive GUI, Asanti 3.0 completely revolutionizes workflow management. Last but not least, Agfa Graphics also launched a number of new UV-curable inks for its Jeti and Anapurna systems, as well as new inkjet media.

Industrial printing

In the industrial inkjet printing segment, Agfa Graphics continued its role as partner to integrate print in manufacturing. In this field, Agfa Graphics' strengths lie in the development of inkjet ink formulations for specific applications and in its profound knowledge of the integration of all elements (ink, print heads, printing presses). The list of applications for industrial inkjet is growing day by day across a wide variety of industries. Examples include flooring, decoration, object printing, as well as automotive and pharmaceutical applications. They can be printed either with state-of-the-art wide-format printers or with specific printing equipment that needs to be custom-designed.

Agfa Graphics partners with multiple OEM inkjet system integrators who develop customized print systems that comprise the business group's single- or multi-pass inkjet inks.

Awards

Customers and industry experts alike praise Agfa Graphics' products for their production speeds, reliability and print quality. In 2017, Agfa Graphics won an EDP Award for its excellent UV LED inks which are used in the Jeti and Anapurna wide-format printer range. Agfa Graphics was honored by Independent Printers Worldwide (IPW) as Vendor of the Year. Agfa Graphics has been a strategic partner of IPW since the organization's inception 19 years ago and is a founding member of the Platinum Elite Group. Agfa and the IPW management team work closely to create, implement and communicate programs that bring valuable, new procurement solutions to members.

Agfa HealthCare

Agfa HealthCare aims to offer integrated solutions tailored to the needs of the customer. The business group continuously invests in its imaging and IT systems, in order to drive the innovation of the healthcare sector. In its pursuit for more qualitative, efficient and patient-centric care procedures, Agfa HealthCare teams up with universities, research centers, hospitals, and governments. Exemplary for Agfa HealthCare's innovation culture, is its EUREKA program. Launched in 2011, the program aims to unlock the creative potential within staff by creating an environment in which people can innovate and share their ideas. The goals of the program include the instigation of both incremental innovations and disruptive innovations that will have a significant impact on healthcare. EUREKA has already yielded numerous project proposals. Several EUREKA innovations have already been implemented in revenue-generating solutions.

Modern challenges in healthcare require constant vigilance and new ways of looking at data and system security. Hospitals and care providers have to protect themselves, their networks, their devices and – critically – their patients' data. Agfa HealthCare is committed to support care providers in protecting the privacy of their patients by delivering secure products and services that protect and preserve the confidentiality, integrity and availability of Protected Health information in the health organizations and products.

Medical imaging

For medical imaging, Agfa HealthCare offers a complete portfolio of traditional X-ray film products, hardcopy film and printers, and computed radiography (CR) and direct radiography (DR) solutions. Today, Agfa HealthCare's film products contain less silver than the products of its competitors. The business group strives to further reduce the silver content in its film products and to make these products even more environmentally-friendly and cost efficient.

Furthermore, Agfa HealthCare invests in the development of innovative digital imaging solutions. All digital radiography solutions are designed to deliver the optimum balance between low radiation dose and high image quality. The benefits of its DR solutions advance the hospital's value based care initiatives and support the optimization of experience and care of patients, provide a smooth workflow for clinicians and enhance the hospital's productivity by making processes more efficient. The business group extended its innovative DR range with a new multipurpose DR 800 (1) Room with Dynamic MUSICA.

The multi-purpose solution covers radiography, fluoroscopy and advanced clinical applications, supporting Agfa HealthCare's role as a value-based healthcare provider offering solutions that assure every image counts.

The DR 800 comes with MUSICA high-speed, multi-scale image processing, which can now also process moving images. Along with enhanced noise suppression and superb brightness control, Dynamic MUSICA processing reduces veiling glare and plays a significant role in enabling potential dose reduction (2).

With the advent of mobile digital radiography systems, combined with an aging population, there has been a continual increase in the percentage of bedside (portable) chest radiographs carried out in hospitals. In some cases, up to 50% of in-hospital digital radiography procedures are now bedside chest exams. MUSICA's advanced Fractional Multiscale Processing (FMP) technology improves the delivery of quality daily care for critically ill patients undergoing these (difficult) bedside chest exposures.

⁽¹⁾ Pending 510(k) submission. Not available in the US and Canada.

⁽²⁾ Testing with board-certified radiologists has determined that Cesium Bromide (CR) and Cesium Iodide (DR) detectors, when used with MUSICA image processing, can provide dose reductions between 50 to 60%, compared to traditional Barium Fluoro Bromide CR systems. Contact Agfa HealthCare for more details.

Imaging IT solutions

Agfa HealthCare also invests in R&D and cooperates with academic and business partners to continually improve its imaging IT solutions.

Customer-driven enhancements to Agfa HealthCare's Enterprise Imaging platform include academic, multi-site, radiology, cardiology, nuclear medicine and additional specialty workflows for medical imaging.

The reach of Enterprise Imaging has been extended into new, medical image-heavy specialties such as dentistry and ophthalmology and pathology. Clinical specialists can view their studies in their familiar sequence, while study-specific, automatic hanging protocols save time and improve efficiency.

Integrated Care

The Integrated Care Suite, which allows patients and their health teams to communicate with each other conveniently and quickly, is already being used in hospitals around the world. With the extended features of the Suite, patient engagement and care coordination are further improved. At the same time, the Suite responds to policy changes in healthcare organizations as they move from volume- to value-based care.

Healthcare Information Solutions

Finally, Agfa HealthCare permanently evaluates and improves its Information Solutions, including its Hospital Information System (HIS)/ Clinical Information System (CIS) platform and its Enterprise Content Management solutions. In 2017, KLAS confirmed Agfa HealthCare as one of the leading EMR vendors in Europe. The report specifies that, "Providers in the German-speaking DACH countries often look to Agfa HealthCare as a stable solution based on the vendor's position as the region's market share leader."

In France, Agfa HealthCare's solid presence was anchored by France's largest hospital organization AP-HP renewing their contract with Agfa HealthCare. Furthermore, Agfa HealthCare combined a comprehensive portfolio of IT solutions, global expertise and its strong footprint in the market to support French healthcare organizations in meeting the legislative requirements for building regional hospital associations (Groupement Hospitalier de Territoire/GHT).

As adapting these comprehensive core international systems to the requirements of countries' national healthcare systems demands vast R&D efforts, Agfa HealthCare only gradually introduces these solutions into new markets.

Agfa Specialty Products

All Research & Development activities related to the consumable products manufactured by the Agfa-Gevaert Group have been centralized in the Materials Technology Center. Building on its core competencies in polyester and coating and well-defined technology platforms, the Center supports the innovation efforts of all business groups of the Agfa-Gevaert Group and leads all respective research projects. Through the Agfa-Labs initiative, the Center's know-how and research infrastructure are also made available to third parties in a context of open innovation.

Sustainability

For Agfa, sustainability is an element of business designed to create long-term value for all stakeholders. Around the world, the Company invests in waste and recycling programs, sustainable energy production, sustainable logistics, as well as packaging and water recycling.

Agfa Gevaert - Annual Report 2017

A global approach

As a global entrepreneur Agfa recognizes the necessity to continuously improve its environmental performance, as well in its own operations as in its customers operations, through offering them eco-designed products and systems. A combination which allows Agfa to optimize the balance between profit and social and environmental impact, thus striving for sustainable entrepreneurship.

Agfa has a long tradition of good citizenship. The Company strives for profitable growth, but at the same time attaches great value to the impact that its activities have on the environment, to the health and safety of its employees and to the relations with all stakeholders. For many years, Agfa has been doing this voluntarily and in many cases the Company goes beyond mere legal compliance.

Agfa does so because its management and its staff firmly believe that – with the right mindset – it does not take more effort to do business in a responsible, sustainable and transparent way. At the same time, entrepreneurs who are willing to think 'out of the box' will see new opportunities arising.

Agfa products are designed, developed and manufactured in such a way that the environmental impact of production, storage, transport, the use of the products and the waste treatment at the end of the life is limited.

Social and personnel issues, respect for human rights and anti-bribery and corruption

The Group has not yet fully completed its analyses of the non-financial information with respect to human rights, antibribery, corruption and social and personnel issues. Therefore, the group has not yet determined the necessary measures and policies to reduce the related risks nor the KPI's to measure the effectivity and efficiency of those measures. Furthermore, the risks in relation to environmental issues need to be clearly determined. During 2018, the group will decide which international framework it will apply and will do the utmost to be fully compliant with the non-financial information legislation to be reported in the annual report over the accounting year 2018.

SAFETY, HEALTH AND ENVIRONMENT POLICY

The general principles of Agfa's policy are:

Comprehensive environmental protection and maximum safety are given the same priority as product quality and operational efficiency.
Products are designed, developed and manufactured so that the production process, the transportation, the storage and the use of products, as well as the waste treatment at the end of the life cycle have minimal impact upon the environment.
Agfa is committed to systematically developing safe and environmentally acceptable products and production processes.
Agfa advises its customers, its employees and the relevant authorities with an evaluation of its products and manufacturing processes, in all matters pertaining to health, safety and environment.

Agfa Graphics

In the field of environmental sustainability, the Agfa Graphics business group is a forerunner in the graphics industry. The business group offers its customers the means to reduce chemicals, reduce waste, lower ink and water consumption and save energy. Its chemistry-free printing plates are the perfect example of eco-friendly products that really make a difference.

Agfa Graphics has a long record of accomplishment when it comes to sustainable development, witness its industry-leading chemistry-free printing plate Azura.

With its recently launched ECO³ program, the business group leverages three key benefits that characterize its next-generation innovations for the printing industry: economy, ecology, and extra convenience – or ECO³ in short. These three E's will bring more value to all aspects of a printing business. Indeed, the focus of the ECO³ program not only lies on the company's well-known strong portfolio in the prepress area, yet equally on quality, productivity and efficiency improvements in the pressroom environment.

In inkjet, Agfa Graphics continues to develop UV-curable inkjet inks. Contrary to solvent inks, UV-curable inks are free of solvents and VOC's. Furthermore, only a limited amount of energy is needed to 'dry' UV-curable inks, which is an important advantage over water-based inks. When selecting the reactive monomers for its UV-curable inks, Agfa Graphics carefully considers the possible health & safety issues of these compounds.

Over the past few years, Agfa Graphics has equipped most of its wide-format printers with UV LED technology. LED lamps last much longer than bulb lamps, and they save significant energy, leading to a higher return on investment. They are also greener as they contain no mercury that needs to be disposed of, and they don't produce ozone gas. On top of that, their minimal heat output broadens the scope of substrates that can be printed on, while the fact that they can be switched on and off instantly, results in higher productivity. Agfa Graphics' software solutions are powerful tools for printers aiming for efficiency, quality and sustainability. Agfa Graphics continuously introduces additions to its workflow management suites for commercial and newspaper printers.

These additions offer commercial and newspaper printers solutions that save time, money and waste, for instance by eliminating paper job jackets, or to realize ink consumption reduction by up to 25%. They also allow printers to use less drying powder and shorten the start-up time for their presses, resulting in substantially reduced paper and ink waste volumes. Furthermore, the tools lead to more stable print-runs.

With its innovative and sustainable solutions, Agfa Graphics actively support its customers in their shift to greener practices. Agfa Graphics' award-winning circular economy model for the supply of printing plates which reuses high-grade aluminum without value loss is a prime example of a sustainable closed-loop solution. This approach guarantees that the aluminum is not uncontrollably downcycled, yet instead maintains its intrinsic value as much as possible, and leads to a reduction of the total carbon footprint of printing plates with 70%.

The project fits the targets of the European Commission to turn the European economic activities more and more into a circular economy model.

Agfa HealthCare

With the growing world population in mind, the Agfa HealthCare business group continuously invests in the development of imaging and IT solutions that help to keep healthcare affordable and sustainable for the generations to come. It actively supports hospitals in their efforts to adopt innovative imaging systems and information systems that connect all their medical departments and administrative departments into one virtual network. The digitization of healthcare not only brings advantages in terms of efficiency and costs. Agfa HealthCare's innovative solutions also help to reduce the ecological footprint of the healthcare industry.

For instance, they reduce the use of consumables and chemistry, and eliminate the need to transport files on film and paper from one department or site to another.

Agfa HealthCare is committed to develop and market products and solutions that generate less waste, improved X-ray dose hygiene, and to enhance or extend the life of hospitals' existing healthcare infrastructure.

Over the years, Agfa HealthCare has evolved from a provider of X-ray film to a specialist in digital radiography and healthcare IT. Agfa HealthCare actively supports its clients in their transition from analog to digital radiography and thus from chemically processed film to dry film, combined with a substantial X-ray dose reduction. Thanks to Agfa HealthCare's image processing software, radiologists have high-quality optimized digital images at their disposal, which are suitable for onscreen diagnosis.

With its Enterprise Imaging solution, Agfa HealthCare offers radiology, cardiology, nuclear medicine and other image-intensive departments the tools to efficiently store, manage and distribute digital medical images from various imaging modalities.

Care organizations can also link all their image intensive departments into one digital network, even if those departments are based at various hospital sites.

With Agfa HealthCare's Enterprise Imaging VNA (Vendor Neutral Archive) technology, it is even possible to centrally store the data from all image intensive departments of all care organizations in entire regions. With Agfa HealthCare's universal viewer, caregivers at disparate organizations can view images within the other organizations' PACS or VNAs without the need to move the images. Digital radiography and advanced imaging IT solutions reduce the use of resources and energy, as the copying of files and the transportation of data on physical media are eliminated.

Agfa HealthCare also goes beyond medical imaging. With its ORBIS Hospital Information System (HIS)/Clinical Information System (CIS) and its Enterprise Content Management, the Company is also active in the Enterprise IT market. With these systems, Agfa HealthCare is able to connect medical departments and administrative departments of hospitals in one virtual network.

The Enterprise IT solutions not only allow hospitals to increase productivity, improve the delivery of care and save cost. They also help care facilities to reduce their ecological footprint by cutting back the use of paper documents and reducing the need for physical archiving space.

Agfa Specialty Products

The Agfa Specialty Products business group strives to offer durable products throughout its extensive portfolio. All its products are designed or enhanced with attention for durability, recyclability and reusability. In some cases, the business group cooperates with various partners to develop specific products for eco-oriented industries and several of the business group's products are used in environment-friendly applications.

Agfa successfully markets its Synaps synthetic papers for a growing range of printing applications. Synaps consists of a PET core film (polyester) with a two-sided coating for top-quality printability. All production waste is recycled and re-used.

For the smartcard security market, Agfa offers its range of PETix films for the production of a variety of ID cards and documents. Thanks to its polyester base, PETix contributes to more reliable and robust cards and offers an environmental friendly alternative to other card materials films. PETix also substantially extends the lifetime of smartcards, which lowers the need for renewal frequency and eventually reduces the ecological footprint of the cards produced.

Agfa Specialty Products commercializes its Zirfon Perl separator membranes for hydrogen production. State-of-the-art hydrogen production facilities use Zirfon Perl membranes to improve their efficiency and productivity. Building on its in-depth expertise in polyester substrates and chemical coatings, Agfa Specialty Products develops and markets innovative materials for renewable energy applications, such as Agfa's UNIQOAT backsheet foils for solar modules.

Sustainability Report

Agfa is committed to the conservation of natural resources, to the safe operation of its facilities and to minimizing the environmental impact of its activities and products. To this end, Agfa installed quality, environmental and safety management systems according to the international standards ISO 9001, ISO 14001, ISO 50001 and OHSAS 18001. The world map on the following pages gives an overview of the certificates that are obtained by the different Agfa sites.

The Mortsel site includes the sites in the Belgian towns of Mortsel, Wilrijk, Edegem and Heultje (Westerlo). For all sites shown on the world map (p. 36-37), all data refer to the full year 2017.

Thanks to various modifications to the cooling installations, we were able to drastically reduce fluorinated gas emissions and the environmental impact of the cooling installations.

Production-related environmental protection

Production of film and synthetic paper

Only the Mortsel site produces polyester film base and synthetic paper. Other polymer bases are purchased from external suppliers. The film base is coated with emulsion layers. The production of these emulsions is a separate process. Some of the chemical components of the emulsion layers are also produced at some of the other sites. The final step in film production comprises converting (cutting-to-size) and packaging.

Production of printing plates and imaging plates

The base for most printing plates is aluminum sheet, which is purchased from external suppliers. Further pre-treating and coating is done at the plate manufacturing sites. Most coatings do not contain silver, but there are some exceptions. The final steps in the production of printing plates and imaging plates are, as for film, converting and packaging.

Production of chemicals

After the exposure of films or printing plates to a light source by the customer, they need to be chemically developed in order to obtain a visible image. An increasing share of exposed film is developed using heat. Contrary to more classic processes using developing chemicals, a significant share of printing plates is now being developed in chemistry-free baths. Agfa Graphics also produces a range of prepress chemicals used in the printing process.

Thanks to Agfa's new wastewater treatment installation, the factory in Mortsel (Belgium) can reuse more than 50% of its waste water.

Production of inks

For its industrial inkjet growth market, Agfa Graphics produces a dedicated range of inks. The production of inks comprises the mixing of ingredients, bottling and packaging.

Production of equipment

Production of equipment includes the design and assembly of mechanics, electronics, optics and software.

Environmental impact

The environmental impact of production operations mainly consists of emissions to air and water, the use of resources and the generation and consumption of energy. Equally important are the safety aspects of the operations and the efforts to avoid environmental incidents and complaints.

Environmental indicators

In line with above considerations, Agfa has selected the following indicators to evaluate its environmental performance:

Water consumption	m³/year
Specific water consumption	m³/tonne of product
Water consumption excluding cooling water	m³/year
Specific water consumption excluding cooling water	m³/tonne of product
Waste water loads	tonnes/year
Specific waste water loads	tonnes/tonne of product
CO2 emissions to air	tonnes/year
Specific CO2 emissions to air	tonnes/tonne of product
NOx , SO2 , VOC, VIC emissions to air	tonnes/year
Specific NOx , SO2 , VOC, VIC emissions to air	tonnes/tonne of product
Specific VOC emissions to air	tonnes/tonne of product
Waste volumes	tonnes/year
Specific waste volumes	tonnes/tonne of product
Specific hazardous waste volumes	tonnes/tonne of product
Energy consumption	TeraJoule/year
Specific energy consumption	GigaJoule/tonne of product
Environmental incidents and complaints	number

Reusing residual heat enabled us to reduce our CO2 emissions by 30,000 tonnes in a decade.

Summary of environmental achievements

Compared to 2016, the global production volume (expressed in weight) of film, printing plates and chemicals decreased by 2.5%, while the production volume (also expressed in weight) of equipment decreased by 3.8%. The overall production volume in tonnes thus declined by nearly 3%. The downward trend in production volumes reflects the general trend in the world market, where analog film-based solutions are increasingly being replaced by digital solutions.

The global production volume of the film factories (expressed in weight) decreased by 4.1%. The overall production of Agfa Graphics' printing plates (expressed in m²) showed a comparable decrease. Agfa HealthCare's film production decreased by 10.6%.

For Agfa Graphics, the growing demand for inks for various inkjet applications continued, leading to an increase in production volume by more than half.

Many environmental indicators remained on a low level or were even further decreasing in 2017.

Total water consumption decreased by 6% as a result of an alertness and actions to reduce water consumption. The specific water consumption excluding cooling water decreased by 4.2%.

Total waste water volume continued to decrease by 6.6%. The specific waste water volume decreased by 3.8% to 10.7 m³/tonne of manufactured product, which is again the lowest level since the beginning of the measurement of the environmental indicators in 1995. Thanks to the improvement of the biological water treatment installation in the Mortsel film factory, water savings and lower production volumes, the specific waste water loads remain at the same level as 2016.

The global energy consumption continued to decline by 2.1% in 2017. The specific energy consumption stabilized at the 2016 level. Monitoring, analysis and optimization remains a constant task in all branches.

In the domain of air emissions, specific emissions generally continued to decrease. Only the VOC emissions rose by 6.2% due to limitations in Agfa Graphics' RTO installations, but they are still among the lowest levels since the registration of the environmental indicators.

The specific waste volumes remain at 191 kg/tonne at the level of 2016. With 28.1 kg/tonne, the amount of hazardous waste remained at the same low level, thus confirming Agfa's continued efforts to control these waste sources. Whereas the ratio of hazardous/non-hazardous waste used to be 1:3, it now is at 1:7.

Of the 14 production sites, 8 did not have to report accidents causing lost work time.

Environment

ENVIRONMENTAL, SAFETY AND ENERGY MANAGEMENT SYSTEMS

MORTSEL

BELGIUM

AGFA-GEVAERT

Agfa Gevaert - Annual Report 2017

Equipment Equipment GERMANY MUNICH PEISSENBERG PEITING SCHROBENHAUSEN WIESBADEN Equipment, accessories Imaging plates and cassettes Printing plates

ISO 9001 QUALITY AGFA GRAPHICS OHSAS 18001 SAFETY AGFA HEALTHCARE ISO 50001 (DIN 16001) ENERGY ISO 13485 Q MEDICAL ISO 14001 ENVIRONMENT AGFA SPECIALTY PRODUCTS

Printing plates CHINA WUXI (PRINTING) WUXI (IMAGING) Conversion of film, equipment

Environmental performance of the Agfa-Gevaert Group

In the comments below, the environmental performance in 2017 is compared with the performance in 2016. The graphs and tables illustrate the general trends since 2008.

Production volumes

The table below gives an overview of the Group's production volumes over the past ten years.

In 2017, the global production volume (expressed in weight) continued to decrease further by nearly 3% – which is less pronounced than in previous years. This is caused by the continuing decline in the production of classic film products and offset plates, reflecting the global trend of digitization.

The production volume (expressed in weight) for equipment decreased by 3.8% compared to 2016. In numbers, this comprises approximately 1,500 units produced by Agfa Graphics (Manerbio and Mississauga) and approximately 27,000 units produced by Agfa HealthCare (Munich, Peiting, Peissenberg and Wuxi). The film factories noted a decrease of 4.1% in total production volume by weight. This included around 4.9% in film production and 3.8% in chemical production (a.o. development fluids).

While the production volume of offset plates continues to decline continuously, the production of inks for inkjet applications continued to grow by more than half.

Water consumption

Agfa Graphics, together with a number of large customers and suppliers, has set up a circular supply chain plan for the permanent reuse of the high-quality aluminum of Agfa's printing plates.

Total water consumption decreased further by 6% in 2017. Given that water consumption decreased more than the production volumes, this means that specific water consumption also decreased by 2.8% to 29.8 m³ per tonne of manufactured product.

Excluding cooling water, water consumption decreased by 7.3% resulting in a specific water consumption of 12.0 m³/tonne.

Specific process water consumption remained almost stable at 6.3m³/tonne of manufactured product. The efforts to optimize the production processes continue to show their results.

Waste water volume and loads

Total waste water volumes continued to decrease by 6.6%, confirming the positive trend of the past years. The specific waste water volume decreased by 3.8% and resulted in 10.79 m³/tonne manufactured product. Due to an instability in the biological water treatment plant of the Mortsel film factory, an increase in the residual COD value in the waste water stream was recorded. Nevertheless, the noted values remain very low. The nitrogen (N) and phosphorus (P) values reached the lowest level ever.

Due to actions and optimizations in Agfa Graphics' printing plate factories, the aluminum sludge level in the waste water was low in 2017.

	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017
Specific volume (m3 /tonne of product)	12.60	13.33	13.00	13.56	12.47	12.10	11.62	12.06	11.22	10.79
COD	1,486.5	1,580.4	1,727.1	1,101.5	524.1	473.1	491.3	462.9	322.7	373.4
N	97.8	116.1	90.8	46.1	17.8	20.4	17.9	15.7	9.5	9.5
P	127.8	112.2	118.7	97.6	97.0	66.5	56.4	54.2	38.1	37.3
AOX	1.3	1.2	0.8	0.6	0.9	0.5	0.4	0.3	0.3	0.3
Heavy metals exl. Al	0.5	0.5	0.5	0.4	0.5	0.5	0.3	0.4	0.4	0.2
Aluminum	60.7	147.1	167.5	30.5	77.5	114.2	34.9	170.4	88.5	40.5
TOTAL (Tonnes/year)	1,774.6	1,957.5	2,105.3	1,276.8	717.8	675.1	601.4	703.9	459.5	461.2

Waste water load and volume

In 2017, the waste water load remained at almost the same low level as in 2016. The specific waste water load, excluding the aluminum load, increased to 2.5 kg/tonne of manufactured product, while the specific waste water load remained at the 2016 level (2.7 kg/tonne).

In 2017, Agfa's HQ switched to LED lighting and optimized building ventilation.

Energy consumption

Total energy consumption continued to decrease further by 2.1%, with specific energy consumption remaining almost stable at 16.4 GJ per tonne of manufactured product.

Analysis, monitoring and optimization of energy consumption at all sites remains a constant task. In the film factories, energy consumption was further reduced by 2.9%. In the printing plate production sites it decreased by 1.1%.

Due to the renewal of one of the combined heat and power plants (CHPs) of the Mortsel film factory, the share of purchased electricity was temporarily higher at this location.

In the meantime, several branches have installed an energy management system.

CO2 emissions to air

Global CO2 emissions fell further by 2% to the lowest level ever since the registration of environmental indicators. Production volumes decreased slightly more, so that specific CO2 emissions rose slightly by 1.2% to 612 kg per tonne of manufactured product.

NOX, SO2 , VOC, VIC emissions to air

The emissions to air excluding CO2 further decreased by 7.1% in 2017. This resulted in a decrease of 4.3% of the specific air emission excluding CO2 .

	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017
NOX	171.3	156.2	160.3	150.3	142.1	141.6	140.4	137.5	120.3	99.4
SO2	28.5	49.6	6.2	40.7	9.7	23.5	5.1	1.5	1.5	0.8
VOC	225.8	177.8	179.3	165.6	171.6	165.2	129.3	121.8	106.1	112.7
VIC	4.1	4.2	4.0	48.5	4.0	2.5	2.0	1.9	3.5	2.0
TOTAL (TONNES/YEAR)	429.7	387.8	349.8	405.1	327.4	332.8	276.8	262.7	231.4	214.9

VOC emissions increased by 6.2% to 112.7 tonnes, resulting in specific VOC emissions increasing to 0.67 kg per tonne of manufactured product. However, this is still one of the lowest values of the last ten years. The reason for the increase in VOC emissions is mainly due to limitations in the Regenerative Thermal Oxidation (RTO) installations used in plate manufacturing and for which necessary corrective actions have been taken. VOC emissions from ink and film production continue to decrease moderately (2.4%) due to optimizations. These were made possible by automated solvent balance monitoring.

Waste

Total waste volume decreased by 2.1% compared to 2016. The specific waste volume remained at almost the same level with 191 kg per tonne of manufactured product (189 kg per tonne in 2016).

	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017
Landfill	1,715	1,590	5,691	6,147	6,373	4,103	4,214	3,586	3,462	2,669
Incineration	203	192	274	387	296	217	327	227	127	782
Recycling	51,604	40,267	39,720	39,813	44,690	37,220	30,879	29,939	24,603	24,398
Energy recovery	1,674	1,301	1,358	1,484	1,308	1,257	1,173	1,438	1,188	1,057
Physico-chemical treatment	534	781	716	701	632	431	187	119	192	262
Valorization	2,952	2,652	2,925	2,762	2,431	2,270	2,581	2,796	3,141	2,874
TOTAL (tonnes/year)	58,682	46,784	50,685	51,294	55,730	45,497	39,361	38,106	32,713	32,041
Non-hazardous	69%	73%	75%	76%	77%	75%	76%	75%	86%	86%
Hazardous	31%	27%	25%	24%	23%	25%	24%	25%	14%	14%

Since 1995, Agfa has organized meetings in its Mortsel HQ where representatives of the surrounding streets and districts can engage in dialogue with representatives of our company and the local government.

For specific hazardous waste volumes, the low level of 2016 (27.2 kg/tonnes) was confirmed with at 28.1 kg/tonne in 2017. The ratio of hazardous and non-hazardous waste, which for a long time remained constant at 1:3, is now 1:7.

Maintaining the low level of hazardous waste is due to continued efforts to control incidents and causes of hazardous waste.

The beneficial use of waste (recycling, energy recovery, physico-chemical treatment and valorization) amounts to 76%. The proportion of waste that is still landfilled, continues to decline, accounting for 8.3% of the total. In 2017, a higher amount of waste was incinerated without energy recovery. These are mainly waste streams that were disposed of in the past but have now been sent for incineration by waste treatment companies. The objective is to reduce this share further towards recovery (recycling and energy recovery).

Environmental incidents, complaints and fines

• Incidents

In 2017, Leeds reported two incidents and Mortsel reported eleven environmental incidents to the local authorities. These mainly concern violations of the waste water permit.

• Complaints

Mortsel reported 18 complaints in 2017. These complaints mainly concerned noise and odeur pollution due to several one-time events.

• Fines

Branchburg received a fine of 492 Euro.

Occupational health & safety

Each Agfa site has health & safety standards in place to protect the employees and all other people on site in accordance with all the specific legal requirements.

Health and safety information is presented monthly at the meetings of the management teams. This information is discussed and adjusted at the meetings of the Corporate Safety, Health and Environment (SH&E) department. Each year, the SH&E Management Committee evaluates the policy, the organization, the management systems and the objectives in terms of safety, health and environment.

The cause of each reported incident, near-accident and accident is investigated so that the most recommended measures can be implemented. Important issues are immediately communicated to all branches as a SH&E alarm and learning point. Cause analyses are carried out to implement specific actions to improve health and safety performance.

The frequency rate of the reportable accidents, in accordance with local legal requirements, remained almost constant at 1.88 in 2017 (1.84 in 2016). This represents 15 accidents worldwide (15 in 2016).

The frequency rate of accidents with more than one lost working day as a result, decreased to 5.28 in 2017 (5.87 in 2016) and thus comes close to the best result (4.64 in 2015) over the last five years. Agfa HealthCare recorded a halving of accidents with more than one lost business day.

The severity rate of accidents involving more than one lost working day remained at the same level of 0.13 in 2017 (0.14 in 2016). This represents 1,043 lost working days (1,142 in 2016).

Of the 14 different production sites, eight (60%) recorded zero accidents with lost working days. Never before has such a result been achieved. This shows that the efforts made at the various sites to take action in the field of health and safety have proved their value.

Agfa Gevaert - Annual Report 2017

Working @ Agfa

The Agfa-Gevaert Group continues to work on its transformation process. Next to its last man standing strategy for traditional film products, the company continues to develop as an international player in digital imaging and printing systems and IT solutions. Its main markets are the graphics industry and the healthcare sector.

In the course of this process, Agfa's activities are increasingly shifting from the familiar domain of film-based imaging to new, rapidly evolving technology domains. At the same time, the company moves from selling only consumables to selling comprehensive solutions, including equipment, services and consumables. It goes without saying that this has a strong impact on the required employee profiles.

Innovation, flexibility, technical skills, sales skills, market knowledge and entrepreneurship are key.

Innovation is essential to develop new products and solutions. Introducing these products and solutions, and successfully entering new markets is impossible without adequate entrepreneurial and sales skills. It also demands people who are receptive for mobility and change. After all, change is the only constant factor.

Agfa's HR policy is aimed at the development of a number of processes linked to the 'employee life cycle'. An employee's career can be subdivided into various phases with specific focal points: recruitment and introduction, competence management, performance management, permanent training and development, compensation, employee reviews and retirement. Top focus points are the development of leadership and career counseling. Our careers have to stay adapted to the changing reality and a lot of employees will be making more moves in their careers than used to be the case. Employees have to stay 'job fit' in order to assure permanent employability. Furthermore, a lot of attention is given to communication, equal rights and safety.

Agfa aims to have the right employee in the right position at the right time and location for the right cost. To that aim, Agfa is continuously looking for a good balance between attracting competencies from the outside, developing competencies internally, and increasing overall employability by stimulating employees to move successfully from one position to another.

There is a wide range of training and development programs available, including various programs aimed at Agfa managers. It gives them access to self-analysis tools, self-training packages and group training sessions covering the different aspects of leadership.

In addition to the long-term 'Global Leadership Program', a European Leadership Program was launched. Various local talent projects are also being set up. Furthermore, more attention was given to the development of sales competencies and training programs focusing on value-based selling were launched.

There is also' EVOLVE', a learning platform on the Agfa intranet, as a portal for interactive communication about learning and development. All Agfa colleagues have access to an online training catalog, where they find product related training tools, as well as training programs in the field of communication, management and client orientation. With these tools, Agfa wishes to cultivate an even broader learning environment.

Finally, the Performance Management process also supports the further development of Agfa's employees. In this process, the targets of each employee are aligned to the overall targets of the company and the employee is actively involved in the assessment process. Therefore, much attention is paid to the personal development plan.

HR Key figures

EMPLOYEES PER CORPORATE FUNCTION

(1) GENERAL & ADMINISTRATION 15.51% (2) LOGISTICS & SUPPLY CHAIN 3.27% (3) MANUFACTURING 27.87% (4) RESEARCH & DEVELOPMENT 13.93% (5) SALES 15.6% (6) SERVICE 24.25%

ALLOCATION OF EMPLOYEES

(1) CORPORATE CENTERS 0.63% (2) GLOBAL SHARED SERVICES 5.46% (HR, ICS, PURCHASING,...) (3) AGFA GRAPHICS 31.79% (4) AGFA HEALTHCARE 43.65% (5) AGFA SPECIALTY PRODUCTS 18.46%

NR OF EMPLOYEES A TOTAL OF 10,552 IN 2017 OR 10,177 FTE'S

882 NEW HIRES JOINED THE COMPANY IN 2017

PERCENTAGE OF MALE/FEMALE WORKFORCE

EMPLOYEES PER AGE CATEGORY

ASIA OCEANIA

66.5% OF EMPLOYEES FOLLOWED AT LEAST ONE TRAINING IN 2017

1,048 EMPLOYEES LEFT THE COMPANY IN 2017

PERCENTAGE OF MALE/FEMALE MANAGEMENT POSITIONS

2017 80.32% 2016 80.82%

WE COUNT 79 NATIONALITIES IN THE AGFA-GEVAERT GROUP THE TOP 5 ARE:

1 - BELGIAN 3,080 EMPLOYEES

2 - GERMAN 1,839 EMPLOYEES

3 - US 1,170 EMPLOYEES

4 - FRENCH 680 EMPLOYEES

5 - CHINESE 601 EMPLOYEES

Human Resources organization

The Agfa-Gevaert Group's HR organization is aligned to the Company's business group structure in the regions as well as in the countries. The Centers of Excellence allow a global coordination of the HR principles, policies, processes and specific key competencies.

This alignment to the business group structure improves the efficiency of the HR organization and reduces its complexity. It further improves the support given by HR, with respect for the identity of the various business groups.

The HR policy is tuned to the specific needs of each business group. To this end, HR business partners support the management teams of the business groups in order to plan the needed staff numbers, competencies, organizational changes, etc.

Taking into account Agfa's worldwide presence, the HR organization counts with HR colleagues in the different countries and regions. The Centers of Excellence are responsible for the uniform application of the HR business partner principles and policies, which are globally applied in Agfa's various organizations. This approach pays off by bringing more transparency, uniformity and cost efficiency.

There are three Centers of Excellence, each with its own global responsibility and its specific primary activity:

Recruitment and talent development
Compensation & Benefits
HR Process Office, which is responsible for managing all HR processes and systems, as well as for managing all transactional functions, such as payroll systems, administration and reporting on training activities.

Programs and policies

Performance Management

Performance Management is a recurring and ongoing business process of goal setting, development and evaluation focused on realizing the strategy and targets of the Company through the performance of the employees. Agfa's performance management processes ensure that employees are evaluated and receive formal and informal feedback on their achievements against a number of agreed targets.

Employee development is an integral part of the performance management. The employee and the manager must identify the personal development objectives. These support the achievement of the stated objectives in the short term and the achievement of personal career expectations in the long term.

Financial rewards to employees are to some extent based on the outcome of the performance management process. The evaluation focuses on both the evaluation of the achieved results (What) and the behaviors shown to achieve those results (How).

Competency Management

Competency Management is a program that facilitates managers and employees to create personal development plans that are in line with the business objectives and the employee's professional aspirations. Generic competencies, as well as an increasing number of job specific competencies, have been defined and are measured against a predefined proficiency level. Any skills gaps are prioritized and addressed through development targets.

Agfa underwrites the STEM Charter. With this charter, the government, knowledge institutions, social partners, sector organizations, the education sector and the business world are joining forces to inspire young people to opt for STEM studies. STEM stands for Science (sciences), Technology (technology), Engineering (engineering) and Mathematics (math).

Talent Management

All senior managers participate in the People Review process, aiming at proactively identifying key talents in the organization, to organize mobility or job rotations and to draw up development, continuity and career plans. The aim is to keep key employees on board.

A Global Leadership Program has been implemented to increase the visibility, coaching and development of global talent. Furthermore, various regions also have local talent programs in place.

Reward policy and practices

The employment of people is a long term investment. Today, global organizations face more and more competitive pressure in attracting and retaining staff. Therefore, Agfa offers competitive remuneration packages to all employees. Most management employees have a variable share in their total salary package. Payout of this variable bonus depends on the performance of the Agfa-Gevaert Group, the results of the respective business group and region, and the individual performance (Global Bonus Plan). For sales representatives and service engineers, variable pay is linked to specific targets in a Sales Incentive Plan, respectively a Service Incentive Plan.

In order to ensure that compensation is in line with the market, Agfa uses a formal job evaluation system and participates in salary surveys to continuously benchmark its pay policy.

Agfa uses a Total Target Cash level on average at the 67th percentile of the general Market as a reference wage for its employees. The package of individual employees is differentiated based on performance and the level of expertise of the employee.

Agfa aims to offer competitive but cost effective short term and long term benefits. The most important benefits are: a pension plan, life insurance, and medical coverage. The benefits may vary significantly across countries depending on local regulations and practices.

Labor practices

Agfa aims to be an employer with clearly defined and applied health and safety standards, respecting all legal requirements and adhering to the overall principles of the international declaration of human rights.

Diversity

To Agfa, diversity is an important concern. The Company has implemented policies and procedures in this respect. They are described in the Company's Code of Conduct and in the non-discrimination policy as described in the Ethical Business Policy Statement.

(see also p. 193-194)

Freedom of association

By adhering to the overall principles of the International Declaration of Human Rights, Agfa supports and respects the employees' right to associate with unions or other organizations legally representing employees in their relation to Agfa as employer.

In every country where it is present, Agfa participates in the dialogue with representatives of the employees. Typically in most European countries, Works Councils will take the role of employee representation bodies. At a European level a European Works Council is in place. For Health & Safety issues, local committees, consisting of representatives of employees and the employer, are often in place.

Employee assistance programs

Besides the rigorous implementation of the Code of Conduct, the large majority of Agfa's subsidiaries have a formal system in place to assist employees who wish to report problems such as harassment, discrimination or specific conflicts of interest cases. Complaints are dealt with in a systematic and confidential manner and dedicated and autonomous contact persons are in place. Local HR contacts are also available for every site so that employees can address individual concerns – if needed – in a confidential manner.

Today's labor market requires professionals to be and remain active longer, stay healthier, and work with enthusiasm. In this respect, Agfa embraces the House of Work Ability concept of Prof. Dr. Juhani Ilmarinen, to introduce new initiatives improving the wellbeing of its employees.

Internal communication

In order to ensure proper one-voice internal communication, Agfa has set up specific communication channels to inform its personnel in a professional and objective manner on all company related matters. To this aim, the Agfa intranet is used as an important internal medium that groups all corporate or departmental information, on a local or global basis. The information covers all the levels of the Agfa organization. No activity is excluded. Colleagues, who don't have access to the intranet at their workplace, are being informed via alternative media such as printed newsletters.

Secondly, all employees receive an update on the quarterly results and any other important business topics, through the quarterly Infotour presentations that are organized at every site. During these meetings, the Company's as well as the business groups' performance and results are commented in detail. Participants are invited to discuss these and related topics with their management at these occasions. Finally, local communication initiatives, such as staff magazines, newsletters, staff meetings,… complement the above communications.

Comments of the financial statements

SHARE OF GROUP REVENUE 2017 BY BUSINESS GROUP

SHARE OF GROUP REVENUE 2017 BY REGION

Comments on the Consolidated Financial Statements

Revenue

In 2017, the Agfa-Gevaert Group's revenue decreased by 3.7% to 2,443 million Euro. Most of the Agfa-Gevaert Group's growth engines – including Inkjet, HealthCare Information Solutions and several future-oriented activities of the Agfa Specialty Products business group – performed well. The Group's top line decrease was attributable to adverse currency effects and to the decline in the traditional businesses, including Agfa HealthCare's hardcopy business, which felt the effects of the reorganization of its distribution channels in China. Excluding currency effects, the Group's revenue decline was limited to 2.9%. The top line trend clearly improved versus the previous year (-3.5%), showing a significant improvement in the fourth quarter.

Agfa Graphics

Showing gradual improvement throughout the year, the Agfa Graphics business group's inkjet segment posted double-digit growth. Both the wide-format equipment product range and the inks for wide-format and industrial applications contributed to the revenue increase. Important drivers were the successful launches of several new Anapurna printing engines and UV LED curable inks. The prepress segment suffered from competitive pressure in the offset markets, market-driven volume declines (primarily in the newspaper sector), and increasing aluminum prices. Within prepress, the sustainable chemistry-free solutions performed well. Agfa Graphics strives to strengthen its market position in this area with the recently introduced ECO³ program, which aims at giving customers access to a range of value-added software solutions that will reduce costs, while improving quality and productivity.

Agfa HealthCare

Agfa Specialty Products

With 49% of revenue, Agfa Graphics remains the largest business group. Agfa HealthCare represents 43% and Agfa Specialty Products 8% of Group sales.

In 2017, Europe accounted for 42% of Group revenue (2016: 40%). NAFTA for 27% (2016: 27%). Asia/Oceania/Africa for 24% (2016: 26%) and Latin America for 7% (2016: 7%).

Results

Although adverse raw material effects weighed on the Group's profitability, targeted efficiency measures allowed the Group to keep its gross profit margin almost stable at 33.3% of revenue in 2017.

Mainly due to adverse raw material effects and competitive pressure effects, Agfa Graphics' gross profit margin decreased from 29.8% in 2016 to 29.0% in 2017. Recurring EBITDA amounted to 77.0 million Euro (6.4% of revenue) in 2017, versus 106.5 million Euro (8.4% of revenue) in 2016 and recurring EBIT reached 52.8 million Euro (4.4% of revenue) in 2017, versus 79.8 million Euro (6.3% of revenue) in 2016.

Agfa HealthCare's gross profit margin reached 39.7% in 2017 (39.9% in 2016). As the success of the Enterprise Imaging platform incites Agfa HealthCare to speed up investments in its sales and service organization, recurring EBITDA decreased from 146.5 million Euro (13.4% of revenue) in 2016 to 131.1 million Euro (12.5% of revenue) in 2017. Recurring EBIT reached 105.9 million Euro (10.1% of revenue) in 2017, versus 120.3 million Euro (11.0% of revenue) in 2016.

Agfa Specialty Products' recurring EBITDA improved to 18.0 million Euro (9.2% of revenue) in 2017, versus 16.5 million Euro (9.2% of revenue) in 2016. Recurring EBIT amounted to 14.7 million Euro (7.5% of revenue) in 2017, versus 12.9 million Euro (7.2% of revenue) in 2016.

As a percentage of revenue, selling and general administration expenses amounted to 20.3%.

In 2017, R&D expenses amounted to 144 million Euro, or 5.9% of revenue, which is slightly higher than in the previous year. This clearly confirms the commitment of the Group to keep its technology leadership in most of its businesses.

Recurring EBITDA (the sum of Graphics, HealthCare, Specialty Products and the unallocated portion) amounted to 9.1% of revenue in 2017, versus 10.4% in 2016. In 2017, recurring EBIT reached 6.9% of revenue, versus 8.2% in the previous year.

Restructuring and non-recurring items resulted in an expense of 31 million Euro, versus an expense of 42 million Euro in 2016.

The net finance costs decreased from 51 million Euro in 2016 to 39 million Euro in 2017.

Income tax expenses amounted to 53 million Euro, versus 35 million Euro in the previous year. This includes a one-off (non-cash) deferred tax cost of 25 million Euro following changes in tax regulation in Belgium and the US. As a result of the elements mentioned above, the Agfa-Gevaert Group

Statement of financial position

At the end of 2017, total assets were 2,233 million Euro, compared to 2,352 million Euro at the end of 2016.

Trade working capital

Inventories amounted to 487 million Euro (108 days), versus 483 million Euro (104 days) at the end of 2016. Trade receivables (minus deferred revenue and advanced payments from customers) amounted to 389 million Euro (55 days), versus 364 million Euro (49 days) at the end of 2016, and trade payables were 224 million Euro (49 days), versus 225 million Euro (48 days) at the end of 2016.

Financial debt

The net financial debt amounted to 18 million Euro, versus a net cash position of 18 million Euro at the end of 2016.

Pension liabilities

In 2017, net pension liabilities for the material countries, excluding defined contribution plans with return guaranteed by law, decreased by 101 million Euro, mainly due to the effect of foreign exchange rates and the remeasurements related to the change in demographic assumptions and return on assets versus the discount rate used.

Equity

Equity amounted to 307 million Euro, against 252 million Euro at the end of 2016.

Cash flow

In 2017, net cash from operating activities, which also takes into account the changes in working capital, amounted to 39 million Euro.

TRADE PAYABLES (MILLION EURO/DAYS)

Conclusion

2017 has been the first year of a two-year transition period. Having overachieved on its profitability targets in 2016, Agfa has taken a number of initiatives to prepare the Group for future growth by addressing the complexity of the Company and the top line decline.

These investments in the future of our Company will have an impact on our profitability in the coming quarters. However, the Agfa management is convinced that they will allow the Agfa-Gevaert Group to transform into a more agile company that will be able to pursue growth in the years to come. The Group expects continued success for most of its growth engines in 2018, but the top line will be influenced by Agfa Graphics' decision to rationalize its prepress product portfolio. The Group sticks to the ambition to target the recurring EBITDA margin around 10% of revenue on average in the years to come. However, in 2018 profitability will be impacted by the abovementioned investments in the future of the Company and by adverse raw material effects. Hence, this year's recurring EBITDA margin

is expected not to be above the margin reached in 2017.

Comments on the Statutory Accounts of Agfa-Gevaert NV

The Annual Accounts as will be presented to the General Meeting of Shareholders of May 8, 2018, were tested against the valuation rules by the Board of Directors, and approved in that form.

The following points, in particular, will be submitted to the General Meeting of Shareholders for approval:

The Annual Accounts close with a loss for the accounting year 2017 of 22,544,640.76 Euro.

Based on the profit or loss account, the Board of Directors concludes that the Company has suffered a loss for two consecutive years. Article 96, 6° of the Code of Companies requires that the Board of Directors justifies the accounting principles in the assumption of going concern. As the going concern assumption of a holding company, such as Agfa-Gevaert NV, basically depends on the group as a whole, the Board refers to the net cash position at group level and the undrawn credit facilities available at balance sheet date.

It is proposed to allocate the result as follows:

• deduction of the result carried forward by 22,544,640.76 Euro. As a result hereof the result carried forward will amount to 308,672,986.71 Euro.

Explanation of the most significant entries of the Annual Accounts

In 2017, the Company achieved a revenue of 446.4 million Euro. This means a decrease of 1.3% compared to the turnover of 2016 (452.1 million Euro). The decrease was mainly caused by a decrease of the sales prices (-0.1%), a decrease of volume/mix (-0.7%) and a negative currency exchange rate difference (-0.5%).

The 2017 operating profit amounts to 7.1 million Euro. This represents an increase of 0.5 million Euro compared to 2016. This is mainly the result of a positive change in inventories.

The financial result improved with 19.3 million Euro compared to 2016, resulting in a loss from operating activities before taxes of 19.4 million Euro versus -39.2 million Euro in 2016.

After income taxes (2017: -3.1 million Euro, 2016: 0.6 million Euro), the loss for the book year amounts to 22.5 million Euro (2016: -38.6 million Euro). This is a decrease of 117.2 million Euro compared to 2016 (94.7 million Euro).

In 2017, the Company spent an amount of 12.5 million Euro on research and development in Belgium.

In 2017, the number of Agfa-Gevaert NV employees in Belgium increased by 8, to 2,168 employees on December 31, 2017. This increase is the result of the recruitment of 83 new employees and 75 employees leaving the Company.

In 2017, the permanent establishment of the Company in the UK booked a loss of 5.7 million Euro.

Agfa Graphics aims to be the number one supplier of integrated prepress solutions for commercial and newspaper printing, as well as a leading supplier of digital printing solutions for sign & display and industrial printing. Its mission is to enable graphic businesses to achieve profitable growth and stay ahead of their competition. Agfa Graphics delivers integrated solutions, which excel by being innovative and reliable, as well as sustainable and price-competitive. By doing so, the business group enables its customers to cost-effectively adjust to new market demands. Agfa Graphics' range of consumables, hardware, software and services combines in-house and leading manufacturers' technologies and know-how.

Agfa Graphics in 2017

Mainly due to adverse raw material effects and competitive pressure effects, Agfa Graphics' gross profit margin decreased from 29.8% in 2016 to 29.0%. Recurring EBITDA amounted to 77.0 million Euro (6.4% of revenue), versus 106.5 million Euro (8.4% of revenue) in 2016 and recurring EBIT reached 52.8 million Euro (4.4% of revenue), versus 79.8 million Euro (6.3% of revenue).

Agfa Graphics

MILLION EURO	2016	2017	% change
Revenue	1,267	1,195	-5.7%
Recurring EBITDA (1)	106.5	77.0	-27.7%
% of revenue	8.4%	6.4%
Recurring EBIT (1)	79.8	52.8	-33.8%
% of revenue	6.3%	4.4%
Results from operating activities	61.0	36.6	-40.0%

(1) Before restructuring and non-recurring items.

A trusted partner for professional printers

Agfa Graphics is a leading supplier of integrated prepress solutions and advanced inkjet systems. All over the world, professional printers and publishers rely on the business group's experience and first-rate technology.

Prepress

The term prepress is used for the chain of processes that precede the actual printing process. Prepress activities begin after the print layout decisions have been made and end where the printing process itself begins. In these preparatory stages, text and images are combined in a layout, colors are quality controlled, pages are correctly positioned and a number of digital proofs are made. When approved, these pages will be prepared for the printing process. In case of offset printing, pages are exposed onto a printing plate, either directly, with computer-to-plate (CtP) technology, or via an intermediate film, with computer-to-film (CtF) technology. Following this process, the exposed plate is mounted on the printing press. Printers rely on Agfa Graphics' equipment, consumables (such as graphic film and printing plates), software and services for almost every stage in the preparatory process. The business group's software packages include workflow management software, cloud-based web-to-print solutions, technology for digital proofing and screening, as well as tools for managing color and quality consistency. The software tools are key elements in the overall solution offered to printers. They automate the prepress processes, guarantee better quality and improve cost efficiency. At the end of 2017, Agfa Graphics released a true printing power combo in the shape of the software packages PressTune and InkTune. Although Agfa Graphics' prepress solutions mainly target the info printing segment of the graphics industry, the business group also supplies prepress technology to customers specializing in offset and flexo printing for packaging purposes.

Over 100,000 commercial printing companies use Agfa Graphics' prepress technology and one in two newspapers in the world are produced with Agfa Graphics' technology. The business group supplies almost 25% of the industry's digital printing plates worldwide and it is a market leader in the field of eco-friendly chemistry-free printing plates. In addition, Agfa Graphics is one of the few remaining suppliers of graphic film.

Inkjet

Most people associate the term 'inkjet' with the home and office printers that they use every day. That, however, is not the market Agfa Graphics is operating in. Agfa Graphics supplies state-of-the-art wide-format inkjet print engines, UV-curable inks and media. Sign & display print houses, as well as customers specializing in industrial print work, use Agfa Graphics' solutions to print on a wide variety of substrates, for an ever-growing range of applications, such as signs, posters and displays, promotional materials, packaging, and decorative materials. Inkjet has become the most important alternative for screen printing and flexo printing technologies. For signage, displays and some decorative applications, wide-format inkjet technology is even able to offer solutions that cannot be answered with conventional equipment.

Commercial successes

In 2017, Agfa Graphics' innovative prepress and inkjet solutions again convinced numerous new customers all over the globe of their many advantages.

Prepress

In the commercial printing segment, Agfa Graphics consolidated its position as a technology and market leader in chemistry-free computer-to-plate (CtP) solutions. In order to improve their environmental credentials, customers often order complete prepress solutions from Agfa Graphics, consisting of state-of-the-art Avalon platesetters, Apogee software and consumables.

Furthermore, Agfa Graphics has built a very strong reputation with its range of workflow management software solutions. At the end of the year, more than 9,500 Apogee systems were installed at commercial print houses around the world.

In the commercial segment of the printing industry, one of the most eye-catching equipment and printing plate contracts of 2017 was signed with the Australian Whirlwind Print company. Whirlwind Print relies on Agfa Graphics' Avalon platesetter, Arkana processing unit and Energy Elite Eco printing plates to deliver the best possible service and print products to its customers in all corners of Australia. Other important commercial prepress contracts were signed with – among other companies – Imprenta Ajusco and Metro Comunicaciones (both in Mexico), Cia Graphic (France), Rotary Printing (Japan), Cipola and Grupo Jauense (both in Brazil), and Dome Printing (USA).

Just like in the commercial printing segment, printers in the newspaper segment invest in eco-friendly prepress technology. With these chemistry-free CtP systems, they can minimize their environmental footprint, reduce their operational costs and boost their efficiency. As in the commercial segment, Agfa Graphics is setting the standard. Since the launch of the N94-VCF printing plate in 2011, more than 90 percent of Agfa Graphics' newspaper customers worldwide have made the switch to chemistry-free technology.

Agfa Graphics is also the world's leading supplier of prepress workflow software for the automation of the production of printed newspapers. Publishers can operate these Arkitex workflow systems in their local prepress departments, but Agfa Graphics also offers the software as a cloud solution.

An example of an extensive newspaper project is the contract signed with Newsprinters, the newspaper arm of News UK. Agfa Graphics provided three print plants of the group with new CtP equipment and an expanded Arkitex workflow system, including cloud based tools. The contract also includes the supply of N95-VCF chemistry-free printing plates. Other major newspaper contracts were signed with – among other companies – D.C. Thomson and Newbury Weekly News (both in the UK), Stellar Printing (US) and Diario El Tribuno (Argentina).

Inkjet

The Anapurna and Jeti wide-format print engines and the related ink portfolio continued to convince sign & display printers all over the world of their excellent print quality and high production speeds. The dedicated Asanti workflow software - which streamlines operations and guarantees color consistency - is often named by customers as an important advantage over the competition.

In the low-end segment of the sign & display market, the installed base for the Anapurna wide-format printers continued to grow steadily. Aimed at the mid- and higher-end segment of the market, the Jeti print engines also continued their success. The showpieces of the Jeti range are the Jeti Tauro, Jeti Mira and Jeti Ceres engines. Often, new and existing customers decide to combine their print engine with an Acorta cutting and finishing plotter and Asanti workflow software.

In 2017, several long-standing prepress customers extended their service offering by investing in an Agfa Graphics inkjet print engine. Examples are Sungwon Adpia (Korea) and Bodoni AS (Norway). Among the first customers for the new Jeti Ceres RTR3200 LED print engine were Nuevo Grupo Visual (Mexico) and X-Skylt (new name: More Print) (Sweden). The print engine combines high production speeds with industry-leading image quality and low ink consumption.

By the end of 2017, more than 3,000 Anapurna and Jeti printers were installed at customer sites all over the world.

Besides hardware and software, Agfa Graphics also supplies a range of UV LED inks with which its sign & display customers can produce high-quality prints on a wide variety of rigid and flexible substrates. At the FESPA 2017 trade event, the European Digital Press Association (EDP) awarded the business group for this ink range. In addition to its inks for sign & display customers, Agfa Graphics also markets a unique range of high-performance UV-curable inks for a broad range of industrial applications. The number of system integrators, OEM customers and other manufacturing specialists that use Agfa Graphics' inks continued to grow steadily in 2017.

Agfa HealthCare is using new technologies and traditional know-how to create solutions that meet the ever evolving needs of healthcare providers. Its medical imaging solutions open up new views to caretakers. Its IT solutions exceed individual hospital boundaries and move into regional networks. Agfa HealthCare builds on its deep knowledge of imaging technology and clinical needs to deliver affordable solutions to healthcare professionals.

By supporting them in the migration process from analog to digital and by connecting all healthcare stakeholders through seamless integration, Agfa HealthCare helps its customers to improve the quality and efficiency of their patient care. This is how Agfa HealthCare delivers healthcare excellence.

Agfa HealthCare in 2017

Most of Agfa HealthCare's growth engines performed well in 2017. The HealthCare Information Solutions range reported continuous top line and order book growth. The Imaging IT Solutions range saw a temporary revenue slowdown in the first nine months, but performed strongly in the fourth quarter. The continuously strong order book for the Enterprise Imaging platform ensures recurring medium and long-term top line growth in this area. Agfa HealthCare's top line decrease was largely due to the continuous market-driven volume decline for classic X-ray products and the decision to reorganize the hardcopy distribution channels in China. The effects of this reorganization started to abate in the third quarter, resulting in a normal hardcopy top line evolution in the fourth quarter.

Agfa HealthCare

MILLION EURO	2016	2017	% change
Revenue	1,090	1,053	-3.5%
Recurring EBITDA (1)	146.5	131.1	-10.5%
% of revenue	13.4%	12.5%
Recurring EBIT (1)	120.3	105.9	-12.0%
% of revenue	11.0%	10.1%
Results from operating activities	100.6	91.7	-8.8%

(1) Before restructuring and non-recurring items.

The expert in medical imaging and healthcare IT

Agfa HealthCare is a global provider of diagnostic imaging and healthcare IT solutions. The business group supports hospitals and healthcare facilities with products and systems for capturing, managing and processing diagnostic images and data, as well as solutions for streamlining and managing the overall clinical and administrative information flow. Clinicians in care facilities all over the world rely on Agfa HealthCare to help meet the challenges of modern day healthcare. The Agfa HealthCare business group is organized in two business divisions: Imaging and IT.

Imaging

The Imaging division supplies traditional X-ray film, hardcopy film and printers, digital radiography equipment and image processing software. Agfa HealthCare's roots are in traditional medical imaging, but in today's healthcare market, digital radiography is taking over.

Due to the competition of softcopy diagnosis, the market for hardcopy film – on which digital images are printed – is also declining in the US and Western Europe. In the emerging countries, this market segment is still growing. Besides hardcopy film, Agfa HealthCare also supplies hardcopy printers that enable clinicians to print digital images made by general radiography equipment, as well as images made by other modalities, including CT and MRI scanners.

In digital radiography, Agfa HealthCare is active with both computed radiography (CR) and direct radiography (DR) systems. Compatible with traditional radiography equipment, CR offers image intensive departments an affordable entry to digital imaging. These systems convert analog images to digital, allowing departments to improve their efficiency and increase overall patient throughput. DR is often the technology of choice for hospital departments demanding a higher throughput and immediate availability of high-quality digital images. Furthermore, the technology allows reducing the radiation dose without compromising on image quality. Many hospitals combine CR and DR technologies to cover all their X-ray imaging needs. As a technology leader in both areas, Agfa HealthCare is in a unique position to offer tailor-made solutions to healthcare facilities planning to invest in digital imaging.

All Agfa HealthCare's CR and DR systems are offered with the business group's leading MUSICA image processing software and its MUSICA workstation for image identification, acquisition and quality control. MUSICA's advanced Fractional Multiscale Processing (FMP) technology improves the delivery of quality daily care for critically ill patients undergoing bedside chest exposures.

IT

Agfa HealthCare is a leading player in the healthcare IT market with both its imaging IT and healthcare information solutions. Furthermore, the business group is developing a strong integrated care portfolio. Agfa HealthCare offers care organizations the tools to improve the overall efficiency and quality of patient care.

The ultimate goal is to connect all healthcare stakeholders through seamless integration. Today, IT accounts for 47% of Agfa HealthCare's revenue.

Imaging IT Solutions

Agfa HealthCare's Imaging IT solutions equal reliability and efficiency for care providers around the world. After the introduction of digital radiography in the early 1990's, Agfa HealthCare became one of the first companies to supply radiology departments with IT systems to efficiently store, manage, process and distribute digital medical images from various imaging modalities. These Picture Archiving and Communication Systems (PACS) are often linked to specialized information systems, such as Radiology Information Systems (RIS).

Based on its experience in radiology, Agfa HealthCare started developing a number of imaging IT solutions for other hospital departments that work intensively with medical images, including cardiology, orthopedics and nuclear medicine, as well as for certain specialized medical disciplines, such as women's care and digital pathology.

Whereas PACS and RIS solutions were originally linked to one hospital department, care organizations are now seeking imaging IT solutions that ensure that all clinically relevant images find their way to the patient's Electronic Health Record. Agfa HealthCare anticipated on this demand with its Enterprise Imaging platform, which creates a true imaging record for every patient, containing all possible images of the patient, regardless of the department and the facility that created them. As it makes images and the data linked to them instantly accessible throughout the hospital, the care organization, or even all care facilities included in a regional network, the Enterprise Imaging platform speeds up overall diagnosis and enhances patient care while providing a modular multidisciplinary workflow needed to complete a successful value-based care strategy.

With its imaging IT solutions for radiology departments, Agfa HealthCare has a very strong position in Europe and a growing market share in the US, Canada and Latin America. In the field of enterprise-wide and region-wide imaging IT solutions, Agfa HealthCare has a strong position worldwide.

Healthcare Information Solutions

Going beyond imaging, Agfa HealthCare has established itself as a leading player in the fast growing market for comprehensive enterprise-wide IT systems. Agfa HealthCare's leading Hospital Information System (HIS)/ Clinical Information System (CIS), connects medical departments and administrative departments of hospitals into one virtual network. It offers immediate and complete access to all relevant patient information – including medical images, and clinical and administrative data – enabling quicker diagnosis and treatment. Furthermore, it supports administration, billing, planning of appointments and examinations, as well as financial reporting. The system can serve as a base for a full-blown Electronic Patient Record (EPR). In short, it is designed to help care facilities to increase productivity, improve the delivery of care and save cost. Agfa HealthCare's step by step approach enables care organizations to implement the HIS/CIS solutions at their own pace, allowing the solution's various modules to be installed separately, tailored to the needs of the customer.

Another important system in Agfa HealthCare's Healthcare Information Solutions offering is its Enterprise Content Management solution. It enables hospitals and care facilities of all sizes to integrate all their paper-based and electronic documentation, creating a complete digital archive of patient records. The solution reduces the need for physical archiving space, cuts down information retrieval time and reduces associated costs.

Integrated Care Solutions

Agfa HealthCare took strategic steps to enter the Integrated Care market. Integrated Care is generally regarded as a key element in the efforts to keep healthcare systems sustainable. Integrated Care solutions support collaboration across the borders of care organizations and medical disciplines. They enable hospitals to actively engage with all stakeholders in the expanded care process, including physicians, informal care-givers and patients. As such, they allow patients to become real partners in their own care process. These solutions should measurably improve the quality of care and the patients' care experience, whilst reducing the demand on costly and resource-intensive emergency and hospital services.

Commercial successes

In 2017, Agfa HealthCare signed numerous eye-catching contracts with hospitals and hospital groups all over the world.

Imaging

At the end of the year, Agfa HealthCare had a global installed base of over 55,000 digital radiography solutions, all integrated with its leading MUSICA image processing software. Agfa HealthCare has been offering computed radiography (CR) solutions since 1993 and direct radiography (DR) solutions since 2009.

In the US, notable DR contracts were signed with – among other care organizations – Rush University Medical Center (Chicago), Kettering Medical Center (Kettering), Kentucky Health Collaborative (Louisville) and Florida Hospital (Orlando). The latter organization, which is part of the Adventist Health System, relies on Agfa HealthCare to implement 80 DR upgrades at 18 sites. In the UK, the West Suffolk Hospital implemented three high-end DR 600 X-ray rooms and one DR Retrofit solution. The Princess Elizabeth Hospital, Guernsey (UK), transformed an X-ray room into a 'spaceship', with Agfa HealthCare's high-performance DR 600, to offer children a less stressful experience.

IT

In 2017, Agfa HealthCare's IT solutions again convinced numerous care organizations around the world, from large multi-site hospital organizations and regional care providers, to medium-sized facilities and small imaging centers.

Imaging IT Solutions

At the end of 2017, Agfa HealthCare's imaging IT solutions served over 3,000 care facilities worldwide.

In 2017, Agfa HealthCare continued to roll-out its innovative Enterprise Imaging platform at care organizations all over the globe. With the solution, care organizations can enable clinicians to access and use all imaging data they need, no matter where they are practicing. Currently, the solution is live in healthcare sites across 25 countries in South America, North America, Africa, Europe and the Middle East.

In the US, a major Enterprise Imaging contract was signed with WellStar Health System, the largest not-forprofit health system in the state of Georgia. WellStar Health will use the Enterprise Imaging platform to connect its clinicians with patient imaging information across multiple hospitals and hundreds of ambulatory care locations in the greater Atlanta metropolitan area. Other important agreements in the US were signed with – among other organizations – UMass Memorial Medical Center, Greenville Health System and Methodist Health.

In Luxembourg, Agfa HealthCare and Fédération des Hôpitaux Luxembourgeois signed a contract for the installation of a national-level Enterprise Imaging platform. The solution will make all patient images accessible from any hospital in the country, while respecting patient rights and confidentiality. In the UK, several hospitals – like Sheffield Children's hospital and Princess Alexandra Hospital – selected Agfa HealthCare's Enterprise Imaging platform.

Furthermore, Agfa HealthCare and STC Solutions entered into a long-term collaboration to deliver cloud based advanced Enterprise Imaging services to healthcare providers in the Kingdom of Saudi Arabia. STC Solutions is the country's main IT services provider.

In Australia, Agfa HealthCare won an Enterprise Imaging tender issued by the Australian Capital Territory Health Directory.

Healthcare Information Solutions

In 2017, Agfa HealthCare confirmed its leading position in Europe (mainly in France and the German speaking countries) with its ORBIS Hospital Information Systems (HIS)/Clinical Information Systems (CIS) and its enterprise content management solution.

Agfa HealthCare strengthened the leading position of its ORBIS HIS/CIS solution in Germany. Only three years after the signing of the contract, 16 hospitals of the Asklepios Kliniken Verwaltungsgesellschaft mbH have made the transition to ORBIS. In total, 42 Asklepios hospitals are now using ORBIS. All five sites of the Gemeinschaftsklinikum Mittelrhein also went live with ORBIS.

ORBIS customer medius Klinik Nürtingen became the first hospital in Germany to be certified EMRAM (Electronic Medical Record Adoption Model) stage 6. EMRAM is an initiative of HIMSS Analytics, a subsidiary of the US Healthcare Information and Management Systems Society. EMRAM is an 8-level model to score hospitals from 0 to 7 on their stage of IT adoption.

At the end of 2017, the ORBIS HIS/CIS solution was installed at over 1,350 care facilities across Europe.

The installed base for Agfa HealthCare's enterprise content management solution also continued to grow, with several new installations in Europe and the Americas.

Integrated Care Solutions

Agfa HealthCare strives to become a key player in the Integrated Care sector of the healthcare market.

After taking its first steps in this area in 2016, Agfa HealthCare signed several Integrated Care contracts in 2017. With new features such as patient self-scheduling, patient care plans and care team/patient coordination, the Integrated Care Suite is further unlocking the door to integrated care. Simultaneously improving patient engagement and care coordination offers benefits in terms of better care coordination, more collaborative relationships between patient and physician, prevention of disease and more – all key to the delivery of value-based care.

Imelda Hospital (Belgium), for instance, decided to implement Agfa HealthCare's 24/ online appointment scheduling solution for patients and care providers. With the solution, patients can manage their own appointments.

Furthermore, Agfa HealthCare's health management platform has been selected to support the joint Radiotherapy Treatment Project of the Saolta University Health Care Group and Altnagelvin Hospital, part of Western Health and Social Care Trust. This cross-border project enables patients from County Donegal (Republic of Ireland) to access radiotherapy services at the nearby Altnagelvin Hospital in Derry (Northern Ireland.

The Agfa Specialty Products business group supplies customers in a variety of industrial markets with a broad range of both classic film and innovative products.

For the production of polymer substrates and chemical coatings, Agfa Specialty Products builds on the Agfa-Gevaert Group's longstanding expertise in film manufacturing and chemical formulations.

Agfa Specialty Products in 2017

In 2017, Agfa Specialty Products' top line grew by 8.3% to 195 million Euro. Particularly strong sales figures were reported by the Printed Circuit Board business, Synaps Synthetic Paper and the Specialty Chemicals business (including Orgacon Electronic Materials).

The business group's recurring EBITDA improved to 18 million Euro (9.2% of revenue). Recurring EBIT amounted to 14.7 million Euro (7.5% of revenue).

Agfa Specialty Products

MILLION EURO	2016	2017	% change
Revenue	180	195	8.3%
Recurring EBITDA (1)	16.5	18.0	9.1%
% of revenue	9.2%	9.2%
Recurring EBIT (1)	12.9	14.7	14.0%
% of revenue	7.2%	7.5%
Results from operating activities	11.2	13.8	23.2%

(1) Before restructuring and non-recurring items.

Innovative solutions for industrial applications

Agfa Specialty Products' marketing and sales activities are grouped in the business units Classic Films, Functional Foils and Advanced Coatings & Chemicals. The business group's R&D is organized within the Group's Materials Technology Centre, which promotes an open innovation culture, offering third parties services in the field of materials and coating research.

Classic Films

Agfa Specialty Products supplies traditional film-based consumables to imaging markets outside the scope of Agfa Graphics and Agfa HealthCare. In these markets, analog systems are gradually replaced by digital alternatives. In some segments, however, film is still the standard. It guarantees high resolution and imaging quality and is easy to use, whereas the transition to digital technologies often demands substantial investments. The business group supplies classic film products in the following industries:

Non-Destructive Testing (NDT): Agfa Specialty Products produces high-quality X-ray film for nondestructive testing of – among others – welds in pipelines, steel structures and fuselages. When Agfa divested its NDT business group to the General Electric Company (GE) in 2003, both parties signed a long-term agreement under which Agfa continues to supply X-ray film to GE. Agfa now acts as the exclusive manufacturer of GE's NDT X-ray films and related chemicals.

Aerial Photography: For the aerial photography industry, Agfa Specialty Products supplies films, chemicals, photo paper and software.

Microfilm: Due to the increasing digitization, the traditional microfilm market continues to decline. Agfa Specialty Products has a long-term exclusive supply agreement for microfilm with Eastman Park Micrographics (EPM). Under the agreement, Agfa manufactures microfilm and related chemicals for EPM. EPM distributes these products worldwide under its own brand name. Agfa Specialty Products' microfilm is known for its high sensitivity and exceptional image quality.

Functional Foils

The business unit Functional Foils groups Agfa Specialty Products' activities as a manufacturer of specialty films for various applications, including security documents, print media and photovoltaic solar panels.

Security: The ever increasing attention for security and identification incites authorities to invest in hightech electronic ID documents of which the authenticity can be checked quickly and effectively. Agfa Specialty Products responds to this need for fraud-proof ID documents with a portfolio of specialty films, targeting applications with high demands on durability and security (e.g. personal ID documents, banking/credit cards,…). These card materials are marketed under the PETix brand name. They can be combined with state-of-the-art personalization and security techniques. In 2017, Agfa Specialty Products announced that it successfully developed and delivered the voting cards for the General Parliament elections in Malta. The company's polyester-based PETix PPF solution replaced the traditional laminated paper voting cards.

Print: Agfa Specialty Products develops and markets a range of synthetic paper types as alternatives to laminated paper for applications with high demands on durability. Branded Synaps, the papers are valued for their print efficiency thanks to exceptionally quick ink acceptance and their resistance to water, tearing and UV light. Synaps papers can be printed with standard inks, on offset and HP Indigo printing presses as well as on dry toner printers. They are suitable for a wide variety of applications, including labels, indoor and outdoor displays, signage and premium commercial printing. Continuing the trend of the previous years, Agfa Specialty Products reported strong revenue growth for its synthetic paper business.

Photovoltaic Solar Panels: Agfa Specialty Products supplies a range of polyester backsheet films for photovoltaic solar panels. Backsheet films are used in the photovoltaic solar module industry to protect solar panels against environmental threats and to avoid power loss and electric hazards. At the SNEC 2017 event in Shanghai, Agfa Specialty Products launched UNIQOAT, the world's first-ever single-layer backsheet. UNIQOAT eliminates the risk of backsheet delamination and is highly reflective which results in better reliability and higher power output.

Industrial Foils: Agfa Specialty Products supplies highly specialized PET (polyester) film bases, chemical materials and high-tech (semi-)finished materials to industrial customers. These materials can be tailor-made according to customer specific requirements, for instance for the production of imaging products.

Advanced Coatings & Chemicals

Building on its expertise and competencies in chemical formulations and in film coatings, Agfa Specialty Products develops advanced products and materials for promising growth markets.

Materials for Printed Electronics: Agfa Specialty Products is an expert in the field of conductive polymers for use in antistatic protection layers for films and components. Based on these products, Agfa has further developed its conductive Orgacon product line of printing inks, pastes and formulations for use in electronic devices and in – among other applications – capacitive sensors, touch screens and membrane switches. Agfa Specialty Products' portfolio includes highly innovative nanosilver inks for the production of printed electronics. Typical applications are printed RFID antennas, but also sensors and touch screens. Continuing the trend of the previous years, the Orgacon product line reported strong revenue growth in 2017.

Phototooling: Agfa Specialty Products is an important manufacturer of phototooling film for the production of printed circuit boards (PCB) for the electronics industry. Manufacturers of electronics use the film to register the extremely thin conductive lines on printed circuit boards. As inkjet is identified as a promising technology for future PCB manufacturing, Agfa Specialty Products is focusing its R&D efforts on the development of PCB inkjet solutions.

Membranes: In cooperation with VITO (the Flemish institute for technological research), Agfa Specialty Products developed flat sheet membranes for hydrogen production. Zirfon Perl is a high quality, very durable separator membrane for use in alkaline water electrolysis systems.

OPINION ON THE FAIR PRESENTATION IN ACCORDANCE WITH THE ROYAL DECREE OF NOVEMBER 14, 2007

The Board of Directors and the Executive Management of Agfa-Gevaert NV, represented by Mr. Julien De Wilde, Chairman of the Board of Directors, Mr. Christian Reinaudo, President and Chief Executive Officer and Mr. Kris Hoornaert, Chief Financial Officer, hereby declare that, to the best of their knowledge,

• the consolidated financial statements give a true and fair view of the Group's net worth and financial position and of its results in accordance with International Financial Reporting Standards;
• the annual report gives a true and fair view of the developments and results of the Company and its subsidiaries included in the consolidated financial statements, as well as a description of the main risks and uncertainties which the Group is facing.

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

Financial Statements

AGFA-GEVAERT GROUP - CONSOLIDATED STATEMENT OF PROFIT OR LOSS

MILLION EURO	Note	2016	2017

Revenue	5	2,537	2,443
Cost of sales		(1,680)	(1,629)
Gross profit		857	814
Selling expenses		(344)	(336)
Research and development expenses		(141)	(144)
Administrative expenses		(167)	(169)
Other operating income	9	98	71
Other operating expenses	10	(137)	(98)
Results from operating activities	5	166	138
Interest income (expense) - net		(8)	(7)
Interest income	11	1	1
Interest expense	11	(9)	(8)
Other finance income (expense) - net		(43)	(32)
Other finance income	11	14	10
Other finance expense	11	(57)	(42)
Net finance costs		(51)	(39)
Share of result of equity accounted investees - net of income tax		-	(1)
Profit (loss) before income taxes		115	98
Income tax expense	12	(35)	(53)
Profit (loss) for the year		80	45
Profit (loss) attributable to:
Owners of the Company		70	37
Non-controlling interests		10	8
Earnings per share (Euro)
Basic earnings per share	32	0.42	0.22
Diluted earnings per share	32	0.42	0.22

AGFA-GEVAERT GROUP - CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

MILLION EURO	Note	2016	2017

Profit (loss) for the year		80	45

Other comprehensive income, net of tax
Items that are or may be reclassified subsequently to profit or loss:
Exchange differences:		37	(43)
Exchange differences on translation of foreign operations	23.9	26	(43)
Exchange differences on disposal of foreign operations reclassified to profit or loss	23.6	8	-
Exchange differences on net investment hedge	23.9	3	-
Income tax on exchange differences on net investment hedge		-	-
Cash flow hedges:		15	9
Effective portion of changes in fair value of cash flow hedges	7.1.4/7.1.8	5	35
Change in fair value of cash flow hedges reclassified to profit or loss	7.1.4	-	(8)
Changes in fair value transferred to adjust the initial measurement of the hedged item recognized	7.1.8	10	(14)
Income taxes		-	(4)
Available-for-sale financial assets:		(2)	1
Changes in the fair value of available-for-sale financial assets	23.3	(2)	1
Income taxes		-	-
Items that will not be reclassified subsequently to profit or loss:		(135)	53
Remeasurements of the net defined benefit liability	23.5	(143)	55
Income tax on remeasurements of the net defined benefit liability	23.5	8	(2)

Total other comprehensive income for the period, net of tax		(85)	20

Total comprehensive income for the period attributable to:		(5)	65
Owners of the Company		(13)	60
Non-controlling interests		8	5

AGFA-GEVAERT GROUP - CONSOLIDATED STATEMENT OF FINANCIAL POSITION

MILLION EURO	Note	December 31, 2016	December 31, 2017
ASSETS
Non-current assets		1,066	985
Intangible assets and goodwill	13	621	589
Property, plant and equipment	14	198	190
Investments in associates	15.1	6	5
Other financial assets	15	10	11
Trade receivables	7	12	14
Receivables under finance lease	18	57	55
Other assets	20	13	6
Deferred tax assets	12	149	115
Current assets		1,286	1,248
Inventories	16	483	487
Trade receivables	7	493	503
Current income tax assets	12	64	63
Other tax receivables	17	25	23
Receivables under finance lease	18	30	30
Other receivables	7/19	13	14
Other assets	20	45	44
Derivative financial instruments	7	4	16
Cash and cash equivalents	21	129	68
Non-current assets held for sale	22	-	-
TOTAL ASSETS		2,352	2,233

EQUITY AND LIABILITIES
Equity	23	252	307
Equity attributable to owners of the Company		215	275
Share capital		187	187
Share premium		210	210
Retained earnings		841	878
Other reserves		(79)	(69)
Translation reserve		32	(8)
Post-employment benefits: remeasurements of the net defined benefit liability		(976)	(923)
Non-controlling interests		37	32
Non-current liabilities		1,382	1,241
Liabilities for post-employment and long-term termination benefit plans	24	1,264	1,149
Other employee benefits	24	13	13
Loans and borrowings	25	74	47
Provisions	26	4	5
Trade payables	7	6	4
Deferred income		2	2
Deferred tax liabilities	12	19	21
Current liabilities		718	685
Loans and borrowings	25	37	39
Provisions	26	74	66
Trade payables	7	219	220
Deferred revenue and advance payments	27	141	128
Current income tax liabilities	12	56	53
Other tax liabilities	17	37	34
Other payables	28	11	12
Employee benefits	24	132	128
Other liabilities		3	3
Derivative financial instruments	7	8	2
TOTAL EQUITY AND LIABILITIES		2,352	2,233

AGFA-GEVAERT GROUP - CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

		ATTRIBUTABLE TO OWNERS OF THE COMPANY
MILLION EURO	Note	Share capital	Share premium	Retained earnings	Reserve for own shares	Revaluation reserve	Hedging reserve	of the net defined Remeasurement benefit liability	Translation reserve	TOTAL	NON-CONTROLLING INTERESTS	TOTAL EQUITY

Balance at January 1, 2016		187	210	771	(82)	4	(14)	(841)	(7)	228	40	268
Comprehensive income for the period
Profit (loss) for the period		-	-	70	-	-	-	-	-	70	10	80
Other comprehensive income net of tax	23.9	-	-	-	-	(2)	15	(135)	39	(83)	(2)	(85)
Total comprehensive income for the period		-	-	70	-	(2)	15	(135)	39	(13)	8	(5)
Transactions with owners, recorded directly in equity
Dividends	23.8	-	-	-	-	-	-	-	-	-	(11)	(11)
Total transactions with owners, recorded directly in equity		-	-	-	-	-	-	-	-	-	(11)	(11)
Balance at December 31, 2016		187	210	841	(82)	2	1	(976)	32	215	37	252
Balance at January 1, 2017		187	210	841	(82)	2	1	(976)	32	215	37	252

Comprehensive income for the period
Profit (loss) for the period		-	-	37	-	-	-	-	-	37	8	45
Other comprehensive income net of tax	23.9	-	-	-	-	1	9	53	(40)	23	(3)	20
Total comprehensive income for the period		-	-	37	-	1	9	53	(40)	60	5	65
Transactions with owners, recorded directly in equity
Dividends	23.8	-	-	-	-	-	-	-	-	-	(10)	(10)
Total transactions with owners, recorded directly in equity		-	-	-	-	-	-	-	-	-	(10)	(10)
Balance at December 31, 2017		187	210	878	(82)	3	10	(923)	(8)	275	32	307

AGFA-GEVAERT GROUP - CONSOLIDATED STATEMENT OF CASH FLOWS

MILLION EURO	Note	2016	2017
Profit (loss) for the period		80	45
Adjustments for:
Depreciation, amortization and impairment losses	13/14	72	56
Changes in fair value of derivative financial instruments		2	(2)
Granted subventions		(8)	(9)
(Gains) Losses on sale of non-current assets	9/10	(12)	1
Net finance costs	11	51	39
Share of result of equity accounted investees - net of income tax		-	1
Income tax expense	12	35	53
		220	184
Changes in:
Inventories		34	(26)
Trade receivables		25	(38)
Trade payables		(18)	7
Deferred revenue and advance payments		(5)	(5)
Other working capital		(22)	5
Non-current provisions and (post-) employee benefits		(70)	(58)
Current provisions		(2)	(8)
Cash generated from operating activities		162	61
Income taxes paid		(20)	(22)
Net cash from (used in) operating activities		142	39

Interest received		1	1
Dividends received		-	-
Proceeds from sale of intangible assets	13	2	2
Proceeds from sale of property, plant and equipment	14	6	4
Proceeds from assets held for sale		14	-
Acquisitions of intangible assets	13	(4)	(3)
Acquisitions of property, plant and equipment	14	(40)	(43)
Changes in lease portfolio		(6)	-
Acquisitions of subsidiary, net of cash acquired	6	-	(2)
Changes in other investing activities		(3)	1
Net cash from (used in) investing activities		(30)	(40)

Interest paid		(9)	(9)
Dividends paid to non-controlling interests	23.8	(12)	(10)
Proceeds from borrowings		-	-
Repayment of borrowings	25.4	(72)	(23)
Other financial flows		(15)	(13)
Net cash from (used in) financing activities		(108)	(55)
Net increase (decrease) in cash and cash equivalents		4	(56)

Cash and cash equivalents at January 1		122	127
Effect of exchange rate fluctuations		1	(3)
Cash and cash equivalents at December 31	21	127	68

1. REPORTING ENTITY

Agfa-Gevaert NV ('the Company') is a company established in Belgium. The address of the Company's registered office is Septestraat 27, 2640 Mortsel.

The 2017 Consolidated Financial Statements of the Group include the Company and 103 consolidated subsidiaries (2016: 98 consolidated subsidiaries) controlled by the Company. Investments in subsidiaries and associates are listed in note 33.

Non-controlling interests have a material interest in seven subsidiaries in greater China and the ASEAN region. The financials are explained in note 23.8. In Europe, there are two subsidiaries in which non-controlling interests have an interest that is of minor importance to the Group.

2. BASIS OF PREPARATION

2.1 STATEMENT OF COMPLIANCE

The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), as adopted by the European Union up to December 31, 2017.

Financial reporting standards applied for the first time in 2017

The consolidated statements of the Group as disclosed in this annual report take into account the impact of the following new or revised IFRSs, which are effective for the first time for annual periods beginning on January 1, 2017:

• IAS 12 Income taxes Recognition of deferred tax assets for unrealized losses

In January 2016, the IASB issued an amendment to IAS 12 Recognition of deferred tax assets for unrealized losses, applicable for annual periods beginning on or after January 1, 2017. This amendment has been endorsed by the European Union in November 2017. This amendment clarifies the accounting treatment for deferred tax assets related to debt instruments measured at fair value. This amendment did not have an impact on the consolidated statements of the Group.

• Amendments to IAS 7 Statements of Cash Flow: Disclosure Initiative

In January 2016, the IASB published amendments to IAS 7 Statements of Cash Flow as part of its Disclosure Initiative, applicable for annual periods beginning on or after January 1, 2017. This amendment has been endorsed by the European Union in November 2017. This amendment requires disclosure of changes in liabilities arising from financing activities, including changes arising from cash flow and non-cash changes. The Group has presented disclosures in accordance with these amendments in Note 25.4 Reconciliation of liabilities arising from financing activities.

The Group has not early adopted any new IFRS requirements that were not yet effective in 2017. Further information is provided in note 4 'New standards and interpretations not yet adopted'. The consolidated financial statements were authorized for issue by the Board of Directors on March 22, 2018.

2.2 BASIS OF MEASUREMENT

The consolidated financial statements have been prepared on the historical cost basis except for the following material items in the statement of financial position:

derivative financial instruments are measured at fair value;
non-derivative financial instruments at fair value through profit or loss are measured at fair value; and
plan assets attributable to the Company's defined benefit retirement plans and other post-employment benefit plans are measured at fair value;
DBO attributable to defined benefit plans are measured using the projected unit credit method.

2.3 FUNCTIONAL AND PRESENTATION CURRENCY

The consolidated financial statements are presented in Euro, which is the Company's functional currency. All financial information presented in Euro has been rounded to the nearest million, except when otherwise indicated.

2.4 USE OF ESTIMATES AND JUDGMENTS

The preparation of the consolidated financial statements in conformity with IFRSs requires management to make certain judgments, assumptions and accounting estimates that may substantially impact the presentation of the Group's financial position and/or results of operations.

Revisions to accounting estimates are recognized prospectively. Accounting estimates and underlying assumptions are continually reviewed but may vary from the actual values.

The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are listed below with reference to the respective note(s) where more information is disclosed.

Area of judgments, assumptions and accounting estimates	Explanatory notes
The discounted cash flows used for impairment testing	Note 13 'Intangible assets and goodwill'
The useful lives of intangible assets with finite useful lives	Note 13 'Intangible assets and goodwill'
The assessment of the adequacy of provisions for pend ing or expected income tax audits over previous years	Note 12 'Income taxes'
The recoverability of deferred tax assets	Note 12 'Income taxes'
The actuarial assumptions used for the measurement of defined benefit obligations	Note 24 'Employee benefits'
Revenue recognition with regard to multiple-element arrangements	Note 27 'Deferred revenue and advance payments'

3. SIGNIFICANT ACCOUNTING POLICIES

3.1 BASIS OF CONSOLIDATION

3.1.1 Business combinations

Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group.

Control is the power over the entity, i.e. the right that gives the Company the ability to direct the relevant activities of related entity, and is exposed to or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

Goodwill is not amortized but tested for impairment on an annual basis and whenever there is an indication that the cash generating unit to which goodwill has been allocated may be impaired. The impairment testing process is described in the appropriate section of these policies. Goodwill is stated at cost less accumulated impairment losses. With respect to associates, the carrying amount of goodwill is included in the carrying amount of the investment.

The Group measures goodwill at the acquisition date as:

the fair value of the consideration transferred; plus
the recognized amount of any non-controlling interests in the acquiree; plus if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree; less
the net fair value of the identifiable assets acquired and liabilities assumed.

When the excess is negative, a bargain purchase gain is recognized immediately in profit or loss. Any contingent consideration payable is recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration recognized as a liability are recognized in profit or loss.

Costs related to the acquisition are expensed as incurred.

3.1.2 Acquisitions of non-controlling interests

Non-controlling interests are measured at their proportionate share of the acquirees identifiable net assets at the date of acquisition.

3.1.3 Subsidiaries

A subsidiary is an entity controlled by the Company. Control exists when the Company has the power over the entity, i.e. the right that gives the Company the ability to direct the relevant activities of related entity, and is exposed to or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of a subsidiary are included in the consolidated financial statements from the acquisition date until the date when the parent ceases to control the subsidiary.

3.1.3.1 Changes in a parent's ownership interest in a subsidiary that do not result in a loss of control

Changes in a parent's ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions (i.e. transactions with owners in their capacity as owners). In such circumstances the carrying amounts of the controlling and non-controlling interests shall be adjusted to reflect the changes in their relative interests in the subsidiary. Adjustments to noncontrolling interests arising from transactions that do not involve the loss of control are based on a proportionate amount of the net assets of the subsidiary. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received, shall be recognized in equity and attributed to the owners of the parent.

3.1.4 Loss of control

On the loss of control, the Group derecognizes the assets and liabilities of the subsidiary, any noncontrolling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognized in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently it is accounted for as an equity-accounted investee or as an available-for-sale financial asset depending on the level of influence retained.

3.1.5 Investments in associates

An associate is an entity in which the Company has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is presumed to exist when the Company holds between 20% and 50% of the voting power of another entity. An investment in an associate is accounted for using the equity method from the date on which it becomes an associate and is recognized initially at cost. The cost of the investment includes transaction costs. On acquisition of the investment, any difference between the cost of the investment and

the Company's share of the net fair value of the associate's identifiable assets and liabilities is accounted for as follows:

goodwill relating to an associate is included in the carrying amount of the investment;
any excess of the Company's share of the net fair value of the associate's identifiable assets and liabilities over the cost of the investment is included as income in the determination of the Company's share of the associate's profit or loss in the period in which the investment is acquired.

If there is an indication that an investment in an associate may be impaired, the accounting policy with respect to impairment is applied.

3.1.5.1 Elimination of unrealized profits and losses on transactions with associates

Profits and losses resulting from upstream and downstream transactions between the Company – included its consolidated subsidiaries – and an associate must be eliminated to the extent of the Company's interest in the associate.

Upstream transactions are, for example, sales of assets from an associate to the Company. Downstream transactions are, for example, sales of assets from the Company to an associate.

3.1.5.2 When an investment ceases to be an associate

From the date when the Company ceases to have significant influence over an associate, it accounts for related investment in accordance with IAS 39 from that date. On the loss of significant influence, the Company measures at fair value any investment the Company retains in the former associate.

The Company recognizes in profit or loss any difference between:

the fair value of any retained investment and any proceeds from disposing of the (partial) interest in the associate; and
the carrying amount of the investment at the date when significant influence is lost.

3.1.6 Jointly controlled entities and jointly controlled operations

A joint arrangement is an arrangement of which two or more parties have joint control. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. Depending upon the rights and obligations of the parties to the arrangement, the joint arrangement is classified either as a joint operation or a joint venture.

3.1.6.1 Joint operation

A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. Those parties are called joint operations.

The consolidated financial statements include the assets that the Group controls and the liabilities that it incurs in the course of pursuing the joint operation and the expenses that the Group incurs and its share of the income that it earns from the joint operation.

3.1.6.2 Joint venture

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. Those parties are called joint venturers.

The Group as joint venturer recognizes its interest in a joint venture as an investment that is accounted for using the equity method.

3.1.7 Transactions eliminated on consolidation

Intragroup balances and transactions, including income, expenses and dividends, are eliminated in full. Unrealized profits and losses resulting from intragroup transactions that are recognized in assets, such as inventory and fixed assets, are eliminated in full.

Unrealized gains arising from transactions with equity- accounted investees are eliminated against the investment to the extent of the Group's interest in the investee. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.

3.2 FOREIGN CURRENCY

Items included in the financial statements of each of the Company's entities are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The consolidated financial statements are presented in Euro, which is the Company's functional and presentation currency.

3.2.1 Foreign currency transactions

All transactions in currencies other than the functional currency are foreign currency transactions. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign currency gains and losses resulting from the settlement of such transactions and from the translation at closing rates of monetary assets and liabilities denominated in foreign currencies are recognized in profit or loss. Non-monetary assets and liabilities measured at historical cost that are denominated in foreign currencies are translated using the exchange rate at the date of the transaction.

3.2.2 Foreign operations

A foreign operation is an entity that is a subsidiary, associate, joint venture or branch of the Company, of which the activities are based or conducted in a currency other than the Euro. The financial statements of foreign operations are translated for the purpose of the consolidation as follows:

assets and liabilities are translated at the closing rate;
income and expenses are translated at average year-to-date exchange rates; and
equity components are translated at historical rates, excluding current year movements, which are translated at average year-to-date rates.

All resulting exchange differences are recognized in other comprehensive income and accumulated in a separate component of equity being 'Translation Reserve'. The amount attributable to any non-controlling interests is allocated to and recognized as part of noncontrolling interests.

On the disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation, recognized in other comprehensive income and accumulated in the separate component of equity, is reclassified from equity to profit or loss when the gain or loss on disposal is recognized. When the disposal of a foreign operation relates to a subsidiary, the cumulative amount of the exchange differences that have been attributed to non-controlling interests are derecognized and reclassified to retained earnings.

On the partial disposal of a subsidiary that includes a foreign operation, the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is re-attributed to non-controlling interests in that foreign operation. Any other partial disposal of a foreign operation – related to an associate, joint venture or branch of the Company – results in a reclassification to profit or loss of the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income.

A partial disposal of an entity's interest in a foreign operation is any reduction in an entity's ownership interest in a foreign operation, except for those reductions resulting in:

the loss of control of a subsidiary;
the loss of significant influence over an associate;
the loss of joint control over a joint arrangement.

These reductions are accounted for as disposals resulting in a reclassification from other comprehensive income to profit or loss of the cumulative amount of the exchange differences relating to that foreign operation.

3.2.3 Hedge of a net investment in a foreign operation

Where a foreign currency liability hedges a net investment in a foreign operation, foreign exchange differences arising on the translation of the liability to the functional currency are recognized directly in other comprehensive income.

Where a derivative financial instrument hedges a net investment in a foreign operation, the portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognized directly in other comprehensive income, while the ineffective portion is reported in profit or loss.

On the disposal of a foreign operation that is subject to a net investment hedge, the accumulated profits and losses of related financial instruments recognized at this time in equity are immediately reclassified to profit or loss.

3.3 REVENUE AND OTHER OPERATING INCOME

All revenues derived from the selling of products or rendering of services or from licensing agreements are recognized as revenue. Other operational revenues are recognized as other operating income.

Revenues are recorded net of sales taxes, customer discounts, rebates and similar charges.

The Group recognizes revenue in profit or loss when significant risks and rewards of ownership have been transferred to the buyer, when the amount of revenue can be measured reliably and there are no significant uncertainties regarding recovery of the consideration due, the associated costs or the possible return of goods and there is no continuing management involvement with the goods.

3.3.1 Sale of goods

For product sales including the sale of consumables, chemicals, spare parts, stand-alone equipment and software licenses, these criteria are generally met at the time the product is shipped and delivered to the customer and, depending on delivery conditions, title and risk have passed to the customer and acceptance of the product has been obtained.

3.3.2 Rendering of services

Revenue related to services, including maintenance, is recognized on a straight-line basis over the period during which the services are performed.

3.3.3 Royalties

Fees and royalties paid for the use of the Company's assets are recognized on an accrual basis in accordance with the terms and substance of the relevant agreement. In some cases, whether or not a license fee or royalty will be received is contingent on the occurrence of a future event. In such cases, revenue is recognized only when it is probable that the fee or royalty will be received, which is generally when the event has occurred.

3.3.4 Multiple-element arrangements

The Group also enters into arrangements combining multiple deliverables such as software, hardware/equipment and services, including training, maintenance and post-contract customer support. Such arrangements are assessed to determine whether the deliverables represent separate units of accounting.

The delivered elements are subject to separate recognition only if:

they have value to the customer on a standalone basis;
there is objective and reliable evidence of the fair value of the undelivered element(s); and
in case a general right of return exists relative to the delivered element(s), delivery or performance of the undelivered element(s) is considered probable and in the control of the Company.

To the extent that the multiple-element arrangements do not involve significant modification or customization of the software element, the total arrangement fee is allocated to each deliverable of the arrangement based upon its relative fair value as determined by 'vendor specific objective evidence'. Vendor specific objective evidence of fair value for the elements of an arrangement is based upon established price lists for each element, when sold separately on the market.

Revenue allocated to each deliverable within a multiple-element arrangement, not requiring significant modification of the software, is recognized on an element-by-element basis when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectability is reasonably assured.

When the fair value of one or more delivered elements in the arrangement cannot be determined objectively, but objective evidence of fair value exists for all undelivered elements, the Group defers revenue for the undelivered elements and recognizes the residual amount of the arrangement fee related to the delivered elements when the above mentioned recognition criteria are met.

Within the Agfa HealthCare business segment, the vast majority of the multiple-element arrangements do not require significant modification or customization of the software element. Revenue related to the hardware component of the arrangement is generally recognized when the product is delivered to the customer and creates value on a stand-alone basis. Revenue related to the software component of the arrangement is recognized after successful installation at the client's premises. Any related services are recognized as rendered.

For equipment sales that require substantive installation activities within the Agfa Graphics business segment, revenue is recognized when the installation of the equipment has been finalized in accordance with the contractually agreed specifications and the system is ready to be used by the customer.

Revenue related to multiple-element arrangements that require significant customization or modification of the software, is recognized following the percentage of completion method. This method applies to Agfa HealthCare solutions which have not met the three major milestones as defined in the 'Solution Launch Process' pilot projects. The contract stage of completion is calculated as the ratio of total contract costs incurred compared to the estimated total contract costs for completing the project.

If no sufficient basis to measure progress to completion is available, revenue is recognized upon final acceptance of the customer.

3.4 INCOME FROM LEASE ARRANGEMENTS

3.4.1 Finance leases

Receivables from finance leases in which the Company as lessor transfers substantially all the risks and rewards incidental to ownership to the customer are recognized at an amount equal to the discounted future minimum lease payments. Finance lease income – reported under 'Other operating income' – is subsequently recognized based on a pattern reflecting constant periodic rate of return on the net investment using the effective interest method. On manufacturing leases, a selling profit component is recognized on the basis of the policy for sale of goods. This means that the Company recognizes revenue and related profit margin at the moment a manufacturing organization or any related company invoices Agfa Finance at commencement of the lease contract with the external customer. The major portion of the finance lease agreements in which the customer is to be regarded as the economic owner, are concluded by Agfa Finance (i.e. Agfa Finance NV, its subsidiaries, Agfa Finance Corp. and Agfa Finance Inc.).

Multiple-element arrangements that are subject to a finance lease arrangement follow the same revenue recognition policy as if no financing agreement has been included.

A commercial contract whereby a certain piece of equipment is financed by means of a medium or long-term agreement under which the customer commits to purchase a certain level of consumables at a mark-up price is called a 'bundle deal'. Finance lease payments made under bundle deal contracts are apportioned between the reduction of the outstanding receivable and consideration from consumables sold on the basis of their relative fair values.

3.4.2 Operating leases

Operating lease income for rental of business accommodation and equipment – reported under 'Other operating income' – is recognized on a straight-line basis over the lease term. An arrangement that is not in the legal form of a lease is accounted for as a lease if it is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

3.4.3 Sale and leaseback transactions

Profit from sale and leaseback transactions is recognized immediately if significant risks and rewards of ownership have passed to the buyer, the leaseback results in an operating lease and the transaction is established at fair value.

3.5 RESEARCH AND DEVELOPMENT EXPENSES

For accounting purposes, research expenses are defined as costs incurred for current or planned investigations undertaken with the prospect of gaining new scientific or technical knowledge and understanding. Development expenses are defined as costs incurred for the application of research findings or specialist knowledge to plans or designs for the production, provision or development of new or substantially improved products, services or processes, respectively, prior to the commencement of commercial production or use.

Research and development expenses are incurred in the Agfa-Gevaert Group for in-house research and development activities as well as numerous research and development collaborations and alliances with third parties.

Research and development expenses include, in particular the running costs of the research and development departments such as personnel expenses, material costs and depreciation of fixed assets as well as the costs of laboratories, costs of applications development facilities, engineering departments and other departments carrying out research and development tasks, costs of contacts with universities and scientific institutes including expenses incurred for commissioned research and development work.

Research costs cannot be capitalized. The conditions for capitalization of development costs are closely defined: an intangible asset must be recognized if, and only if, there is reasonable certainty of receiving future cash flows that will cover an asset's carrying amount. Additional information about the capitalization of development expenses is provided in note 3.9.1.

3.6 NET FINANCE COSTS

Interest income (expense) - net comprises interests receivable/payable in relation to items of the net financial debt position.

Net financial debt is defined as current and non-current loans and borrowings less cash and cash equivalents. Other finance income (expense) - net comprises:

interest received/paid on other assets and liabilities not part of the net financial debt position such as the net interest cost of defined benefit plans and the interest component of long-term termination benefits;
exchange results on non-operating activities;
changes in the fair value of derivative instruments hedging non-operating activities;
impairment losses recognized on available-for-sale financial assets;
results on the sale of marketable securities; and
other finance income (expense).

Interest income is recognized in profit or loss as it accrues, taking into account the effective yield on the asset.

Dividend income is recognized in profit or loss on the date that the dividend is declared.

All interest and other costs incurred in connection with borrowings are expensed as incurred using the effective interest rate.

The interest expense component of finance lease payments is recognized in profit or loss using the effective interest rate method.

The net interest cost of defined benefit plans is determined by multiplying the net defined benefit liability by the discount rate that is used to measure the defined benefit obligation, both as determined at the start of the annual reporting period, taking account of any changes in the net defined benefit liability during the period as a result of contributions and benefit payments.

The interest component of long-term termination benefits comprises the impact of unwinding the liability as well as the impact of the changed discount rate.

3.7 INCOME TAX

Income tax on the profit (loss) for the year comprises current and deferred tax. Income tax is recognized in profit or loss except to the extent that it relates to items recognized directly in other comprehensive income, in which case it is recognized in other comprehensive income.

In determining the amount of current and deferred tax the Company takes into account the impact of uncertain tax positions and whether additional taxes and interest may be due.

3.7.1 Current tax

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Additional income taxes that arise from the distribution of dividends are recognized at the same time as the liability to pay the related dividend.

3.7.2 Deferred tax

Deferred tax is calculated using the balance sheet method, providing for temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

The following temporary differences are not provided for:

taxable temporary differences on the initial recognition of goodwill;
the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss); and
differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future.

The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the reporting date. A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences, unused tax losses and credits can be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

3.7.2.1 Deferred tax on defined benefit plans

Defined benefit plans could give rise to either taxable or deductible temporary differences depending on whether the tax base exceeds the carrying amount of the liability (taxable difference) or the opposite (deductible difference). For defined benefit liabilities resulting in a deductible temporary difference, a deferred tax asset is recognized when assumed recoverable within the foreseeable future.

When the accumulated remeasurements – being the impact of the first time adoption of the 2011 amendment to IAS 19 and all subsequent remeasurements – of the net defined benefit liability represent a debit balance in OCI and due to the accumulated remeasurements the defined benefit liability results in a deductible temporary difference with deferred tax asset recognition, the impact is reflected in OCI to the extent it is related to the accumulated remeasurements. If in subsequent years a deferred tax asset recognized in OCI decreases, the impact will also be presented in OCI.

When the accumulated remeasurements of the net defined benefit liability would represent a credit balance in OCI and due to the accumulated remeasurements the defined benefit liability results in a taxable temporary difference with deferred tax liability recognition, the impact is reflected in OCI to the extent it is related to the accumulated remeasurements. If in subsequent years a deferred tax liability recognized in OCI decreases, the impact will also be presented in OCI.

The total balance of accumulated remeasurements of the net defined benefit liability is reflected in OCI, net of tax.

3.8 GOODWILL AND INTANGIBLE ASSETS WITH INDEFINITE USEFUL LIVES

Goodwill that arises on the acquisition of subsidiaries is presented with intangible assets. For the measurement of goodwill at initial recognition, see note 3.1.1 'Business Combinations'.

Goodwill is measured at cost less accumulated impairment losses. In respect of equity-accounted investees, the carrying amount of goodwill is included in the carrying amount of the investment, and any impairment loss is allocated to the carrying amount of the equity-accounted investee as a whole.

Intangible assets with indefinite useful lives, such as trademarks, are stated at cost less accumulated impairment losses.

Intangible assets with indefinite useful lives are not amortized. Instead, they are tested for impairment annually and whenever there is an indication that the intangible asset may be impaired.

3.9 INTANGIBLE ASSETS WITH FINITE USEFUL LIVES

3.9.1 Recognition and measurement

Intangible assets with finite useful lives are stated at cost less accumulated amortization and impairment losses.

Research and development costs are expensed as they are incurred, except for certain development costs, which are capitalized when it is probable that a development project will be a success, and certain criteria, including technological and commercial feasibility, have been met. Capitalized development costs are amortized on a systematic basis over their expected useful lives.

In accordance with IFRS 3 Business Combinations, if an intangible asset is acquired in a business combination, the cost of that intangible asset is its fair value at the acquisition date. The fair value of an intangible asset reflects market expectations about the probability that the future economic benefits embodied in the asset will flow to the entity.

3.9.2 Subsequent expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognized in profit or loss as incurred.

3.9.3 Amortization

Intangible assets with finite useful lives, such as acquired technology and customer relationships are amortized on a straight-line basis over their estimated useful lives, generally for periods ranging from five to 15 years. Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

3.10 PROPERTY, PLANT AND EQUIPMENT

3.10.1 Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses.

The cost of an item of property, plant and equipment comprises:

its purchase price, including import duties and non-refundable purchase taxes;
any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management;
the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, the obligation for which the Company incurs either when the item is acquired or as a consequence of having used the item during a particular period for purposes other than to produce inventories during that period;
capitalized borrowing costs.

For self-constructed assets, directly attributable costs are direct cost of materials, direct manufacturing expenses, appropriate allocations of material and manufacturing overheads, and an appropriate share of the depreciation of assets used in construction. It includes the share of expenses for company pension plans and discretionary employee benefits that are attributable to construction and capitalized borrowing costs.

3.10.2 Subsequent expenditure

Expenses for the repair of property, plant and equipment are usually expensed as incurred. They are, however, capitalized when they increase the future economic benefits embodied in the item of property, plant and equipment.

3.10.3 Leased assets

Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Property, plant and equipment acquired by way of finance lease is stated at an amount equal to the lower of its fair value and the present value of the minimum lease payments at inception of the lease, less accumulated depreciation and impairment losses.

3.10.4 Depreciation

Property, plant and equipment is depreciated on a straight-line basis over the estimated useful life of the item, except where the declining-balance basis is more appropriate in light of the actual utilization pattern from the date they are available for use.

For leased assets, the depreciation period is the estimated useful life of the asset, or the lease term if shorter.

The estimated useful lives of the respective asset categories are as follows:

Owned assets
Buildings	20 to 50 years
Outdoor infrastructure	10 to 20 years
Plant installations	6 to 20 years
Machinery and equipment	6 to 12 years
Laboratory and research facilities	3 to 5 years
Vehicles	4 to 8 years
Computer equipment	3 to 5 years
Furniture and fixtures	4 to 10 years

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

3.11 IMPAIRMENT TESTING OF GOODWILL, INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT

Goodwill and intangible assets with indefinite useful lives are tested for impairment at least annually and upon the occurrence of an indication of impairment.

The impairment tests are performed annually at the same time each year and at the cashgenerating unit level.

The Group defines its cash-generating units based on the way that it monitors its goodwill and will derive economic benefit from the acquired goodwill and intangibles.

The impairment tests are performed by comparing the carrying value of the assets of these cash-generating units with their recoverable amount, based on their future projected cash flows discounted at an appropriate pre-tax rate of return.

The discount rate used in calculating the present value of the estimated future cash flows is based on a weighted average cost of equity and debt capital (WACC), using a debt-equity ratio of an average market participant. An additional risk premium was added to the cost of equity. The cost of debt is based on conditions on which comparable companies can obtain long-term financing. The forecasting risk related to silver and aluminum is reflected in the cash flow projections.

An impairment loss is recognized whenever the carrying amount of the cash-generating unit exceeds its recoverable amount. Impairment losses are recognized in profit or loss.

Consideration is given at each reporting date to determine whether there is any indication of impairment of the carrying amounts of the Group's property, plant and equipment and intangible assets with finite useful lives.

If any such indication exists, the asset's recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognized in profit or loss and the carrying amount of related asset is reduced through use of an allowance account.

The recoverable amount of the Group's property, plant and equipment and intangible assets with finite useful lives is the greater of the fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

An impairment loss recognized in prior periods for an asset other than goodwill shall be reversed if, and only if, there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognized.

3.12 NON-DERIVATIVE FINANCIAL ASSETS

Non-derivative financial assets include primary financial instruments such as cash, receivables and equity and debt instruments in another entity.

The Group initially recognizes loans and receivables on the date that they are originated. All other non-derivative financial assets are recognized on the trade date when the Group becomes a party to the contractual provisions of the instrument.

The Group derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the rights to receive the contractual cash flows on a financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. In a transaction where an entity neither transfers nor retains substantially all of the risks and rewards of ownership of a financial asset, the related asset is derecognized in case the entity lost control of the asset. Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.

The Group has the following categories of non-derivative financial assets: financial assets at fair value through profit or loss, held-to-maturity financial assets, loans and receivables and available for sale financial assets.

3.12.1 Financial assets at fair value through profit or loss

A financial asset is classified at fair value through profit or loss if it is classified as held for trading or if it is designated as such upon initial recognition. These assets are measured at fair value with changes in fair value recognized in profit or loss.

Non-derivative financial assets at fair value through profit or loss comprise investments in mutual funds.

3.12.2 Held-to-maturity financial assets

If the Group has a positive intent to hold debt securities with fixed or determinable payments and fixed maturity till maturity date, then such financial assets are classified as held-to-maturity. Held-to-maturity financial assets are initially recognized at fair value plus any directly attributable transaction costs.

Subsequent to initial recognition held-to-maturity financial assets are measured at amortized cost using the effective interest method, less any impairment losses (see note 3.13). Held-to-maturity financial assets comprise debt securities with a short term maturity and are consequently presented under 'Cash and cash equivalents' as well as debt securities with a longer maturity date that are presented under 'Financial assets'.

3.12.3 Loans and receivables

Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market.

These financial assets are initially recognized at fair value plus any directly attributable transaction costs.

Subsequent to initial recognition, these financial assets are carried at amortized cost using the effective interest rate method, less any impairment losses (see note 3.13).

Loans and receivables comprise trade receivables, lease and other receivables, cash on hand, demand deposits and checks as well as loans and receivables included in financial assets. Cash and cash equivalents categorized under loans and receivables comprise cash balances, demand deposits and checks with maturities of three months or less from the acquisition date that are subject to an insignificant risk of changes in fair value, and are used by the Group in the management of its short-term commitments.

3.12.4 Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale and not classified in any of the previous categories.

Available-for-sale financial assets are stated at fair value plus any directly attributable transaction costs, except for unquoted equity instruments whose fair value cannot be estimated reliably. These investments are carried at cost. A gain or loss arising from a change in fair value of an investment classified as available-for-sale is recognized in other comprehensive income except for foreign exchange gains and losses on available-for-sale monetary items and impairment losses on all available-for-sale financial assets, which are recognized in profit or loss. The Group's investments in equity securities and certain debt securities are classified as available-for-sale financial assets. When the investment is sold, collected, or otherwise disposed of, or when the carrying amount of the investment is impaired, the gains or losses previously accumulated in other comprehensive income are reclassified to profit or loss.

3.13 IMPAIRMENT OF NON-DERIVATIVE FINANCIAL ASSETS

A financial asset not classified as at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. When indication for impairment exists, the asset's recoverable amount is estimated.

3.13.1 Financial assets measured at amortized cost

The recoverable amount of the Group's loans and receivables and held-to-maturity financial assets is the present value of the estimated future cash flows discounted at the financial asset's original effective interest rate. When the carrying amount of a financial asset is higher than its recoverable amount, an impairment loss is recognized in profit or loss and the carrying amount of related asset is reduced through use of an allowance account.

An impairment loss recognized in prior periods on financial assets measured at amortized cost shall be reversed if, and only if, there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognized.

For trade accounts receivable, the Company assesses at least on a quarterly basis the biggest outstanding accounts receivable (totaling +/- 70% of total accounts receivable) individually for collectability.

Adjustments to the allowance account are made based on professional judgment and taking into account following general principles:

all receivables of which the collection is handled by the legal department are fully impaired;
the remaining outstanding receivables receivables not individually assessed or handled by the legal department – are impaired based on the number of days overdue;
doubtful accounts receivable that are credit insured are only impaired based on the risk that is contractually retained by the Group;
outstanding amounts covered by a letter of credit are not impaired.

To cover the credit risk of the lease receivables, the Company assesses at least on a quarterly basis all lease receivables individually for collectability.

Adjustments to the allowance account are generally made based on the number of days overdue. Deviations however remain possible based on supporting evidence from the Credit and Collections department. In assessing the recoverability of the lease receivables, management considers remarketing values, credit insurance and the existence of a letter of credit.

3.13.2 Available-for-sale financial assets

Available-for-sale financial assets comprise investments in equity and debt securities, other than investments in associates and are stated at fair value, except for unquoted equity instruments whose fair value cannot be estimated reliably.

Impairment losses on available-for-sale financial assets that are measured at fair value are recognized by reclassifying the losses accumulated in 'Revaluation reserve' in other comprehensive income to profit or loss.

The cumulative loss that is reclassified from other comprehensive income to profit or loss is the difference between the acquisition cost, net of any principal repayment and amortization, and the current fair value, less any impairment loss recognized previously in profit or loss. If, in a subsequent period, the fair value of an impaired available-for-sale debt security increases and the increase can be related objectively to an event occurring after the impairment loss was recognized, then the impairment loss is reversed, with the amount of the reversal recognized in profit or loss.

However, any subsequent recovery in the fair value of an impaired available-for-sale equity security is recognized in other comprehensive income.

3.14 CURRENT AND OTHER TAX RECEIVABLES AND LIABILITIES

Current income tax for current and prior periods are, to the extent unpaid, recognized as a liability. If the amount already paid in respect of current and prior periods exceeds the amount due for those periods, the excess is recognized as an asset. Income tax assets and income tax liabilities are both carried at cost.

Other tax receivables and liabilities relate to other tax, such as VAT and other indirect taxes. They are carried at cost.

Both current and other tax receivables are offset against current tax liabilities, respectively other tax liabilities when they relate to taxes levied by the same taxation authority and are intended to be settled on a net basis.

3.15 OTHER ASSETS

Other assets comprise deferred charges and other non-financial assets. Deferred charges relate to payments made by the Company before the balance sheet date in respect of the expenses of future periods (prepayments). Examples of deferred charges are payments of rent, interests and insurance premiums that were made before the balance sheet date but relate to a specific period after the balance sheet date.

Non-financial assets are carried at cost. Deferred charges are recognized in profit or loss by the straight-line method or according to performance of the services received.

3.16 DERIVATIVE FINANCIAL INSTRUMENTS

The Group uses derivative financial instruments primarily to manage its exposure to interest rate and foreign currency risks arising from operational, financing and investment activities. In accordance with its treasury policy, the Group does not currently hold or issue derivatives for trading purposes. Derivative financial instruments that are economic hedges but that do not meet the strict IAS 39 Financial Instruments: Recognition and Measurement hedge accounting criteria, however, are accounted for as financial assets or liabilities at fair value through profit or loss.

Derivative financial instruments are initially recognized at fair value on the date at which a derivative contract is entered into (trade date) and are subsequently remeasured at their fair value. In case cash flow hedge or net investment hedge accounting is applied, the effective portion of any gain or loss is recognized in OCI, the non-effective portion in profit or loss.

Cash flow, fair value or net investment hedge accounting is applied to all hedges that qualify for hedge accounting when required documentation of the hedging relationship is in place and when the hedge is determined to be effective.

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 determined based on observable prices for the related assets or liabilities (level 2).

3.16.1 Fair value hedges

When a derivative financial instrument hedges the changes in fair value of a recognized asset or liability or an unrecognized firm commitment, any resulting gain or loss on the hedging instrument is recognized in profit or loss.

The hedged item is also stated at fair value in respect of the risk being hedged, with any gain or loss being recognized in profit or loss.

3.16.2 Cash flow hedges

When a derivative financial instrument hedges the variability in cash flows that is attributable to a particular risk associated with a recognized asset or liability or a highly probable forecasted transaction, the effective portion of any resulting gain or loss on the hedging instrument is recognized directly in other comprehensive income.

When the forecasted transaction results in the recognition of a non-financial asset or a nonfinancial liability the cumulative gain or loss is reclassified from other comprehensive income to the initial carrying amount of the asset or liability and subsequently recognized in profit or loss when the asset acquired or the liability assumed affects profit or loss. When the hedge relates to financial assets or liabilities, the cumulative gain or loss on the hedging instrument is reclassified from other comprehensive income to profit or loss in the same period during which the hedged forecasted cash flow affects profit or loss (for instance when the forecasted transaction takes place or when the variable interest expense is recognized). The gain or loss relating to any ineffective portion is recognized immediately in profit or loss. When a hedging instrument expires or is sold, terminated or exercised, or when a hedge no longer meets the criteria for hedge accounting but the hedged transaction is still expected to occur, the cumulative gain or loss (at that point) remains in other comprehensive income and is reclassified in accordance with the above policy when the hedged transaction occurs. If the hedged transaction is no longer expected to occur, the cumulative gain or loss recognized in other comprehensive income is immediately recognized in profit or loss.

3.17 INVENTORIES

Raw materials, supplies and goods purchased for resale are valued at purchase cost.

Work in progress and finished goods are valued at the cost of production. The cost of production comprises the direct cost of materials, direct manufacturing expenses, appropriate allocations of material and manufacturing overheads, and an appropriate share of the depreciation of assets used for production. It includes the share of expenses for company pension plans and discretionary employee benefits that are attributable to production. Administrative costs are included where they are attributable to production.

Inventories are valued using the weighted-average cost method.

If the purchase or production cost is higher than the net realizable value, inventories are written down to net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs necessary to make the sale.

The cost of inventories may not be recoverable in following situations:

Obsolete inventory: this is determined based on a list of non-moving or slow-moving inventoryitems, including items approximating the expiry date;
Damaged or expired inventory items or products showing quality problems;
Declining selling prices.

Within the Group, write-downs of inventories mainly result from obsolescence.

3.18 CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise cash, checks received, and balances with banks and companies. Cash equivalents are highly liquid short-term financial investments that are subject to an insignificant risk of changes in value, are easily convertible into a known amount of cash and have a maturity of three months or less from the date of acquisition or investment.

3.19 NON-CURRENT ASSETS HELD FOR SALE

The Group classifies an 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. 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 applicable IFRS. Then, on initial classification as held for sale, 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. Assets classified as held for sale are no longer amortized or depreciated.

3.20 SHARE CAPITAL

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares, net of any tax effects, are recognized as a deduction from retained earnings.

When share capital recognized as equity is repurchased, the amount of the consideration paid, including directly attributable costs, net of any tax effects, is recognized as a deduction from equity. Repurchased shares are classified as treasury shares and presented as a deduction from total equity under the caption 'Reserve for own shares'. Cancelled treasury shares are transferred from 'Reserve for own shares' to 'Retained earnings'.

3.21 EMPLOYEE BENEFITS

For the accounting treatment of post-employment plans, IFRS distinguishes defined contribution plans and defined benefit plans. The classification depends on which party – Company or employee – bears the actuarial and investment risk. In case of a defined contribution plan, the employee bears all the risks and therefore the Company does not recognize a liability in its statement of financial position except for any unpaid contribution.

In case of a defined benefit plan, the Company bears the actuarial and investment risk and should consequently recognize a liability in its statement of financial position.

3.21.1 Defined contribution plans

Contributions to defined contribution pension plans are recognized as an expense in profit or loss as incurred.

They are allocated among functional costs: cost of sales, research and development expenses, selling and administrative expenses, following the functional area of the corresponding profit and cost centers to which related employees are attributed.

3.21.2 Defined benefit plans

As from December 31, 2016, the accounting treatment for Belgian defined contribution plans with return guaranteed by law has been aligned with the accounting treatment of defined benefit plans.

Liabilities for post-employment benefits

For defined benefit plans, the amount recognized in the statement of financial position is determined as the present value of the defined benefit obligation less the fair value of any plan assets. Where the calculation results in a net surplus, the recognized asset does not exceed the present value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan.

The present value of the defined benefit obligations (DBO) and the service costs are calculated by a qualified actuary using the Projected Unit Credit (PUC) method. Under this method projected benefits that are payable each future year are discounted to the reporting date at the assumed interest rate. The resulting total benefit obligation is then allocated to past service, presenting the DBO and yearin-service, presenting the service cost. The assumed interest rate is the discount rate based on yields at reporting date on high-quality corporate bonds that have maturity dates approximating the terms of the Group's obligations. In determining the net present value of the future benefit entitlement for service already rendered (DBO), the Group considers future compensation and benefit increases. The DBO also comprises the present value from the effects of taxes payable by the plan on contributions or benefits relating to services already rendered.

More information about the application of the PUC method for Belgian defined contribution plans can be found hereafter.

Defined benefit cost recognized in profit or loss and 'Other comprehensive income'

The amount charged to profit or loss consists of current service cost, past service cost, gain or loss on settlement, net interest cost and administrative expenses and taxes. Current service costs as well as administrative expenses and taxes, which are borne by the employer(s) participating to the plan, are allocated among functional costs: cost of sales, research and development expenses, selling and general administrative expenses, following the functional area of the corresponding profit and cost centers to which related employees are attributed.

Past service cost and settlement gains (losses) are recognized immediately in profit or loss under 'Sundry other operating income' or 'Sundry other operating expense' when the plan amendment, curtailment or settlement occurs. Administrative expenses which are related to the management of plan assets and taxes directly linked to the return on plan assets – borne by the plan itself – are included in the return on plan assets and are recognized in 'Other comprehensive income, net of income taxes (OCI)'.

Net interest cost is recognized in profit or loss under 'Other finance expense'. It is calculated by applying the discount rate used to measure the defined benefit obligation to the net defined benefit liability. The net interest cost is broken down into interest income on plan assets and interest cost on the defined benefit obligation. The difference between the return on plan assets and the interest income on plan assets is included in line item 'Post-employment benefits: remeasurements of the net defined benefit liability' and recognized in 'Other comprehensive income, net of income taxes'. Next to the difference between the actual return and the interest income on plan assets, the line item 'Post-employment benefits: remeasurements of the net defined benefit liability' also comprises actuarial gains and losses resulting for example from an adjustment of the discount rate. These changes are all presented in 'Other comprehensive income, net of income taxes'.

Belgian defined contribution plans with return guaranteed by law

Belgian 'Defined Contribution' plans are subject to the Occupational Pensions Act of April 2003. According to article 24 of this Act, affiliated persons are entitled to a guaranteed minimum return on contributions made by either the organizer of the plan or the employee. Some conditions in this law, such as the required level of minimum return, have been amended by the Act of December 18, 2015. This Act has also impacted the accounting treatment of defined contribution plans with return guaranteed by law. Whereas management assumed until December 2015 the intrinsic value approach as the most suitable method for measuring the liability related to these hybrid plans, management has decided as of December 2016 – after consultation of specialists – to change related accounting estimate also considering the different facts and circumstances with regard to these plans. Similar to the measurement of all other defined benefit plans, the net pension liability related to defined contribution plans with return guaranteed by law is calculated as the difference between the present value of the defined benefit obligation (DBO) and the fair value of the plan assets. As of December 31, 2016, the present value of the defined benefit obligation (DBO) and the service costs are calculated by a qualified actuary using the Projected Unit Credit (PUC) method.

More information on the general principles of this method can be found under 'Liabilities for postemployment benefits'.

Within the Belgian Agfa-Gevaert Group entities, all insured plans guarantee a fixed return up to the retirement age (so-called Branch 21 insured products). Depending on the nature of the insured contract, the DBO has been determined with or without future contributions and their related minimum returns up to the retirement age or exit. For the Top Performance Plan no future contributions were considered, for all other 'Branch 21' insured products recurring contributions are paid and therefore considered in the actuarial calculation.

In measuring the net liability related to Belgian defined contribution plans with return guaranteed by law, the Group has applied paragraph 115 of IAS 19. Paragraph 115 states "Where plan assets include qualifying insurance policies that exactly match the amount and timing of some or all of the benefits payable under the plan, the fair value of those insurance policies is deemed to be the present value of the related obligations" up to the guaranteed rate of the insurer. The application of this paragraph 115 implies a market valuation of the retirement age contractual insured benefit, which impacts both the assets to account for and the DBO. In terms of applying the methodology of Paragraph 115, management believes that the DBO calculation should reflect that the employee is entitled to the higher of the actual accumulated reserves and the minimum reserves. Therefore, the DBO calculation reflects this plan characteristic for every event, being leaving before retirement or staying until retirement.

3.21.3 Termination benefits

Termination benefits are recognized as a liability and an expense when a Group company is demonstrably committed to either:

terminate the employment of an employee or group of employees before the normal retirement date; or
provide termination benefits as a result of an offer made in order to encourage voluntary redundancy and to the extent it is probable that the employees will accept the offer.

Where termination benefits fall due more than twelve months after the reporting date, they are discounted using a discount rate which is the yield at reporting date on high quality corporate bonds that have maturity dates approximating the terms of the Group's obligations.

The interest impact of unwinding and remeasuring long-term termination benefits at adjusted discount rates at financial reporting date is reflected in profit or loss under 'Other finance expense' whereas the impact of increases and decreases of the Group's commitments are presented under 'Other operating expenses' – Restructuring expenses.

3.21.4 Other long-term employee benefits

The Group's net obligation in respect of long-term employee benefits, other than pension plans, post-employment life insurance and medical care, is the amount of future benefit that employees have earned in return for their service in current and prior periods.

The obligation is calculated using the projected unit credit method and is discounted to its present value and the fair value of any related assets is deducted. The discount rate used is the yield at reporting date on high quality corporate bonds that have maturity dates approximating the terms of the Group's obligations.

Unlike the accounting treatment of post-employment defined benefit plans, remeasurements of other long-term employee benefits are not reflected in other comprehensive income. Instead, the impact of remeasurements is recognized in profit or loss.

3.21.5 Current employee benefits

Current employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognized for the amount expected to be paid within twelve months if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.

3.21.6 Share-based payment transactions

The Group has cash-settled share-based payment transactions as it has granted share appreciation rights (SARs) to a number of employees listed by the Board of Directors. SARs entitle the holder to receive a cash payment that equals the increase in value of the shares from a specified level over a specified period of time, i.e. from grant date to settlement date. In the established share-based payment transaction, the employee directly participates in changes in value of the underlying equity instrument, being the shares of Agfa-Gevaert NV and, accordingly, the cash payment is based on the price or value of the equity instrument.

Related share appreciation rights do not vest until the employees have completed a specified period of service. Therefore, the Company recognizes the services received, and a liability to pay for them, as the employees render service during that period.

The liability is measured, initially and at the end of each reporting period until settled, at the fair value of the share appreciation rights, by applying an option pricing model, and the extent to which the employees have rendered service to date. Changes in fair value are recognized in profit or loss. Both the cost recognized at initial measurement as well as the impact of changes in fair value are considered as employee benefit expenses. Black and Scholes is the applied option pricing model.

3.22 PROVISIONS

Provisions are recognized in the statement of financial position when a Group company has a present obligation (legal or constructive) as a result of a past event and when 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 of the amount of the obligation.

The amount recognized as a provision is the best estimate of the expenditure required to settle the present obligation at the reporting date.

If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

3.22.1 Restructuring

A provision for restructuring is 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 it. Future operating costs are not provided for.

3.22.2 Environmental protection

In accordance with the Group's published environmental policy and applicable legal requirements, a provision for site restoration in respect of contaminated land is recognized when the land is contaminated.

3.22.3 Trade-related

Trade-related provisions primarily include provisions for bonuses and rebates related to goods and services purchased by customers in the accounting period, commissions to agents, warranty provisions, commercial litigations and onerous contracts.

A provision for product warranty is made at the time of revenue recognition and reflects the estimated cost of replacement that will be incurred by the Group.

3.22.4 Onerous contracts

A provision for onerous contracts is recognized when the expected benefits to be derived by the Group from a contract are lower than the unavoidable cost of meeting its obligations under the contract. Provisions are established under 'Trade-related provisions' for impending losses on purchase or sales contracts at the amount of the anticipated losses.

3.23 NON-DERIVATIVE FINANCIAL LIABILITIES

Non-derivative financial liabilities comprise debentures, uncommitted bank facilities, revolving and other credit facilities, trade and other payables.

Financial liabilities are recognized initially at fair value on the trade date at which the Group becomes a party to the contractual provisions of the instrument.

Interest-bearing loans and borrowings are recognized initially at fair value, less attributable transaction costs. Subsequent to initial recognition, interest-bearing loans and borrowings are stated at amortized cost with any difference between the initial amount and the maturity amount being recognized in profit or loss over the expected life of the instrument on an effective interest rate basis.

The Group derecognizes a financial liability when its contractual obligations are discharged, cancelled or expired.

3.24 DEFERRED REVENUE AND DEFERRED INCOME

Amounts invoiced in accordance with contractually agreed terms but unearned are presented as deferred revenue. They typically relate to multiple-element arrangements and maintenance contracts. Deferred revenue is recognized in profit or loss in compliance with the basic revenue recognition criteria as described in 3.3.

Similar to deferred revenue, deferred income relates to unearned other operating income. Deferred income is presented in following captions of the consolidated statement of financial position: 'Deferred income – noncurrent liabilities' and 'Other liabilities – current liabilities'.

Government grants are a typical example of deferred income. They are recognized in profit or loss when there is reasonable assurance that the conditions attached to the grants will be or are complied with and the grants will be received. Grants that compensate the Group for expenses incurred are recognized in profit or loss under the same functional reporting line item as the corresponding expenses. They are recognized as income over the periods necessary to match them on a systematic basis to the costs that are intended to be compensated.

Grants awarded for the purchase or production of assets (Intangibles or Property, plant and equipment) are recognized initially as deferred income and then recognized in profit or loss as other income on a systematic basis over the useful life of the asset. Government grants for future expenses are recorded as deferred income.

4. NEW STANDARDS AND INTERPRETATIONS NOT YET ADOPTED

A number of new IFRS standards, amendments to IFRS standards and interpretations issued, were not yet effective for the year ended on December 31, 2017 and have not been applied in preparing the consolidated financial statements.

The Group shall adopt these standards after endorsement by the European Union. It relates to:

• IFRS 9 Financial Instruments

In November 2009, the IASB issued IFRS 9 Financial Instruments, amending the classification and measurement of financial assets, effective for annual periods beginning on or after January 1, 2018. The standard has been endorsed by the European Union in November 2016 with effective date for use within the European Union set at January 1, 2018.

IFRS 9 contains a new classification and measurement approach for financial assets that reflects the business model in which assets are managed and their cash flow characteristics. According to IFRS 9, an entity shall subsequent to initial recognition, measure financial assets at either amortized cost or at fair value through other comprehensive income or through profit or loss on the basis of an entity's business model for managing the financial asset and the contractual cash flow

characteristics of the financial asset. Debt instruments are measured at amortized cost if they are held in a business model whose objective is to hold an asset in order to collect the contractual cash flows that are solely payments of principal and interests on specified dates. Investments in equity instruments can be designated at fair value through other comprehensive income with only dividends to be recognized in profit or loss. All other instruments are measured at fair value with changes recognized in profit or loss. Gains and losses on financial assets measured at amortized cost and not part of a hedging relationship shall be recognized in profit or loss when the financial asset is derecognized, impaired or reclassified.

The standard eliminates the existing IAS 39 categories of held to maturity, loans and receivables and available for sale financial assets.

Based on its assessment, the Group believes that the new classification requirements will not have a material impact on its accounting for trade and lease receivables, loans and investments in equity securities. At December 31, 2017 the Group has an equity investment classified as available-for-sale amounting to 9 million Euro, with changes in fair value accounted for in OCI under the current IAS 39 standard. Under the new standard IFRS 9, the Group has designated this investment as measured at Fair Value through OCI. Consequently, all fair value changes will be reported in OCI. No impairment losses will be recognized in profit or loss and no gains or losses will be classified to profit or loss on disposal.

Other financial assets currently classified as loans and receivables carried at amortized cost will under the new IFRS 9 also be measured at amortized cost. Derivative financial instruments will continue to be measured at fair value.

With regard to impairment of financial assets, the new IFRS 9 standard replaces the 'incurred loss' model with a forward-looking 'expected credit loss' (ECL) model. This will require considerable judgement about how changes in economic factors affect expected credit losses. With regard to impairment of trade receivables, lease receivables and contract assets, the Group will apply the simplified approach for the impairment evaluation, which implies that credit losses for these categories of assets are always measured at an amount equal to lifetime expected credit losses. Credit losses are measured as the present value of all cash shortfalls – i.e. the difference between the cash flows to which the entity is entitled to and what the entity expects to receive.

Currently, at each reporting date, the Group assesses whether financial assets carried at amortized cost are credit-impaired. Evidence that a financial asset is credit-impaired is based on observable data which include significant financial difficulty of the counterparty, a default of more than 90 days past due, a possible bankruptcy of the counterparty, …

The evaluation of possible credit-impairment is done on an individual basis by counterparty taking into account forward-looking elements. All debtors are scored and rated based on quantitative and qualitative information on an ongoing basis through Credit Risk Application in place. All customers are classified into different risk categories which are reassessed on a yearly basis based on relevant forward-looking information such as data from external credit bureaus, age of business, country risk and the credit manager's assessment. To mitigate the credit risk, credit insurance and other risk mitigation tools such as letter of credit, bank guarantees, mortgage are used within the Group.

This methodology of individually reviewed outstanding receivable amounts taking into account forward-looking information to assess impairment risks is already used within the Group. Therefore, the implementation of the ECL model as defined by IFRS 9 will not have a quantitative impact on the consolidated financial statements.

With regard to hedge accounting, the Group has chosen to apply the new requirements of IFRS 9 and not to continue to apply the hedge accounting requirements of IAS 39. IFRS 9 requires the Group to ensure that hedge accounting relationships are aligned with the Group's risk management objectives and strategy and to apply a more qualitative and forward looking approach to assessing hedge effectiveness.

The Group uses forward exchange contracts to hedge the variability in cash flows arising from changes in foreign exchange rates relating to future sales. The Group currently designates only the change of the spot element of the forward exchange contract as the hedging instrument in cash flow hedging relationships. The change in the fair value of the forward element ('forward points') are recognized immediately in financial result under the current IAS 39. Under the new IFRS 9 the forward points will be accounted for as fair value through profit or loss, which is not different from the current IAS 39 standard.

The Group also uses metal swap agreements hedging the Group's exposure to fluctuations in commodity prices related to highly probable forecasted purchases of aluminum. The contracts are designated as cash flow hedges and are held for the purpose of the receipt of commodities in accordance with the Group's expected usage of aluminum. Under IAS 39, the amounts accumulated in the cash flow hedge reserve are removed from OCI and included in the initial carrying amount of the inventory purchased. There will be no different accounting treatment under the revised IFRS 9.

The types of hedge accounting transactions that the Group currently designates meet the requirements of IFRS 9 and are aligned with the Group's risk management strategy and objectives. The application of hedge accounting requirements of IFRS 9 will not have an impact on the consolidated financial statement.

• IFRS 15 Revenue from Contracts with Customers

In May 2014, the IASB issued a new standard IFRS 15 on revenue recognition. In September 2015, an amendment to this standard was issued deferring the effective first-time application date to annual periods beginning on or after January 1, 2018. The standard has been endorsed by the European Union in September 2016 with effective date for use within the European Union set at January 1, 2018. On April 12, 2016, the IASB issued clarifications to IFRS 15 which have been endorsed by the European Union in October 2017.

This standard introduces a five-step approach to be applied in revenue recognition for all contracts with customers: first the contract with the customer should be identified; then the performance obligations in the contract should be identified; as a third step the transaction price should be determined; then the transaction price should be allocated to the performance obligations in the contract; and finally revenue is recognized when the performance obligation is satisfied. The standard moreover specifies whether revenue should be recognized at a certain point in time or over a period of time.

The standard introduces increased requirements for the disclosure of revenue.

The Group has investigated the application of the five-step approach and has concluded that the application of the new IFRS 15 standard will have no impact on the timing and amount of revenue recognition compared to the current revenue recognition model. The Group currently recognizes revenue from standard multiple-element arrangements on an element-by-element basis for each determined deliverable based on its fair value. The Group has assessed that these determined deliverables meet the requirements of a performance obligation as defined by the new standard.

Revenue from the sale of goods includes the sale of consumables, chemicals, spare parts, stand-alone equipment sales and software licenses. Currently revenue from the sale of goods is recognized when title and risk passes to the customer. This is achieved at the moment that the goods are shipped and delivered to the customer. Under the new IFRS 15, revenue from the sale of goods will be recognized when the customer obtains control of the goods and when it is probable that the agreed transaction price will be collected. In evaluating whether collectability is probable, the entity shall consider the customer's ability and intention to pay that amount when it is due. Revenue from the sale of goods will, under the new IFRS 15, be recognized upon delivery following applicable freight terms, at a point in time.

The Group's assessment indicated that the revised treatment of revenue recognized from the sale of goods will not result in a changed amount recognized in revenue nor in a change in the timing of the recognition.

Revenue from the rendering of services includes installation services, maintenance and postcontract support services and is currently recognized on a straight line basis over the period during which the services are performed. Under the revised standard IFRS 15, as the customer simultaneously receives and consumes the benefits related to these services, the revenue from rendering of services will be recognized over time. In case the Group sells multiple services, the total consideration in service contracts will be allocated to all services based on their stand-alone selling price. The stand-alone selling price will be determined based on the list prices at which the Group sells the services in separate transactions.

The Group's assessment indicated that the revised treatment of revenue recognized from the rendering of services will not result in a changed amount recognized in revenue nor in a change in the timing of the recognition.

The Group moreover enters into multiple-element arrangements with customers whereby several deliverables such as software, licenses, hardware, services and maintenance are combined and offered to the customer. Currently all these deliverables are determined as separate units of accounting and recognized on an element-by-element basis if and only the delivered elements have value to the customer on a stand-alone basis, and there is objective evidence of the fair value of the undelivered elements and in case general right of return exists, delivery or performance of the undelivered elements is considered probable. To the extent that these arrangements do not require substantive modification of the software, the total arrangement fee is allocated to each deliverable based on its relative fair value.

Under the new IFRS 15, the Group has assessed whether these deliverables qualify as separate performance obligations, based on the criteria of separate identifiability and whether or not the customer can benefit from goods or services on its own or with resources readily available to him. The Group concluded that for arrangements not requiring substantive customization of the software, these criteria were met and that the identified performance obligations correspond to the separate units of accounting that are currently used by the Group in its current revenue recognition.

Within the HealthCare business segment, the vast majority of the arrangements do not require significant customization of modification. Revenue allocated to the hardware portion of the arrangement is recognized on delivery when it creates value to the customer on a stand-alone basis. Revenue allocated to the software component is recognized after successful installation at the client's premises. Revenue from the sale of licenses is recognized at a point in time, at delivery as licenses are distinct from other performance obligations in the contract and provide the customer a right to use the license as it exists at the point when the license is granted. Implementation and other services are defined as separate performance obligation and are recognized as rendered. With the introduction of the revised IFRS 15, these recognition principles and timing will not change.

Within the Graphics business segment, equipment sales that require substantive installation activities are currently recognized when the installation of the equipment is finalized in accordance with the contractually agreed specifications. Under the new IFRS 15, installation services and equipment are considered highly interrelated and are identified as one performance obligation that will be recognized at a point in time, i.e. at installation at the client's premises.

The Group's assessment indicated that the revised treatment of revenue recognized from multiple-element arrangements not requiring significant modification will not result in a changed amount recognized in revenue nor in a change in the timing of the recognition.

Currently the Group does not have revenue from arrangements that require significant customization.

The new standard will change the presentation of the balance sheet with the introduction of contract assets and contract liabilities on the face of the balance sheet. Currently these assets and liabilities are included in other captions of the balance sheet.

	IAS 18 carrying amount - Dec. 31, 2017	Reclassification	IFRS 15 carrying amount Jan. 1, 2018
Trade receivables	517	(84)	433
Inventory	487	(11)	476
Other assets	50	(10)	40
Contract assets		105	105

Deferred revenue & advance payments	128	(128)	-
Trade related provisions	45	(17)	28
Contract liabilities		145	145

Following reclassifications have been made at the date of initial application:

At December 31, 2017, trade receivables comprise recognized not billed revenue which will be reclassified to contract assets as from January 1st, 2018. Reclassifications from Inventory to contract assets mainly comprise work in progress. Reclassifications from deferred charges to contract assets relate to underpinning contracts i.e. contracts between the Group and a third party that provides supporting services that enable the Group to deliver maintenance services to the customer.

On the liability side, a reclassification will be made to contract liabilities for deferred revenue and advance payments as well as for bonuses and rebates related to goods and service purchased by customers during the period. The latter was presented as part of trade-related provisions as at December 31, 2017.

The Group will adopt IFRS 15 using the cumulative effect method, with the effect of initially applying this standard recognized at the date of initial application, i.e. January 1, 2018. As a result, the Group will not apply the requirements of IFRS 15 to the comparative period presented. IFRS 15 also requires extensive disclosures on revenue recognition which the Group will disclose as of January 1, 2018.

• IFRS 16 Leases

IFRS 16 Leases published on January 13, 2016 makes a distinction between a service contract and a lease based on whether the contract conveys the right to control the use of an identified asset and introduces a single, on-balance sheet accounting model for lessees. A lessee recognizes a rightof-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. There are optional exemptions for short-term leases and leases of low value items. Lessor accounting remains similar to the current standard – i.e. lessors continue to classify leases as finance or operating leases. For lessors, there is little change to the existing accounting in IAS 17 Leases.

IFRS 16 replaces existing leases guidance including IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases - Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The standard is effective for annual periods beginning on or after January 1, 2019. Early adoption is permitted for entities that apply IFRS 15 Revenue from Contracts with Customers at or before the date of initial application of IFRS 16. This standard has been endorsed by the EU. The Group's management has decided to not early adopt IFRS16 and, therefore, the date of initial application of the standard is January 1, 2019. The Company has made an initial assessment of the number and types of lease contracts as lessee and their geographical location. They mainly relate to real estate (in value) and car leases (in number of contracts). The new standard has been discussed with internal stakeholders such as Purchasing, the management of the business segments and the Group's different financial departments. Management has also decided on an IT-tool supporting IFRS 16 calculations and journal entries. The Company is in the process of collecting all contract data relevant in implementing IFRS 16.

The International Accounting Standards Body (IASB) has foreseen two transition options in IFRS 16:

Simplified retrospective transition approach; and
Full retrospective transition approach.

Under the simplified retrospective approach, no comparative information will be restated. Instead, the cumulative effect of applying the standard is recognized as an adjustment to the opening balance of retained earnings (or other component of equity, as appropriate) at January 1, 2019. At this date, the standard foresees different options to measure the lease liability and the right-of-use asset.

Under the full retrospective approach, IFRS 16 needs to be applied retrospectively to each prior reporting period in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.

The management of the Group has decided to apply the simplified retrospective approach. Under this approach, the following options will be applied:

For leases that were previously classified as an operating lease under IAS 17, the remaining lease payments at January 1, 2019 will be discounted applying the lessee's incremental borrowing rate at January 1, 2019. The right-of-use asset will be the same as the amount of the lease liability. The Group will not recognize initial direct costs as part of the right-of-use asset at January 1, 2019.
The Group will not reassess any operating leases for which the lease term ends within twelve months as of January 1, 2019.

The application of IFRS 16 will increase non-current assets by requiring the recognition of rightof-use assets. Similarly, financial liabilities will be increased by recognition of the corresponding lease liabilities. In the consolidated statement of profit or loss, the amortization of the right-of-use assets and the interest expense for the lease liabilities will be recognized in place of the expenses for operating leases. In the consolidated statement of cash flows, IFRS 16 will probably result in an improvement in the cash generated from operating activities by reducing the cash outflows for operating activities, while the repayment of lease liabilities and the interest expense will be recognized in the 'Net cash from financing activities'. Upon completion of the collection of lease contract data, the Company will evaluate the quantitative impacts of implementing IFRS 16.

• Amendments to IFRS 2 Share-based Payment Transactions

In June 2016, the IASB published amendments to IFRS 2 Share-based Payments applicable for annual periods beginning on or after January 1, 2018. This amendment has been endorsed by the European Union in February 2018. This amendment clarifies the classification and measurement of share-based payment transactions and intends to eliminate diversity in practice of particular share-based payment transactions. The amendments are narrow in scope. The amendment will not have an impact on the consolidated financial statements.

• Amendments to IFRS 4: Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts In September 2016, the IASB issued an amendment to IFRS 4 applicable for annual periods beginning on or after January 1, 2018. This amendment has been endorsed by the European Union in November 2017.

This amendment was issued to address accounting consequences from different application dates of the standards IFRS 9 Financial Instruments and IFRS 4 Insurance Contracts. The amendment provides two options for entities that issue insurance contracts within the scope of IFRS 4, an overlay approach and a temporary exemption. The overlay approach is an option for all issuers of insurance contracts to reclassify from profit or loss to other comprehensive income, some income or expense from designated financial assets whereas under the temporary exemption some entities whose predominantly activity is issuing insurance contracts can be exempt from applying IFRS 9. This amendment will not have an impact on the consolidated financial statements.

• IFRIC Interpretation 22 Foreign Currency Transactions and Advance Consideration In December 2016, the IASB issued an IFRIC Interpretation applicable for annual periods beginning on or after January 1, 2018. This interpretation has not yet been endorsed by the European Union. IFRIC 22 clarifies the accounting treatment for transactions that include the receipt or payment of advance consideration in a foreign currency, where the entity recognizes a prepayment asset or a deferred income liability in a foreign currency that is non-monetary. The Interpretation determines that the date of the transaction, for the purpose of determining the exchange rate, is the date of initial recognition of the non-monetary prepayment asset or deferred income liability. If there are multiple payments or receipts in advance, a date of transaction is established for each payment or receipt. The application of this interpretation is not expected to have a material impact to the consolidated financial statements.

• Amendments to IAS 40: Transfers of Investment Property

In December 2016, the IASB issued an amendment to IAS 40 Transfers of Investment Property applicable for annual periods beginning on or after January 1, 2018. This amendment has not yet been endorsed by the European Union. The amendment clarifies that an entity shall transfer a property to or from investment property when there is evidence of a change in use. A change of use occurs if the property meets or ceases to meet the definition of investment property. A change in management's intentions of use does not constitute a change of use. The amendment will not have an impact on the consolidated financial statements.

• Annual improvements to IFRS standards 2014-2016 Cycle

In December 2016, the IASB issued a next set of Annual Improvement to IFRSs effective for annual periods beginning on or after January 1, 2017 and January 1, 2018. These improvements have been endorsed by the European Union in February 2018.

These improvements delete the outdated exemption for first-time adopters in IFRS 1; clarify the scope of IFRS 12 Disclosure of Interests in Other Entities by specifying that the disclosure requirements in the standard also apply to assets held for sale, held for distribution or as discontinued operations; and clarify that a venture capital organisation may elect to measure its investments in associates or joint venture at fair value through profit or loss which can be made on an investment-by-investment basis. These amendments will not have an impact on the consolidated financial statements.

• IFRS 17 Insurance contracts

In May 2017, the IASB issued a new standard IFRS 17 Insurance Contracts applicable for annual periods beginning on or after January 1, 2021. This standard has not yet been endorsed by the European Union. As from January 2021, this new standard supersedes the existing standard IFRS 4 on insurance contracts. The new standard requires insurance liabilities to be measured at current fulfillment value and requests a more uniform measurement and presentation for all insurance contracts. This new standard will not have an effect on the consolidated financial statements of the Group.

• IFRIC Interpretation 23 Uncertainty over Income Tax Treatment

In June 2017, the IASB issued a new IFRIC interpretation IFRIC 23 Uncertainty over Income Tax Treatment, applicable for annual periods beginning on or after January 1, 2019. This interpretation has not yet been endorsed by the European Union. The Group shall apply IFRIC 23 retrospectively on adoption.

This interpretation clarifies how to account for income taxes when it is unclear whether the tax authority will accept the company's tax treatment. Examples include tax deductibility of certain expenses, tax exemption of certain income and transfer pricing rules to allocate income between jurisdictions. The current IAS on income taxes does not address the accounting for tax uncertainties. An entity has to determine whether it is probable that the relevant tax authority will accept the plans used in its tax filing. If the entity concludes that this is not probable, the entity has to reflect the most likely amount or the expected value of the tax treatment when determining the taxable profit, tax bases, unused tax losses, unused tax credits and tax rates.

This new interpretation is not expected to have an impact to the consolidated financial statements of the Group.

• Amendments to IFRS 9 Prepayment features with negative compensation and modifications of financial liabilities

In October 2017, the IASB issued an amendment to IFRS 9 Prepayment features with negative compensation and modifications of financial liabilities applicable for annual periods beginning on or after January 1, 2019. This amendment has not yet been endorsed by the European Union. This amendment allows more assets to be measured at amortized cost than under the previous version of IFRS 9, in particular some financial assets with prepayment features that permit or require a party to a contract to pay or receive a reasonable compensation for early termination of the contract.

This amendment is not expected to have a material impact on the consolidated financial statements of the Group.

• Amendments to IAS 28 Long-term Interests in Associates and Joint ventures

In October 2017, the IASB issued an amendment to IAS 28 Long-term interests in Associates and Joint ventures applicable for annual periods beginning on or after January 1, 2019. This amendment has not yet been endorsed by the European Union.

This amendment clarifies that an entity should measure its long-term investments in associates and joint ventures to which the equity method is not applied, according to IFRS 9 Financial Instruments. This amendment is currently not applicable to the Group.

• Annual Improvements to IFRS Standards 2015-2017 Cycle

In December 2017, the IASB issued a next set of annual improvements to various IFRS standards applicable for annual periods beginning on or after January 1, 2019. These improvements have not yet been endorsed by the European Union.

These amendments clarify that when an entity obtains control of a joint operation, it remeasures previously held interests in that business (IFRS 3). The amendments to IFRS 11 clarify that when an entity increases its interests in a joint operation but maintains joint control, the entity does not remeasure previously held interests. Amendments to IAS 12 clarify that all income tax consequences of dividends should be recognized consistently with the transactions that generated the distributable profits, in profit or loss, OCI or equity. Amendments to IAS 23 specify that if specific borrowings remain outstanding after the related asset is ready for its intended use or sale, that borrowing becomes part of the generally borrowings of that entity when calculating the capitalization rate on general borrowings. These amendments will not have an impact on the consolidated financial statements.

5. REPORTABLE SEGMENTS

The Group's management identified three operating segments: Agfa Graphics, Agfa HealthCare and Agfa Specialty Products.

All operating segments have strong market positions, well-defined strategies and full responsibility, authority and accountability.

The Group's operating segments reflect the level at which the Group's CEO and the Executive Committee review the business and make decisions about the allocation of resources and other operating matters. The Group's reportable segments equal its operating segments. The reportable segments Agfa Graphics, Agfa HealthCare and Agfa Specialty Products comprise the following activities:

Agfa Graphics

Agfa Graphics provides commercial, newspaper and packaging printers with the most extensive range of integrated prepress solutions, from complete computer-to-plate systems and printing plates to color management, workflow automation and security design software.

Agfa Graphics also supplies a wide range of wide-format digital printing solutions to sign & display companies. Agfa's print engines combine high speed with exceptional print quality and are part of a complete package including dedicated inks as well as workflow automation software. Enabling manufacturers to integrate print into their production processes, Agfa Graphics also develops and manufactures high-performance inkjet inks and fluids for various industrial inkjet printing applications.

Agfa HealthCare

Agfa HealthCare is a leading provider of diagnostic imaging and healthcare IT solutions for hospitals and care centers everywhere in the world. The business group is a major player on the diagnostic imaging market, providing analog and digital technology, as well as IT solutions to meet the needs of specialized clinicians. The business group is also a key player on the healthcare information solutions market, integrating the administrative, financial and clinical workflows of individual hospitals and hospital groups.

Today, care organizations in over 100 countries rely on Agfa HealthCare's leading technologies, solutions and services to optimize their efficiency and improve patient care.

Agfa Specialty Products

Agfa Specialty Products supplies a wide variety of products to large business-to-business customers outside the graphic and healthcare markets. On the one hand, this segment produces classic film-based products, such as film for non-destructive testing and aerial photography, as well as microfilm and film for the production of printed circuit boards. On the other hand, Agfa Specialty Products targets promising growth markets with innovative solutions. Examples are synthetic papers, conductive polymers, materials for the production of high-security ID documents, backsheets for solar panels and membranes for hydrogen production.

5.1 PRINCIPLES APPLIED IN DETERMINING SEGMENT RESULTS, SEGMENT ASSETS AND LIABILITIES

Segment results include revenue and expenses directly attributable to a segment and the relevant portion of revenue and expenses that can be allocated on a reasonable basis to a segment. There are no transactions between operating segments.

Segment assets and liabilities comprise those operating assets and liabilities that are directly attributable to the segment or can be allocated to the segment on a reasonable basis. They do not comprise current income tax receivables and payables and deferred taxes. The allocation of assets and liabilities that are commonly used by more than one reportable segment can be summarized as follows:

In general, each item of the operating assets is assigned in full to one of the reportable segments, i.e. a single asset such as an office building is assigned to a single segment. If a related asset is employed by more than one reportable segment, one segment owns the asset and the other segment(s) rents it (by means of cross charging via a Service Agreement). The same applies for operating liabilities such as employee related liabilities. As all employees, except for the employees belonging to the Corporate Center and the Global Shared Services (ICS, HR and Purchasing) and the inactive employees (see below), are dedicated to a single reporting segment, related liabilities and provisions are assigned to the segment to which the employee belongs.

The production unit Materials produces film and chemicals worldwide for Agfa Graphics, Agfa HealthCare and Agfa Specialty Products. Therefore operating assets assigned to the production unit Materials are owned by the three reportable segments. This is an exception to the abovementioned principle that a single asset is always owned by a single reportable segment.

Operating income and expenses and operating assets and liabilities that relate to film consumables, Corporate Center and Global Shared Services are allocated to the different reportable segments using allocation keys.

The results, assets and liabilities related to inactive employees cannot be allocated on a reasonable basis to one or more reportable segments. The data are included in the reconciling items between the total reportable segment information and the consolidated profit or loss, total assets and total liabilities (see note 5.3). Inactive employees are defined as permanently retired employees, former employees with vested rights, and other employees who are not expected to return to active status, e.g. early retirement. Employees who are in principle only temporarily inactive, e.g. long-term disability or illness, maternity leave, military service, etc. are treated as active employees and are consequently assigned to one of the reportable segments.

5.2 KEY DATA BY BUSINESS

Key data for the reportable segments have been calculated as follows:

recurring EBIT is the result from operating activities before restructuring and non-recurring items. Non-recurring items comprise results from the sale of land and buildings, past service costs related to defined benefit obligations and impairment losses;
% of revenue is the ratio of recurring EBIT to revenue;
segment result is the profit from operating activities;
segment assets are those operating assets that are employed by a reportable segment in its operating activities;
segment liabilities are those operating liabilities that result from the operating activities of a reportable segment;
net cash from (used in) reportable segments is the excess of cash receipts over cash disbursements from activities that result from a reportable segment. The financial flows, the interest received and cash flows from other investing activities are not attributed to a reportable segment;
segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used for more than one year;
other non-cash items include impairment losses and reversal of impairment losses of receivables, write downs of inventories and reversals of write downs, past service costs (credits) and gains and losses on settlements of defined benefit liabilities, granted subventions and additions and reversals of provisions, excluding provisions for income tax, to the extent reflected in results from operating activities.

Reportable Segment	Agfa Graphics		Agfa HealthCare		Agfa Specialty Products		TOTAL
MILLION EURO	2016	2017	2016	2017	2016	2017	2016	2017
Revenue	1,267	1,195	1,090	1,053	180	195	2,537	2,443
Change	(6.7)%	(5.7)%	(0.8)%	(3.5)%	(4.8)%	8.3%	(4.1)%	(3.7)%
Recurring EBIT	80	53	120	106	13	15	213	174
% of revenue	6.3%	4.4%	11.0%	10.1%	7.2%	7.7%	8.4%	7.1%
Segment result	61	37	101	92	11	14	173	143
Segment assets	695	667	1,125	1,124	98	101	1,918	1,892
Segment liabilities	383	362	475	450	41	43	899	855
Net cash from (used in) reportable segments	88	24	97	37	11	15	196	76
Capital expenditures	21	21	20	21	3	4	44	46
Amortization and depreciation	27	24	26	25	4	4	57	53
Impairment losses recognized on non-current assets	9	3	6	-	-	-	15	3
Other non-cash items	86	81	90	78	14	14	190	173
Research and development expenses	43	43	92	93	6	8	141	144
Average number of employees (Full time equivalents) (1)	4,200	3,982	5,500	5,482	628	622	10,329	10,086

(1) The figures comprise permanent and temporary contracts.

5.3 RECONCILIATION OF REVENUE, RECURRING EBIT, PROFIT OR LOSS, ASSETS, LIABILITIES AND CASH FLOWS

MILLION EURO	2016	2017
Revenue
Revenue for reportable segments	2,537	2,443
Consolidated revenue	2,537	2,443
Recurring EBIT
Recurring EBIT for reportable segments	213	174
Recurring EBIT not allocated to a reportable segment (1)	(5)	(5)
Consolidated recurring EBIT	208	169
Profit or loss
Segment result	173	143
Profit (loss) from operating activities not allocated to a reportable segment (1)	(7)	(5)
Results from operating activities	166	138
Other unallocated amounts:
Interest income (expense) - net	(8)	(7)
Other finance income (expense) - net	(43)	(32)
Share of result of equity accounted investees - net of income tax	-	(1)
Consolidated profit (loss) before income taxes	115	98
Assets
Total assets for reportable segments	1,918	1,892
Operating assets not allocated to a reportable segment (1)	1	1
Financial assets	2	2
Investment in associates	-	-
Deferred tax assets	149	115
Receivables under finance leases	87	85
Derivative financial instruments	2	7
Cash and cash equivalents	129	68
Other unallocated receivables	64	63
Consolidated total assets	2,352	2,223
Liabilities
Total liabilities for reportable segments	899	855
Operating liabilities not allocated to a reportable segment (1)	1,003	906
Loans and borrowings	111	86
Deferred tax liabilities	19	21
Derivative financial instruments	8	2
Other unallocated liabilities	60	55
Consolidated total liabilities	2,100	1,925
Cash flows
Net cash from (used in) reportable segments	196	76
Operating cash flows not allocated to a reportable segment (1)	(82)	(79)
Net interest and dividend paid to non-controlling interests	(20)	(18)
Net proceeds from borrowings	(72)	(23)
Other financial flows	(15)	(13)
Change in other investing activities	(3)	1
Consolidated net increase (decrease) in cash and cash equivalents	4	(56)

(1) Operating results, assets and liabilities and cash flows, not allocated to a reportable segment, relate mainly to inactive employees.

5.4 RECONCILIATION OF OTHER MATERIAL ITEMS FOR 2016 AND 2017 Other material items 2016

The segmented other material items as presented in the table under note 5.2 can be reconciled with the consolidated figures as follows:

MILLION EURO	Note	REPORTABLE SEGMENTS TOTAL	Adjustments	TOTAL
Capital expenditures (cash outflows)	13/14	44	-	44
Amortization and depreciation	13/14	57	-	57
Impairment losses recognized on non-current assets	13/14	15	-	15
Other non-cash items		190	-	190
Research and development expenses		141	-	141

Other material items 2017

MILLION EURO	Note	REPORTABLE SEGMENTS TOTAL	Adjustments	TOTAL
Capital expenditures (cash outflows)	13/14	46	-	46
Amortization and depreciation	13/14	53	-	53
Impairment losses recognized on non-current assets	13/14	3	-	3
Other non-cash items		173	-	173
Research and development expenses		144	-	144

5.5 GEOGRAPHICAL INFORMATION FOR 2016 AND 2017

The Group distinguishes four geographical regions: Europe, NAFTA, Latin America and Asia/ Oceania/Africa. The Group's country of establishment is Belgium.

Geographical information 2016

MILLION EURO	Revenue by market (1)	Non-current assets (2)
Europe	1,018	509
of which related to home market Belgium	36	174
NAFTA	675	344
Latin America	191	30
Asia/Oceania/Africa	653	34
TOTAL	2,537	917

(1) Location of customers.

(2) Excluding deferred tax assets based on the location of the assets.

Geographical information 2017

MILLION EURO	Revenue by market (1)	Non-current assets (2)
Europe	1,015	506
of which related to home market Belgium	38	178
NAFTA	648	306
Latin America	182	27
Asia/Oceania/Africa	598	31
TOTAL	2,443	870

(1) Location of customers.

(2) Excluding deferred tax assets based on the location of the assets.

6. ACQUISITIONS

ACQUISITIONS 2017

In June 2017, the Group acquired all of the shares of BODONI Systems Limited, a UK based company specialized in color management consultancy and publisher of pressSign, the most popular print standardization software. With this acquisition the Group wishes to strengthen its position in this segment.

The purchase price amounted to 5 million Euro, of which 2 million Euro is paid in cash and 3 million will be paid over the coming 2 years based on EBIT achievements of the company acquired. Identifiable assets acquired and liabilities assumed are measured at their acquisition-date fair values. Identifiable assets acquired and liabilities assumed are as follows:

MILLION EURO	Note	BODONI Systems Ltd.
Acquired technology	13	3
Cash		1
Deferred tax liabilities		(1)
Total identifiable net asset acquired		3

Acquired technology is amortized over a period of 8 years. The fair value of intangible assets acquired has been determined using a discounted cash flow model. A goodwill amount of 2 million Euro was recognized as a result of the acquisition and is calculated as follows:

MILLION EURO	Note	BODONI Systems Ltd.
Total consideration transferred		5
Fair value of identifiable net assets		(3)
Goodwill amount recognized	13	2

The goodwill on acquisition mainly relates to operating synergies. The total amount of goodwill is not deductible for tax purposes.

Acquisition related costs relate to external fees and due diligence costs. They are immaterial and are reflected in 'administrative expenses'. The Group's profit or loss includes an amount of 1 million Euro revenue of the acquiree. The effect on EBIT is immaterial.

ACQUISITIONS 2016

During 2016 there were no acquisitions.

7. FINANCIAL RISK MANAGEMENT

In the normal course of its business, the Group is exposed to a number of financial risks such as currency risk, interest rate risk, commodity price risk, liquidity risk and credit risk that could affect its financial position and its result of operations. The Group's objectives, policies and processes in managing these financial risks are described further in this note. In managing these risks the Group may use derivative financial instruments. The use of derivative financial instruments is subject to internal controls and uniform guidelines set up by the Group's Treasury Committee. Derivatives used are over-the-counter instruments, particularly forward exchange contracts. Since a few years, the Group also concludes metal swaps.

7.1 MARKET RISK

7.1.1 Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument

will fluctuate due to changes in foreign exchange rates. The foreign currency risk management distinguishes between three types of foreign currency risk: foreign currency transaction risk, foreign currency translation risk and foreign currency economic risk.

The Group incurs foreign currency transaction risk on accounts receivable, accounts payable and other monetary items that are denominated in a currency other than the Company's functional currency. Foreign currency transaction risk in the Group's operations also arises from the variability of cash flows in respect of forecasted transactions.

Foreign operations which do not have the Euro as their functional currency give rise to a translation risk.

The foreign currency economic risk is the risk that future cash flows and earnings generated by foreign operations may vary. Foreign currency economic risk is highly connected with other factors such as the foreign operations' competitive position within an industry, its relationship with customers and suppliers.

In monitoring the foreign currency risk exposures, the central treasury department focuses on the transaction and translation risk exposures whereas business management seeks to manage the foreign economic risk through natural hedges.

Each of the above types of foreign currency risk exposure impacts the financial statements differently. The central treasury department monitors and manages foreign currency exposure from the view of its impact on either the statement of financial position or profit or loss.

7.1.2 Foreign currency transaction risk in the statement of financial position

The currencies that primarily impact the net foreign currency exposure on the statement of financial position are as follows:

MILLION	Net exposure	Hedging
FOREIGN CURRENCY	of receivables and payables	Cash, cash equivalents loans & deposits	Derivative Financial Instruments	Net position
December 31, 2016
USD	57.6	(158.9)	117	15.7
RMB	38	(54.1)	-	(16.1)
GBP	13.9	(57.7)	41.3	(2.5)
CAD	(12.2)	0.2	-	(12.1)
HKD	46.6	(73.7)	36	8.9
KRW	6,380.8	-	(8,184.9)	(1,354.1)
AUD	10.6	(10.8)	-	(0.2)
December 31, 2017
USD	37.2	(159)	117	(4.8)
RMB	187.2	(193.7)	-	(6.5)
GBP	14.3	(50.9)	35.4	(1.2)
CAD	(5.9)	(0.7)	-	(6.6)
AUD	8.2	(6.3)	-	1.9
INR	487.5	-	(500.5)	(13)

The aim of Group's management regarding transaction exposure in the statement of financial position is to minimize, over the short term, the revaluation results – both realized and unrealized – of items in the statement of financial position that are denominated in a currency other than the Company's functional currency.

In order to keep the exposures within predefined risk adjusted limits, the central treasury department economically hedges the net outstanding monetary items in the statement of financial position in foreign currency using derivative financial instruments such as forward exchange contracts. As of December 31, 2017, the outstanding derivative financial instruments are mainly forward exchange contracts with maturities of generally less than one year.

Where derivative financial instruments are used to economically hedge the foreign exchange exposure of recognized monetary assets or liabilities, no hedge accounting is applied. Changes in the fair value of these derivative financial instruments are recognized in profit or loss.

7.1.3 Foreign currency translation risk in the statement of financial position

When the functional currency of the entity that holds the investment is different from the functional currency of the related subsidiary, the currency fluctuations on the net investment directly affect other comprehensive income ('Translation reserve') unless any hedging mechanism exists.

All subsidiaries and associates have as functional currency the currency of the country in which they operate. The currencies giving rise to the Group's translation risk in the statement of financial position are primarily the US Dollar, Canadian Dollar, Chinese Renminbi, Pound Sterling and Brazilian Real.

MILLION	Net investment in a foreign entity
FOREIGN CURRENCY	December 31, 2016	December 31, 2017
USD	237	235
CAD	207	216
RMB	592	518
GBP	(94)	(74)
BRL	108	120

During 2016, an amount of 8 million Euro was reclassified from translation reserve to financial result on disposal of a foreign operation, being the abandonment of operating activities in Venezuela. The central treasury department monitors the translation exposure in the statement of financial position of the Group at least on a quarterly basis. The Treasury Committee proposes corrective actions if needed to the Executive Management.

Until May 2016, the Group utilized forward exchange contracts (120 million USD) to hedge the foreign currency exposure of the Group's net investment in one of its subsidiaries in the United States. As from May 2016, the Group has revoked the designation of the hedge. The gain on the hedging instrument relating to the effective portion of the hedge that was recognized in Other Comprehensive Income (Translation reserve December 31, 2017: 10 million Euro; December 31, 2016: 10 million Euro) shall be reclassified from equity to profit or loss on the disposal of the foreign operation.

7.1.4 Foreign currency risk in profit or loss

Foreign currency risk in profit or loss includes both the risk of the variability of cash flows in respect of forecasted transactions as a result of changes in exchange rates and the risk that the profit (loss) for the year generated by foreign operations may vary in amount when translated into the presentation currency (Euro). The central treasury department monitors and manages both risks simultaneously.

The currencies that primarily impact the net foreign currency exposure in profit or loss are US Dollar, currencies highly correlated to the US Dollar – i.e. Hong Kong Dollar, Canadian Dollar, Pound Sterling, Australian Dollar, Korean Won, Indian Rupees and Swiss Francs.

The Executive Management decides on the hedging policy of aforementioned currency exposures considering the market situation and upon proposal of the Treasury Committee. The objective of the Group's management of exposure in profit or loss is mainly to increase the predictability of results but also to allow the business to react to the changing environment (e.g. by adapting prices or shifting production).

In the course of 2017, the Group designated foreign exchange contracts as 'cash flow hedges' of its foreign currency exposure in US Dollar and Pound Sterling related to highly probable forecasted revenue over the following 15 months.

The portion of the gain on the forward exchange contracts that is determined to be an effective hedge is recognized directly in 'Other comprehensive income' (December 31, 2017: 3 million Euro). During 2017, gains amounting to 13 million Euro have been recognized in 'Other comprehensive income'. An amount of 8 million Euro has been reclassified from 'Other Comprehensive Income' and was included in Turnover (6 million Euro) and in other operating income (2 million Euro). Taxes amounting to 1 million Euro have been deducted from 'Other comprehensive income'.

In the course of 2016, the Group designated foreign exchange contracts as 'cash flow hedges' of its foreign currency exposure in US Dollar, Pound Sterling and Chinese Renminbi related to highly probable forecasted revenue over the following 15 months.

The portion of the gain on the forward exchange contracts that is determined to be an effective hedge is recognized directly in 'Other comprehensive income' (December 31, 2016: minus 1 million Euro). During 2016, losses amounting to 2 million Euro have been recognized in 'Other comprehensive income'. Taxes amounting to 1 million Euro have been recognized in 'Other comprehensive income'.

7.1.5 Sensitivity analysis

A strengthening/weakening of the Euro by 10% against the currencies listed hereafter with all other variables held constant, would have increased (decreased) profit or loss by the amounts shown below. The analysis has been carried out on the budgeted net exposure for the year 2017, net of the use of cash flow hedges.

			Profit or loss
	2016			2017
MILLION EURO	Strengthening of the Euro by 10%	Weakening of the Euro by 10%	Strengthening of the Euro by 10%	Weakening of the Euro by 10%
USD and currencies highly related to the USD – HKD – RMB	(1.7)	1.7	0.3	(0.3)
CAD	1.0	(1.0)	1.4	(1.4)
GBP	(1.7)	1.7	(2.2)	2.2
AUD	(3.3)	3.3	(2.7)	2.7
INR	(4.2)	4.2	(4.2)	4.2
KRW	(3.3)	3.3	(2.9)	2.9
CHF	(2.3)	2.3	(1.9)	1.9

7.1.6 Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market interest rates.

The Group's exposure to changes in interest rates primarily relates to the Group's net financial debt position, including the FX-swaps and its interest component that economically hedge intercompany loans and deposits. For the most important currencies the following interest rate profile exists at the reporting date:

	2016		2017
	Outstanding amount		Outstanding amount
MILLION EURO	At floating rate	At fixed rate	At floating rate	At fixed rate
EUR	90	100	120	74
USD	(112)	-	(98)	-
GBP	(50)	-	(41)	-
RMB	(26)	-	(8)	-
AUD	(9)	-	(9)	-
JPY	13	-	11	-
BRL	-	-	(5)	-
Other	(24)	-		-
TOTAL	(118)	100	(56)	74
NET FINANCIAL DEBT	(18)		18

7.1.7 Sensitivity analysis

A change of 100 basis points in interest rates at December 31, 2017 would have increased (decreased) profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.

The analysis is performed on the same basis for 2016.

	Profit or loss
	100 bp increase	100 bp decrease
December 31, 2016
Net impact	1.2	(1.2)
December 31, 2017
Net impact	0.6	(0.6)

7.1.8 Commodity price risk

The Group's most important raw material exposures relate to silver and aluminum. The Group's commodity price risk – i.e. the risk that its future cash flows and earnings may vary because of changed material prices – is highly connected with other factors such as the Group's competitive position within an industry, its relationship with customers and suppliers.

In order to prevent negative effects from potential future price rises or price volatility of aluminum, the Group applies for aluminum a strategy of purchasing at spot rates combined with a system of 'Rolling layered forward buying'.

This 'Rolling layered forward buying' model has been set up mainly for increasing the predictability with respect to raw material prices. According to this model, the Group purchases a predefined % of the planned yearly consumption.

The Commodities Steering Committee periodically reviews the commodity purchasing and hedging strategy. Deviations from the predefined 'Rolling layered forward buying' model are possible in which case the Chief Executive Officer takes the final decision.

This 'Rolling layered forward buying' is achieved by means of metal swap agreements. These metal swap agreements are concluded with banks and are designated as 'cash flow hedges', hedging the Group's exposure to fluctuations in commodity prices related to highly probable forecasted purchases of aluminum.

These commodity contracts are held for the purpose of the receipt of commodities in accordance with the Group's expected usage requirements. The portion of the gain or loss on the swap contracts that is determined to be an effective hedge is recognized directly in 'Other comprehensive income' (December 31, 2017: 7 million Euro net of tax, December 31, 2016: 2 million Euro net of tax). During 2017, gains amounting to 22 million Euro have been recognized in 'Other comprehensive income'. An amount of 14 million Euro has been reclassified from 'Other comprehensive income' and has been included in the initial carrying amount of 'Inventory'. Taxes amounting to minus 3 million Euro have been recognized in 'Other comprehensive income'.

It should also be noted that the Group's management will react on increased raw material prices by mitigating this impact through sales price adaptations and cost efficiency measures amongst other measures, depending on the size of the price increases of the raw materials and considering currency evolutions and the general market circumstances.

7.2 CREDIT RISK

Credit risk is the risk that the counterparty to a financial instrument may fail to discharge an obligation and cause the Group to incur a financial loss.

The Group manages exposure to credit risk by working with upfront agreed counterparty credit limits and through diversification of counterparties.

Credit risk arises mainly from the Group's receivables from customers, investments and foreign currency forward contracts.

The exposure to credit risk from customer receivables is monitored on an ongoing basis by the Credit Committee. Credit limits are set for each customer based on its creditworthiness and are reviewed periodically by the Credit Committee. In monitoring the credit risk, customers are grouped in risk categories according to their financial characteristics. It is the Group's policy to cover a portion of the receivables portfolio through credit insurance to cover default risk.

Goods sold are subject to retention of title clauses, so that in event of non-payment the Group may have a secured claim. In normal circumstances, the Group does not require collateral in respect of trade or other receivables.

Transactions involving derivative financial instruments and deposits are only allowed with counterparties that have good credit ratings. To minimize the concentration of counterparty risk, the Group enters into derivative transactions with a number of financial institutions. Investments are only allowed in liquid assets.

7.2.1 Exposure to credit risk

As a result of the Group's broad customer portfolio, there were no significant concentrations of credit risk at December 31, 2017.

The maximum exposure is kept within predefined limits.

The carrying amounts of the financial assets, including derivative financial instruments, in the statement of financial position reflect the maximum exposure to credit risk.

The maximum exposure to credit risk at the reporting date per class of financial asset is as follows:

MILLION EURO	Note	2016	2017
Available-for-sale financial assets
Included in Financial assets	15	8	9
Held-to maturity investments
Included in Cash & cash equivalents	21	10	-
Financial assets at fair value through profit or loss
Included in Financial assets	15	-	-
Derivatives not part of a hedging relationship - assets	7.5	1	2
Loans and receivables
Trade receivables	7	505	517
Receivables under finance lease	18	87	85
Other receivables	19	13	14
Loans and receivables included in Financial assets	15	2	2
Cash on hand, demand deposits and checks	21	119	68

7.2.2 Impairment losses

The Group assesses at least on a quarterly basis whether there is objective evidence that a financial asset or group of financial assets is impaired.

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables, being the difference between the carrying amount and the present value of the estimated future cash flows. Specific loss allowances are established for individually significant exposures after consultation with the Credit Committee.

The ageing of trade receivables and receivables under finance lease at the reporting date was:

		2016			2017
MILLION EURO	Gross value	Impairment loss	Net	Gross value	Impairment loss	Net
Trade receivables
Not past due	459	(1)	458	465	(3)	462
Past due 0 – 30 days	25	(1)	24	28	(1)	27
Past due 31 – 90 days	14	(1)	13	15	-	15
Past due more than 90 days	71	(61)	10	64	(51)	13
TOTAL TRADE RECEIVABLES	569	(64)	505	572	(55)	517
Receivables under finance leases
Not past due	86	(1)	85	82	(1)	81
Past due 0 – 30 days	1	-	1	1	-	1
Past due 31 – 90 days	-	-	-	1	-	1
Past due more than 90 days	1	-	1	2	-	2
TOTAL RECEIVABLES UNDER FINANCE LEASES	88	(1)	87	86	(1)	85

Past due amounts are not impaired when collection is still considered likely or sufficient collaterals have been obtained.

The Group believes that the unimpaired amounts that are past due by more than 30 days are still collectible in full, based on historic payment behavior and extensive analysis of customer credit risk.

The movement in the allowance for impairment in respect of loans and receivables during the year was:

MILLION EURO	2016	2017
Balance at January 1	66	65
Additions/reversals charged to profit and loss	7	2
Deductions from allowance (1)	(8)	(10)
Exchange differences	-	(1)
Balance at December 31	65	56

(1) Write-offs for which an allowance was previously recorded.

7.3 LIQUIDITY RISK

Liquidity risk is the risk that the Group will encounter difficulties in meeting commitments related to financial liabilities when they fall due.

The Group ensures that it has sufficient liquidity to meet its liabilities. Liquidity risk is managed by maintaining a sufficient degree of diversification of funding sources.

The Group has a policy in place to limit concentrations related to liquidity risk.

The total share of gross drawn term debt and all undrawn committed facilities provided by one bank or bank group should not exceed predetermined limits. Risk concentrations are monitored on an ongoing basis by the Treasury Committee.

In managing its liquidity risk the Group has a revolving credit facility it can access to meet its liquidity needs.

In the course of 2015, this credit facility was renegotiated. The notional amount of this renewed credit facility amounts to 400 million Euro with maturity date July 17, 2020.

Drawdowns under these lines are made for shorter periods but the Group has the discretion to roll-over the liability under the existing committed loan agreement. In the liquidity analysis, repayments of the committed facilities are included in the earliest time band the Group could be required to repay its liabilities. At December 2017, there were no drawdowns under these lines.

The following are the remaining contractual maturities at the end of the reporting period of financial liabilities, including estimated interest payments based on conditions existing at the reporting date, i.e. exchange rates and interest rates. With regard to derivatives, the maturity analysis comprises liabilities arising from derivatives and all gross settled forward exchange contracts. The contractual cash flows for forward exchange contracts are determined using forward rates.

2016

			Contractual cash flows
MILLION EURO	Carrying amount	TOTAL	3 months or less	3-12 months	1-5 years	More than 5 years
Non-derivative financial liabilities
Debenture	42	48	-	2	46	-
Revolving credit facility (1)	(2)	-	-	-	-	-
EIB loan	58	61	14	14	33	-
Other loans	13	14	9	3	2	-
Trade payables	225	225		219	6	-
Other payables	11	11		11	-	-
Derivative financial liabilities
Forward exchange contracts designated as cash flow hedges:
Outflow	(3)	(187)	(43)	(114)	(30)	-
Inflow	1	185	41	114	30	-
Other forward exchange contracts:
Outflow	(3)	(247)	(237)	(10)	-	-
Inflow	1	245	235	10	-	-
Other swap contracts:
Outflow	(2)	(8)	(8)	-	-	-
Inflow	-	6	6	-	-	-

(1) Transaction costs are included in the initial measurement of the financial liability (2 million Euro).

2017

		Contractual cash flows
MILLION EURO	Carrying amount	TOTAL	3 months or less	3-12 months	1-5 years	More than 5 years
Non-derivative financial liabilities
Debenture	42	46		2	44	-
Revolving credit facility (1)	(1)	-	-	-	-	-
EIB loan	32	33	14	13	6	-
Other loans	13	13	8	5	-	-
Trade payables	224	224		220	4	-
Other payables	12	12		12	-	-
Derivative financial liabilities
Forward exchange contracts designated as cash flow hedges:
Outflow	(1)	(128)	(36)	(69)	(23)	-
Inflow	4	131	39	69	23	-
Other forward exchange contracts:
Outflow	(1)	(222)	(210)	(12)	-	-
Inflow	1	222	209	13	-	-

(1) At December 31, 2017, there were no drawdowns under the revolving credit facility. Transaction costs (1 million Euro) are presented as a reduction of the carrying amount of the financial liability.

The following table indicates the periods in which the cash flows associated with cash flow hedges and hedge of a net investment are expected to occur and impact the profit or loss with the fair value of the related hedging instruments.

2016

		Expected cash flows
MILLION EURO	Fair value	TOTAL	3 months or less	3-12 months	1-5 years	More than 5 years
Derivative financial instruments designated as cash flow hedges
Forward exchange contracts designated as cash flow hedges:
Outflow	(3)	(187)	(43)	(114)	(30)	-
Inflow	1	185	41	114	30	-
Swap contracts designated as cash flow hedges:
Outflow	-	-	-	-	-	-
Inflow	2	2	-	2	-	-

2017

		Expected cash flows
MILLION EURO	Fair value	TOTAL	3 months or less	3-12 months	1-5 years	More than 5 years
Derivative financial instruments designated as cash flow hedges
Forward exchange contracts designated as cash flow hedges:
Outflow	(1)	(128)	(36)	(69)	(23)	-
Inflow	4	131	39	69	23	-
Swap contracts designated as cash flow hedges:
Outflow	-	-	-	-	-	-
Inflow	10	10	2	8	-	-

7.4 CAPITAL MANAGEMENT

The Executive Management seeks to maintain a balance between the components of the shareholders' equity and the net financial debt at an agreed level. Net financial debt is defined as current and non-current loans and borrowings less cash and cash equivalents. There were no changes in the Group's approach to capital management during the year.

The Group is not subject to any externally imposed capital requirements, with the exception of the statutory minimum equity funding requirements that apply to its subsidiaries in the different countries.

In previous years, the Group purchased its own shares in the market. These shares are intended to be used for issuing shares under future option plans that the Group would issue. The Group does not have a defined share buy-back plan.

7.5 ACCOUNTING CLASSIFICATION AND FAIR VALUES

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

All derivative financial instruments are recognized at fair value in the statement of financial position.

The Group aggregates its financial instruments into classes based on their nature and characteristics. The following table shows the carrying amounts and fair values of financial assets and liabilities by category and a reconciliation of the corresponding line items in the statement of financial position.

2016

				Measured at Fair value			Measured at Amortized cost
MILLION EURO	Note	Held for trading	Fair value - hedging instruments	Designated at fair value through profit or loss	Available for-sale	Held-to maturity	Loans and receivables and financial liabilities	Carrying amount in the statement of financial position	Fair value
Assets
Financial assets	15	-	-	-	8	-	2	10	10
Trade receivables	7	-	-	-	-	-	505	505 (1)
Receivables under finance lease	18	-	-	-	-	-	87	87 (1)
Other receivables	19	-	-	-	-	-	13	13 (1)
Derivative financial instruments:
Forward exchange contracts used for hedging		-	1	-	-	-	-	1	1
Swap contracts used for hedging		-	2	-	-	-	-	2	2
Other forward exchange contracts		1	-	-	-	-	-	1	1
Cash and cash equivalents	21	-	-	-	-	10 (2)	119	129	129
TOTAL ASSETS		1	3	-	8	10	726	748
Liabilities
Loans and borrowings	25
EIB loan		-		-	-	-	58	58	60
Other bank liabilities		-		-	-	-	11	11	13
Debenture		-		-	-	-	42	42	44
Trade payables	7	-		-	-	-	225	225 (1)
Other payables	28	-		-	-	-	11	11 (1)
Derivative financial instruments:
Forward exchange contracts used for hedging		-	3	-	-	-	-	3	3
Other forward exchange contracts		3	-	-	-	-	-	3	3
Other swap contracts		2	-	-	-	-	-	2	2
TOTAL LIABILITIES		5	3	-	-	-	347	355

(1) The Group has not separately disclosed the fair value of trade and other receivables and the fair value of trade payables and other payables as these assets and liabilities are mainly short-term receivables and payables for which the carrying amount is an approximation of fair value.

(2) The fair value of the financial assets classified as held-to-maturity approximates the carrying amount as the maturity dates are very short.

2017

		Financial assets/liabilities
				Measured at Fair value		Measured at Amortized cost
MILLION EURO	Note	Held for trading	Fair value - hedging instruments	Designated at fair value through profit or loss	Available for-sale	Held-to maturity	Loans and receivables and financial liabilities	Carrying amount in the statement of financial position	Fair value
Assets
Financial assets	15	-	-	-	9	-	2	11	11
Trade receivables	7	-	-	-	-	-	517	517 (1)
Receivables under finance lease	18	-	-	-	-	-	85	85 (1)
Other receivables	19	-	-	-	-	-	14	14 (1)
Derivative financial instruments:
Forward exchange contracts used for hedging		-	4	-	-	-	-	4	4
Swap contracts used for hedging		-	10	-	-	-	-	10	10
Other forward exchange contracts		1	-	-	-	-	-	1	1
Other swap contracts		1	-	-	-	-	-	1	1
Cash and cash equivalents	21	-	-	-	-	-	68	68	68
TOTAL ASSETS		2	14	-	9	-	686	711

Liabilities
Loans and borrowings	25
EIB loan		-	-	-	-	-	32	32	33
Other bank liabilities		-	-	-	-	-	12	12	13
Debenture		-	-	-	-	-	42	42	44
Trade payables	7	-	-	-	-	-	224	224 (1)
Other payables	28	-	-	-	-	-	12	12 (1)
Derivative financial instruments:
Forward exchange contracts used for hedging		-	1	-	-	-	-	1	1
Other forward exchange contracts		1	-	-	-	-	-	1	1
TOTAL LIABILITIES		1	1	-	-	-	322	324

7.5.1 Basis for determining fair values

Significant methods and assumptions used in estimating the fair values of financial instruments are as follows.

7.5.1.1 Available-for-sale financial assets

Investments in equity securities, other than associates, are classified as available-for-sale and are stated at fair value, except for unquoted equity instruments whose fair value cannot be estimated reliably. The fair value of available-for-sale financial assets is determined by reference to their quoted market price at the reporting date.

7.5.1.2 Financial assets and liabilities at fair value through profit or loss

The fair value of forward exchange contracts and swap contracts is valued using observable forward exchange rates and yield curve data at reporting date.

7.5.1.3 Loans and receivables

The fair value of trade and other receivables is estimated as the present value of future cash flows, discounted at the market rate of interest at the reporting date. The fair value of trade and other receivables and trade and other payables is not disclosed as it relates to short-term receivables and payables for which their carrying amount is a reasonable approximation of fair value. The fair value of lease receivables is based on the present value of future minimum lease receivables discounted at a market rate of interest for similar assets.

7.5.1.4 Financial liabilities at amortized cost

Fair value is calculated based on the present value of future principal and interest cash flows, discounted at market rates of interest at the reporting date. The fair value of the debenture is the quoted market price at the reporting date (level 1). The fair value of the EIB loan is calculated based on observable data for the liability (level 2).

The fair value for the current bank liabilities approximates nominal amounts excluding transaction costs, as drawdowns are made for short periods.

7.5.1.5 Fair value hierarchy table

Fair value measurements related to financial instruments carried at fair value are classified using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has following levels:

Level 1: quoted prices (unadjusted) in active markets;
Level 2: inputs other than quoted prices but that are observable for the related asset or liability; either directly (as prices) or indirectly (derived from prices);
Level 3: inputs not based on observable market data (unobservable inputs).

	December 31, 2016			December 31, 2017
		Fair value hierarchy		Fair value hierarchy
MILLION EURO	level 1	level 2	level 3	level 1	level 2	level 3
A. Available-for-sale financial assets
Carried at fair value	8	-	-	9	-	-
B. Financial assets/liabilities carried at fair value through profit or loss
B.1. Classified as held for trading
Derivatives not part of a designated hedging relationship:
Assets	-	1	-	-	2	-
Liabilities	-	(5)	-	-	(1)	-
B.2. Designated at fair value through profit or loss	-	-	-	-	-	-
C. Fair value - hedging instruments
Swap contracts designated as cash flow hedges:
Assets	-	2	-	-	10	-
Liabilities	-	-	-	-	-	-
Forward exchange contracts designated as cash flow hedges:
Assets	-	1	-	-	4	-
Liabilities	-	(3)	-	-	(1)	-

7.6 ITEMS OF INCOME, EXPENSE, GAINS AND LOSSES ON FINANCIAL INSTRUMENTS RECOGNIZED IN PROFIT OR LOSS

	2016
MILLION EURO	Loans and receivables	Held-to-maturity investments	Available for-sale financial assets	Derivatives	Financial liabilities carried at amortized cost	TOTAL
Interest income	1	-	-	2	-	3
Interest expense	-	-	-	(5)	(9)	(14)
Finance lease income	6	-	-	-	-	6
Impairment charges	(9)	-	-	-	-	(9)
Income from reversal of impairment losses	2	-	-	-	-	2
Change in fair value of financial instruments not part of a hedging relationship	-	-	-	(3)	-	(3)
Net result from ineffectiveness of hedging instruments designated as cash flow hedges	-	-	-	-	-	-

	2017
MILLION EURO	Loans and receivables	Held-to-maturity investments	Available for-sale financial assets	Derivatives	Financial liabilities carried at amortized cost	TOTAL
Interest income	1	-	-	3	-	4
Interest expense	-	-	-	(6)	(8)	(14)
Finance lease income	6	-	-	-	-	6
Impairment charges	(5)	-	-	-	-	(5)
Income from reversal of impairment losses	3	-	-	-	-	3
Change in fair value of financial instruments not part of a hedging relationship	-	-	-	5	-	5
Net result from ineffectiveness of hedging instruments designated as cash flow hedges	-	-	-	2	-	2

8. INFORMATION ON THE NATURE OF EXPENSES

The following table gives an overview of the major expenses classified by nature.

MILLION EURO	Note	2016	2017
Cost of raw materials, goods purchased for resale and production related costs		1,053	1,047
Cost of services purchased		78	71
Employee benefit expenses	24	870	871
Restructuring expenses including impairment losses on intangible assest and PP&E	10/13/14	38	17
Amortization and depreciation	13/14	57	53
Write-downs of inventories	16	16	16
Impairment losses on loans and receivables	10	9	5

Cost of raw materials, goods purchased for resale and production related costs cover the total amount on third party supplies (including purchases of electricity and other utilities) to the extent reflected in the cost of sales as comprised in profit or loss for the year.

Cost of services purchased cover the external preliminary work for the processing or manufacturing of products and projects on behalf of the Company to the extent reflected in the cost of sales as comprised in profit or loss for the year.

Employee benefit expenses in 2017 amounted to 871 million Euro compared to 870 million Euro in 2016.

The average number of employees in full-time equivalent heads for 2017 amounted to 10,086 (2016: 10,329). Classified per corporate function, this average comprising permanent and temporary contracts can be presented as follows:

	2016	2017
Manufacturing/Engineering	3,094	2,924
Research & Development	1,396	1,406
Sales & Marketing/Service	4,104	4,119
Administration	1,735	1,637
TOTAL	10,329	10,086

9. OTHER OPERATING INCOME

MILLION EURO	2016	2017
Exchange gains on operating activities net of changes in fair value of derivative financial instruments not part of a hedging relationship	47	42
Recharge to customer	10	8
Reversal of unutilized provisions recognized in previous years	2	1
Reversal of impairment losses on loans and receivables	2	3
Finance lease income	6	6
Gains on the sale of non-current assets held for sale	10	-
Gains on the sale of PP&E	2	1
Other income	19	10
TOTAL	98	71

Income from recharge to customers mainly reflects the recharge of freight and research and development expenses.

Finance lease income mainly comprises interest income and income from the sale of receivables under finance lease.

10. OTHER OPERATING EXPENSES

MILLION EURO	2016	2017
Exchange losses on operating activities net of changes in fair value of derivative financial instruments not part of a hedging relationship	45	43
Restructuring expenses	38	17
Impairment losses on loans and receivables	9	5
Provisions	4	4
Bank charges	4	4
Impact remeasurements long term disabilility plan US	1	-
Loss on settlements Pensionplan US and Canada	6	-
Loss on the sale of PP&E	-	2
Other expenses	30	23
TOTAL	137	98

In 2017, the Group has recorded restructuring expenses of 17 million Euro (2016: 38 million Euro) that mainly relates to employee termination costs, whereas in 2016 22 million Euro of the 38 million Euro related to non-employee related costs.

In 2016, these costs mainly related to the closure of the printing plate factory in Vallese, Italy and the decision to exit the contrast media market.

11. NET FINANCE COSTS

MILLION EURO	2016	2017
Interest income
on bank deposits	1	1
TOTAL INTEREST INCOME	1	1
Interest expense on financial liabilities measured at amortized cost
on bank loans	(7)	(6)
on debentures	(2)	(2)
TOTAL INTEREST EXPENSE	(9)	(8)

Other finance income
Exchange gains on non-operating activities net of changes in fair value of derivative financial instruments not part of a hedging relationship	11	4
Financial assets at fair value through profit or loss
Held for trading	2	3
Available-for-sale financial assets:
Gains ons the sale of available-for-sale financial assets	1	1
Other	-	2
TOTAL OTHER FINANCE INCOME	14	10

Other finance expense
Net periodic pension cost treated as other finance income (expense) and interest portion on other interest-bearing provisions (1)	(32)	(25)
Exchange losses on non-operating activities net of change in fair value of derivative financial instruments not part of a hedging relationship	(7)	(6)
Exchange differences on disposal of foreign operations reclassified to profit or loss	(8)	-
Financial assets at fair value through profit or loss
Held for trading	(5)	(6)
Other	(5)	(5)
TOTAL OTHER FINANCE EXPENSE	(57)	(42)

NET FINANCE COSTS	(51) (2)	(39) (2)

(1) The interest portion of other interest-bearing provisions primarily comprises the allocation of interest on provisions for pre-retirement. (2) The above finance income and finance costs include the following interest income and expense in respect of assets (liabilities) not at fair value through profit or loss.

Total interest income on financial assets 1 1 Total interest expense on financial liabilities (9) (8)

12. INCOME TAXES

The breakdown of the income tax expenses by origin is as follows:

MILLION EURO	2016	2017
Taxes paid or accrued	26	27
Related to this year	27	27
Related to prior years	(1)	-
Deferred tax expense (income)	9	26
From temporary differences	3	9
From tax loss carryforwards and tax credits	6	17
Income tax expense	35	53

Deferred tax expense amounted to 26 million Euro versus 9 million Euro in the previous year. The evolution is mainly explained by a one-off deferred tax expense of 25 million Euro following changes in tax regulation in Belgium and the US.

Further information on the major components of tax expense (income) is provided in the table reflecting the reconciliation between the theoretical tax rate and the effective tax rate in note 12.3.4.

12.1 CURRENT INCOME TAX ASSETS AND LIABILITIES

Current income tax assets amount to 63 million Euro (2016: 64 million Euro) and current income tax liabilities amount to 53 million Euro (2016: 56 million Euro).

The Group is subject to income taxes in numerous jurisdictions. Uncertainties exist with respect to the interpretations of complex tax regulations in the respective countries. The Group establishes accruals for anticipated tax audit issues based on reasonable estimates of whether additional taxes will be due, considering various factors such as experience with previous tax audits and differing legal interpretations by the taxable entity and the responsible tax authority. Differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate adjustments to tax income and expense in future periods.

The Group believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors as explained above.

Current income tax assets are offset against current income tax liabilities when they relate to taxes levied by the same taxation authority and are intended to be settled on a net basis.

12.2 DEFERRED TAX ASSETS AND LIABILITIES

Deferred tax assets are the amounts of income taxes recoverable in future periods in respect of deductible temporary differences, the carry-forward of unused tax losses and the carry-forward of unused tax credits.

Deferred tax liabilities are the amounts of income taxes payable in future periods in respect of taxable temporary differences.

		December 31, 2016			December 31, 2017
MILLION EURO	Assets	Liabilities	Net	Assets	Liabilities	Net
Intangible assets and goodwill	52	24	28	37	21	16
Property, plant and equipment	11	18	(7)	8	12	(4)
Investments in associates and non-current financial assets	-	-	-	-	-	-
Inventories	22	5	17	19	3	16
Receivables	4	3	1	3	2	1
Provisions and liabilities for post-employment benefits	36	3	33	32	2	30
Other current assets and other liabilities	1	1	-	(1)	5	(6)
Deferred tax assets and liabilities related to temporary differences	126	54	72	98	45	53
Tax loss carry-forwards	55	-	55	37	-	37
Excess tax credits	3	-	3	4	-	4
Deferred tax assets/liabilities	184	54	130	139	45	94
Set off of tax	(35)	(35)	-	(24)	(24)	-
Net deferred tax assets/liabilities	149	19	130	115	21	94

Deferred tax assets and liabilities are attributable to the following items:

The movement in temporary differences during 2016-2017 is disclosed in note 12.4.

Deferred tax assets are recognized where it is sufficiently probable that taxable income will be available in the future to enable the deductible temporary differences, tax loss carry forwards and tax credits to be utilized.

The Group's management regularly assesses the recoverability of its deferred tax assets, mainly based on the long-term business plans for the operating segments

Agfa Graphics and Agfa HealthCare and considering historical profitability and projected future taxable income of the individual consolidated entities that are involved. Other parameters such as the expected timing of the reversals of existing temporary differences and tax planning strategies are considered as well in this assessment. Material changes to business plans and/or business (goods and services) flows impacting the taxable profit or loss of certain entities of the Group may influence the realization of deferred tax assets. Differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate reversing certain deferred tax assets resulting in an increase of the Group's effective tax rate.

Deferred tax assets and deferred tax liabilities are offset if they relate to income taxes levied by the same taxation authority.

Deferred tax assets have not been recognized in respect of 'tax loss carry forwards', 'tax credits' and 'temporary differences' for the amounts stated hereafter because it is not probable that future taxable profit will be available against which the Group can utilize the benefits there from:

tax loss carry-forwards: 189 million Euro (2016: 250 million Euro);
tax credits: 31 million Euro (2016: 35 million Euro);
temporary differences: 205 million Euro (2016: 285 million Euro).

The remeasurements of the net defined benefit liability (IAS 19R) has a significant effect on the unrecognized deferred tax assets in respect of temporary differences.

The impact is situated in entities of the Group for which the Group's management estimated that it is not sufficiently probable that the related tax benefit would be realized.

The unrecognized deferred tax assets related to the impact of the 2011 amendment of IAS 19 and the subsequent remeasurements of the net defined liability amount to 140 million Euro and would impact OCI when recognized.

The deferred tax asset impact on unused temporary differences, tax losses and tax credits expires as follows:

MILLION EURO	Temporary differences	Tax losses	Tax credits	TOTAL
Expiry in:
2018	-	1	13	14
2019	-	-	-	-
2020	-	-	-	-
2021	-	1	-	1
2022	-	1	-	1
after	-	6	-	6
No expiry	205	180	18	403
TOTAL	205	189	31	425

12.3 RELATIONSHIP BETWEEN INCOME TAX EXPENSE AND PROFIT (LOSS) BEFORE INCOME TAXES 12.3.1 Summary 2016

MILLION EURO
Profit (loss) before income taxes	115
Income tax expense	35
Tax rate	30.43%

12.3.2 Reconciliation of effective tax rate

MILLION EURO
Profit (loss) before income taxes	115
Theoretical income tax expense (income)	33
Theoretical tax rate (1)	28.70%
Disallowed items	6
Impact of tax credits and other deductions from tax basis	(10)
Tax losses of the year for which no deferred tax asset has been recorded	13
Tax losses used this year for which no deferred tax asset was recorded	(37)
Tax income recorded on losses of previous years	(7)
Tax expense due to taxation of previously non taxable reserves	45
Reclassification from translation reserve to profit or loss	3
Reversal of deductible temporary differences for which no deferred tax asset had been recognized	(15)
Witholding taxes	4
Income tax expense	35
Effective tax rate	30.43%

(1) The theoretical tax rate is the weighted average tax rate of the Company and all subsidiaries included in the consolidation.

12.3.3 Summary 2017

MILLION EURO
Profit (loss) before income taxes	99
Income tax expense	53
Tax rate	53.53%

During 2017, compared to the previous accounting period, there were significant changes in the applicable tax rates for Belgium and the United States which materially impacted the income tax expense (income).

12.3.4 Reconciliation of effective tax rate

MILLION EURO
Profit (loss) before income taxes	99
Theoretical income tax expense (income)	32
Theoretical tax rate (1)	32.32%
Disallowed items	8
Impact of tax credits and other deductions from tax basis	(6)
Tax losses of the year for which no deferred tax asset has been recorded	17
Tax losses used this year for which no deferred tax asset was recorded	(1)
Tax income recorded on losses of previous years	(1)
Tax expense due to increase in deductible temporary differences for which no different tax asset was recorded	7
Tax income due to reversal of deductible temporary differences for which no deferred tax asset was recorded	(34)
Witholding taxes	4
Impact of adjustment in deferred tax rates	25
Other	2
Income tax expense	53
Effective tax rate	53.53%

(1) The theoretical tax rate is the weighted average tax rate of the Company and all subsidiaries included in the consolidation.

12.4 MOVEMENT IN TEMPORARY DIFFERENCES DURING 2016-2017

MILLION EURO	December 31, 2015	consolidation scope Change in	Recognized in profit or loss	comprehensive income Recognized in other	Translation reserves	December 31, 2016	consolidation scope Change in	Recognized in profit or loss	comprehensive income Recognized in other	Translation reserves	December 31, 2017
Intangible assets and goodwill	29	-	(1)	-	-	28	-	(12)	-	-	16
Property, plant and equipment	(11)	-	4	-	-	(7)	-	3	-	-	(4)
Investments in associates and non-current financial assets	-	-	-	-	-	-	-	-	-	-	-
Inventories	20	-	(3)	-	-	17	-	-	-	(1)	16
Receivables	2	-	(1)	-	-	1	-	-	-	-	1
Provisions and liabilities for post-employment benefits	24	-	1	8	-	33	-	-	(2)	(1)	30
Other current assets and other liabilities	3	-	(3)	-		-	-	-	(4)	(2)	(6)
Deferred tax assets and liabilities related to temporary differences	67	-	(3)	8		72	-	(9)	(6)	(4)	53
Tax loss carry-forwards	61	-	(6)	-		55	-	(18)	-	-	37
Excess tax credits	3	-	-	-	-	3	-	1	-	-	4
Deferred tax assets/liabilities	131	-	(9)	8		130	-	(26)	(6)	(4)	94

The deferred tax asset on provisions and liabilities for post-employment benefits which is recognized in other comprehensive income is related to the remeasurements of the net defined benefit liability (IAS 19R). The accounting policy on the deferred tax recognition related to these remeasurements is explained in note 3.7.2.1.

13. INTANGIBLE ASSETS AND GOODWILL

			Intangible assets
		Indefinite useful lives		Finite useful lives
MILLION EURO	Goodwill	Trademarks	development costs Capitalized	Technology	Contractual customer relationships	Trademarks	nformation systems Management i	property rights and other licences Industrial	Advance payments intangible assets to acquire	TOTAL
Cost at December 31, 2015	622	17	42	213	115	14	120	62	-	1,205
Exchange differences	14	-	-	2	1	-	1	-	-	18
Change in consolidation scope	-	-	-	-	-	-	-		-	-
Capital expenditures	-	-	-	-	3	-	1	3	-	7
Retirements	-	-	-	-	-	-	-	(6)	-	(6)
Transfers	-	-	-	-	-	-	1	3	-	4
Cost at December 31, 2016	636	17	42	215	119	14	123	62	-	1,228
Exchange differences	(28)	-	-	(2)	(3)	-	(6)	(1)	-	(40)
Change in consolidation scope	2	-	1	3	-	-	-	-	-	6
Capital expenditures	-	-	-	-	-	-	1	3	-	4
Retirements	-	-	-	-	-	-	-	(3)	-	(3)
Transfers	-	-	-	-	-	-	3	(2)	-	1
Cost at December 31, 2017	610	17	43	216	116	14	121	59	-	1,196

Accumulated amortization and impairment losses December 31, 2015	93	4	42	176	87	10	114	57	-	583
Exchange differences	3	-	-	2	-	-	2	-	-	7
Change in consolidation scope	-	-	-	-	-	-	-	-	-	-
Amortization during the year	-	-	-	4	4	1	3	2	-	14
Impairment loss during the year	7	-	-	-	-	-	-	-	-	7
Retirements	-	-	-	-	-	-	-	(4)	-	(4)
Transfers	-	-	-	-	-	-	-	-	-	-
Accumulated amortization and impairment losses December 31, 2016	103	4	42	182	91	11	119	55	-	607
Exchange differences	(5)	-	-	(1)	(3)	-	(6)	-	-	(15)
Change in consolidation scope	-	-	1	-	-	-	-	-	-	1
Amortization during the year	-	-	-	4	4	1	3	2	-	14
Impairment loss during the year	3	-	-	-	-	-	-	-	-	3
Retirements	-	-	-	-	-	-	(1)	(1)	-	(2)
Transfers	-	-	-	-	-	-	1	(2)	-	(1)
Accumulated amortization and impairment losses December 31, 2017	101	4	43	185	92	12	116	54	-	607

Carrying amount December 31, 2015	529	13	-	37	28	4	6	5	-	622
Carrying amount December 31, 2016	533	13	-	33	28	3	4	7	-	621
Carrying amount December 31, 2017	509	13	-	31	24	2	5	5	-	589

In 2017, the capital expenditures for intangible assets amount to 4 million Euro (2016: 7 million Euro). Cash outflows for additions to intangible assets amount to 3 million Euro (2016: 4 million Euro) in the consolidated statement of cash flows. The difference of 1 million Euro (2016: 3 million Euro) relates to attributed Combined Heat and Power (CHP) certificates and emission rights which did not result in a cash outflow.

In the course of 2017, as part of the restructuring plan related to stop certain reseller activities in the US in the Graphics business segment, individual impairment losses on goodwill have been booked amounting to 3 million Euro.

In the course of 2016, as part of the restructuring plan related to the decision to withdraw from the contrast media market and the closure of a printing plate factory in the Graphics business segment, individual impairment losses on goodwill have been booked amounting to 7 million Euro (HealthCare business segment: 6 million Euro; Graphics business segment: 1 million Euro).

At year-end 2017 and 2016, the Group has tested its goodwill and intangible assets with indefinite useful lives for impairment. It relates to trademarks with indefinite useful life that are fully attributed to the operating segment Agfa HealthCare. In addition, the Group assessed whether there was an indication of impairment for intangible assets with finite useful lives. These tests did not result in the recording of any impairment loss.

The Group's management has reviewed the appropriateness of the useful lives of its major intangible assets at year-end 2017. This review has not resulted in revised amortization periods. More information on the underlying assumptions of the useful lives is provided in section 13.3 of this note.

13.1 IMPAIRMENT TESTS FOR GOODWILL

For the financial statements of the Group, goodwill is tested for impairment annually and whenever there is an indication of impairment. For the purpose of impairment testing, goodwill is allocated to a cash-generating unit (CGU).

In line with the definition of cash-generating units, the management of the Group has identified the reportable segments as the cash-generating units, i.e. Agfa Graphics, Agfa HealthCare and Agfa Specialty Products. The operating segment is the lowest level within the Group at which the goodwill is monitored for internal management purposes.

The impairment test for goodwill is performed by comparing the carrying amount of each cash-generating unit to its recoverable amount. The recoverable amount of the CGU has been determined based upon a value in use calculation.

The value in use is determined as the present value of estimated future cash flows that are derived from the current long-term planning of the Group. The discount rate used in calculating the present value of the estimated future cash flows, is based on an average market participant's weighted average cost of equity and debt capital (WACC).

The WACC considers a debt/equity ratio for an average market's participant increased with an additional risk premium to the cost of equity. The cost of debt is based on the conditions on which comparable companies can obtain long-term financing.

The discount rate is calculated for each cash-generating unit independently, considering the debt/ equity ratio of each peer group. The pre-tax discount rates are derived from the WACC by means of iteration.

It should be noted that the Group's management will react on increased raw material prices by mitigating this impact through sales price adaptations and cost efficiency measures amongst other measures, depending on the size of the price increases of the raw materials and considering currency evolutions and the general market circumstances.

13.1.1 CGU Agfa Graphics

At December 31, 2017, the carrying amount of the CGU Agfa Graphics comprises goodwill of 33 million Euro. At year-end 2017, the Group tested its goodwill of the CGU Agfa Graphics for impairment. Based on the assumptions used, the calculated value in use of the CGU was higher than its carrying amount and no impairment loss was recognized.

The value in use of the CGU Agfa Graphics has been determined based on estimated cash flow projections covering the next five years.

The estimated cash flow projections are based upon the strategic business plan formally approved by the Board of Directors.

After the business plan period, a terminal value is computed using a growth rate of -2.0% for the prepress business and 2.0% for the inkjet business. These growth rates are derived from respective market information.

The main assumptions used in the annual impairment test are determined by the reportable segment's key management and are based on past performance and management's expectations for the market development.

Key assumptions are:

after-tax WACC: 5.98% (2016: 6.07%);
pre-tax discount rate: 7.37% (2016: 7.53%);
terminal growth rate (after five years): -2.0% (2016: -2.0%) for the prepress business, 2.0% (2016: 2.0%) for the inkjet business;
aluminum: range between 1,722-1,730 Euro/Ton (2016: range between 1,435-1,440 Euro/Ton);
silver: 18 USD/Troz. (2016: 18 USD/Troz.);
exchange rate US dollar/Euro: 1.160 (2016: 1.125);
revenue and gross margin: revenue and gross margin reflect management's best expectations, based on past experience and taken into account the specific business risks.

Sensitivity analyses on changes in key assumptions, i.e. substantially increased raw material prices (silver and aluminum) and WACC changes, have been performed. The sensitivity analysis was based on an increase of the silver and aluminum price and a 100 basis points increase in the weighted average cost of capital. Based upon these sensitivity analyses, management is of the opinion that a reasonable, possible change in these assumptions would not trigger an impairment loss to occur.

13.1.2 CGU Agfa HealthCare

At December 31, 2017, the carrying amount of the CGU Agfa HealthCare comprises goodwill of 476 million Euro. At year-end 2017, the Group tested its goodwill of the CGU Agfa HealthCare for impairment.

Based on the assumptions used, the calculated value in use of the CGU was higher than its carrying amount and no impairment loss was recognized.

The value in use of the CGU Agfa HealthCare has been determined based on estimated cash flow projections covering the next five years. The estimated cash flow projections are based upon the strategic business plan formally approved by the Board of Directors.

After five years a terminal value is computed using a growth rate in the division Information Technologies (IT Solutions) of 2.10% and a growth rate in the division Imaging Systems of -1.63%. These growth rates are derived from respective market information.

Key assumptions are:

after-tax WACC: 8.22% (2016: 8.00%);
pre-tax discount rate: 10.51% (2016: 10.09%);
terminal growth rate (after five years): 2.10% for IT Solutions (2016: 2.01%) and -1.63% for Imaging Systems (2016: -1.74%);
silver: 18 USD/Troz. (2016: 18 USD/Troz.);
exchange rate US dollar/Euro: 1.16 (2016: 1.125);
revenue and gross margin: revenue and gross margin reflect management's best expectations, based on past experience and taken into account the specific business risks.

Sensitivity analyses on changes in key assumptions, i.e. substantially increased silver prices and WACC changes, have been performed. The sensitivity analysis was based on a substantially increased silver price (+ 8 USD/Troz. over the long term horizon) and a 100 basis point increase in the weighted average cost of capital. These sensitivity analyses have not revealed any risk for impairment loss. Based upon these sensitivity analyses, management is of the opinion that a reasonable, possible change in one of these key assumptions would not trigger an impairment loss to occur.

13.1.3 CGU Agfa Specialty Products

At December 31, 2017, the carrying amount of the CGU Agfa Specialty Products comprises no goodwill.

13.2. IMPAIRMENT TESTS FOR INTANGIBLE ASSETS WITH INDEFINITE USEFUL LIVES

At year-end 2016 and 2017, the Group has tested its intangible assets with indefinite useful lives for impairment. It relates to trademarks with indefinite useful lives that are fully attributed to the operating segment Agfa HealthCare. These tests did not result in the recording of any impairment loss.

13.3 USEFUL LIVES OF INTANGIBLE ASSETS WITH FINITE USEFUL LIVES

The useful life of an intangible asset is the period over which the asset is expected to contribute directly or indirectly to the future cash flows of the Group. Acquired technology and customer relationships are the most crucial recognized intangible assets with finite useful lives for the Group. For acquired technology, the estimation of the remaining useful life is based on the analysis of factors such as typical product life cycles in the industry and technological and commercial obsolescence arising mainly from expected actions by competitors or potential competitors.

At December 31, 2017, the net carrying amount of the Group's acquired technology amounted to 31 million Euro (2016: 33 million Euro). The Group's acquired technology has an estimated weighted average remaining useful life of approximately seven years. The useful lives are periodically reviewed and revised if necessary.

For acquired contractual customer relationships, the estimated remaining useful life is assessed by reference to customer attrition rates. For the estimation of appropriate customer attrition rates, the Group assesses the probability that existing contracts will be renegotiated.

For the assessment of the probability that existing contracts can be renegotiated, demand as well as competition and other factors such as technological lock-in and related sunk costs are of importance.

At December 31, 2017, the net carrying amount of the Group's acquired contractual customer relationships amounted to 24 million Euro (2016: 28 million Euro).

The Group's acquired contractual customer relationships have an estimated weighted average remaining useful life of approximately eight years. The useful lives are periodically reviewed and revised if necessary.

While the Group believes that the assumptions (such as attrition rates and product life cycles) used for the determination of the useful lives of aforementioned intangibles are appropriate, significant differences in actual experience would affect the Group's future amortization expense.

14. PROPERTY, PLANT AND EQUIPMENT

				Construction in progress and advance
	Land, buildings and	Machinery and technical	Furniture, fixtures and	payments to vendors and
MILLION EURO	infrastructure	equipment	other equipment	contractors	TOTAL
Cost at December 31, 2015	345	1,535	214	14	2,108
Exchange differences	2	1	3	-	6
Change in consolidation scope	-	-	-	-	-
Capital expenditures	3	10	15	13	41
Retirements	(9)	(54)	(21)	(1)	(85)
Transfers	17	(13)	2	(11)	(5)
Cost at December 31, 2016	358	1,479	213	15	2,065
Exchange differences	(11)	(27)	(6)	(1)	(45)
Change in consolidation scope	-	-	-	-	-
Capital expenditures	2	14	12	16	44
Retirements	(4)	(29)	(5)	(1)	(39)
Transfers	1	2	3	(10)	(4)
Cost at December 31, 2017	346	1,439	217	19	2,021

Accumulated depreciation and impairment losses December 31, 2015	267	1,435	192	-	1,894
Exchange differences	1	-	2	-	3
Change in consolidation scope	-	-	-	-	-
Depreciation during the year	7	24	12	-	43
Impairment loss during the year	4	4	-	-	8
Retirements	(8)	(53)	(20)	-	(81)
Transfers	10	(10)	-	-	-
Accumulated depreciation and impairment losses December 31, 2016	281	1,400	186	-	1,867
Exchange differences	(7)	(25)	(5)	-	(37)
Change in consolidation scope	-	-	-	-	-
Depreciation during the year	7	19	13	-	39
Impairment loss during the year	-	-	-	-	-
Retirements	(2)	(28)	(5)	-	(35)
Transfers	-	(5)	1	1	(3)
Accumulated depreciation and impairment losses December 31, 2017	279	1,361	190	1	1,831

Carrying amount December 31, 2015	78	100	22	14	214
Carrying amount December 31, 2016	77	80	26	15	198
Carrying amount December 31, 2017	67	78	27	18	190

In 2017, capital expenditure for property, plant and equipment amount to 44 million Euro (2016: 41 million Euro), of which 16 million Euro (2016: 13 million Euro) relates to construction in progress mainly for production efficiency, maintenance and IT-related projects in Belgium, France, Germany, USA, Brazil and China.

Cash outflows for addition to property, plant and equipment amount to 43 million Euro in the consolidated statement of cash flows.

The difference of 1 million Euro relates to assets transferred from inventory which did not result in a cash flow.

The Group, as lessor, included assets subject to operating leases in its statement of financial position under the caption 'Other Equipment'. At the end of December 2017, the assets subject to operating leases have a total net carrying amount of 9 million Euro (2016: 7 million Euro). The future minimum lease income under non-cancellable operating leases is presented in note 29.

In 2016, as part of the restructuring plan related to the closure of the Italian printing plate factory in Agfa Graphics, impairment losses on buildings, infrastructure, machinery and technical equipment have been booked amounting to 7 million euro.

15. INVESTMENTS IN ASSOCIATES AND FINANCIAL ASSETS

15.1. INVESTMENTS IN ASSOCIATES

During 2016, the Group acquired 26.4% equity stake in the company My Personal Health Record Express Inc. (MphRx) in order to strengthen its position in the Integrated Care market. The entry in the Integrated Care market is part of Agfa HealthCare's long term strategy to expand its offering for HealthCare IT on the global market.

For the acquisition of the 26.4% stake in MphRx, US-Indian based company, the Group has paid 6 million Euro. The investment in the associate is measured using the equity method. During 2017, the Group has recognized losses amounting to 0.6 million Euro in relation to its interest in this associate (2016: -0.5 million Euro).

As result of a share redeem transaction and a funding transaction, the Group's stake in MphRx increased to 27.4% at the end of December 2017.

The following table discloses the carrying amount and share of profit or loss and Other Comprehensive Income and summarized financial information of associates:

MILLION EURO	2016	2017
Carrying amount of investment in PlanOrg Informatik Gmbh	-	-
Carrying amount of interests in MphRx, including goodwill	6	5
Net loss after taxes of MphRx	(2)	(2)
Group's share of result of net loss after taxes (26.4%/27.4%)	(0.5)	(0.6)
Other Comprehensive Income of MphRx	-	-
Group's share of Other Comprehensive Income (26.4%/27.4%)	-	-
Summarized financial information of MphRx
Current assets	4	2
Equity	4	2
Group's share of equity (26.4%/27.4%)	1	-
Goodwill included in carrying amount of investment in MphRx	5	5
Carrying amount of investment in MphRx	6	5

15.2. FINANCIAL ASSETS

MILLION EURO	2016	2017
Available-for-sale financial assets	8	9
Loans and receivables	2	2
TOTAL	10	11

At December 31, 2017, available-for-sale financial assets comprise investments in a quoted company carried at fair value with changes in fair value recognized in equity.

At December 31, 2016, available-for-sale financial assets comprise investments in a quoted company carried at fair value with changes in fair value recognized in equity. In the course of 2016, the investment in a fixed income investment fund was sold.

16. INVENTORIES

MILLION EURO	2016	2017
Raw materials and auxiliaries	70	74
Work in progress & semi-finished goods	107	112
Finished goods	39	44
Goods purchased for resale including spare parts	201	183
Inventory in transit & other inventory	66	74
TOTAL	483	487

In 2017, inventories are written down to net realizable value for an amount of 16 million Euro (2016: 16 million Euro). These write-downs relate to obsolete, damaged or expired inventory. The cost of those inventory items has been fully written down. As a consequence the Group has no inventory carried at fair value less cost to sell at December 31, 2017.

Write-downs of inventories are included in cost of sales in the consolidated statement of profit or loss.

17. OTHER TAX RECEIVABLES AND OTHER TAX LIABILITIES

Other tax receivables amount to 23 million Euro (2016: 25 million Euro) and other tax liabilities amount to 34 million Euro (2016: 37 million Euro).

Other tax receivables and liabilities relate to other tax, such as VAT and other indirect taxes. Other tax receivables are offset against other tax liabilities when they relate to taxes levied by the same taxation authority and are intended to be settled on a net basis.

18. RECEIVABLES UNDER FINANCE LEASES

Lease agreements in which the other party, as lessee, is to be regarded as the economic owner of the leased assets give rise to accounts receivable in the amount of the discounted future lease payments. These receivables amounted to 86 million Euro as of December 31, 2017 (2016: 88 million Euro) and will bear interest income until their maturity dates of 8 million Euro (2016: 10 million Euro). As of December 31, 2017, the impairment losses on the receivables under finance leases amounted to 1 million Euro (2016: 1 million Euro).

The receivables under finance leases are as follows:

		2016		2017
MILLION EURO	Total future payments	Unearned interest income	Present value	Total future payments	Unearned interest income	Present value
Not later than one year	35	4	31	35	4	31
Between one and five years	61	6	55	57	4	53
Later than five years	2	-	2	2	-	2
TOTAL	98	10	88	94	8	86
Impairment losses			(1)			(1)
Receivables under finance leases			87			85

The Group leases out its commercial equipment under finance leases mainly via Agfa Finance (i.e. Agfa Finance NV, its subsidiaries, Agfa Finance Corp. and Agfa Finance Inc.) and via Agfa sales organizations in New Zealand and Australia.

At the inception of the lease, the present value of the minimum lease payments generally amounts to at least 90% of the fair value of the leased assets.

The major part of the leases concluded with Agfa Finance typically run for a non-cancellable period of four years. The contracts generally include an option to purchase the leased equipment after that period at a price that generally lies between 2% and 5% of the gross investment at the inception of the lease.

Sometimes, the fair value of the leased asset is paid back by means of a purchase obligation for consumables at a value higher than its market value, in such a way that this mark-up is sufficient to cover the amount initially invested by the lessor.

In these types of contracts the mark-up and or the lease term can be subject to change.

Agfa Finance offers its products via its subsidiaries in France and Italy and its branches in Europe (Spain, Switzerland, Benelux, Germany, UK and the Nordic countries), via Agfa Finance Corp. in the US and Agfa Finance Inc. in Canada. As of December 31, 2017, the present value of the total future lease payments after impairment losses for Agfa Finance amounted to 85 million Euro (2016: 87 million Euro).

Agfa sales organizations in Australia and New Zealand offer customer financing of graphical equipment with an average remaining term of 12 months. As of December 31, 2017, the present value of the total future lease payments before impairment losses for these sales organizations amounted to 1 million Euro (2016: 1 million Euro).

During 2017, the Group hasn't sold receivables under finance lease (2016: 3 million Euro).

19. OTHER RECEIVABLES

Other receivables as presented in the statement of financial position amounted to 14 million Euro (2016: 13 million Euro) and comprise uninstalled leases 8 million Euro (2016: 6 million Euro), payroll receivables 1 million Euro (2016: 2 million Euro) and other 5 million Euro (2016: 5 million Euro).

MILLION EURO	2016	2017
Other receivables
Uninstalled leases (1)	6	8
Payroll receivables	2	1
Other receivables	5	5
TOTAL	13	14

(1) Leased equipment not yet installed at the client's premises.

20. OTHER ASSETS

Other non-current and current assets can be presented as follows:

MILLION EURO	2016	2017
Non-current
Multi year service contracts (strategic suppliers)	13	6
Total non-current	13	6
Current
Multi year service contracts (strategic suppliers)	21	23
Advances on costs (mainly related customs broker)	7	7
Guarantees and deposits	6	4
Other	11	10
Total current	45	44
TOTAL	58	50

21. CASH AND CASH EQUIVALENTS

The reconciliation of cash and cash equivalents with its corresponding items in the statement of financial position can be presented as follows:

MILLION EURO	2016	2017
Marketable securities and other instruments	10	-
Cash on hand, demand deposits and checks	119	68
Cash collateral derivative financial instruments (metal swaps)	-	-
Other cash on hand, demand deposits and checks	119	68
Total cash and cash equivalents as reported in the consolidated statement of financial position	129	68
Accounts receivable under cash management agreements (reported under other receivables)	-	-
Liabilities under cash management agreements (reported under other payables)	(2)	-
Total cash and cash equivalents as reported in the consolidated statement of cash flows	127	68

22. NON-CURRENT ASSETS HELD FOR SALE

There are no material non-current assets held for sale as of December 31, 2017.

23. EQUITY

The various components of Equity and the changes therein from January 1, 2016 to December 31, 2017 are presented in the Consolidated Statements of Changes in Equity.

23.1 SHARE CAPITAL AND SHARE PREMIUM

At December 31, 2017, the issued capital of the Company amounts to 187 million Euro, represented by 171,851,042 fully paid ordinary shares.

23.2 RESERVE FOR OWN SHARES

The reserve for the Company's own shares comprises the cost of the Company's shares held by the Group. At December 31, 2017, the Group held 4,099,852 (2016: 4,099,852) of the Company's shares.

23.3 REVALUATION RESERVE

The revaluation reserve mainly comprises the revaluation of the Group's investment in Digital Illustrate Inc. classified as available-for-sale financial asset.

23.4 HEDGING RESERVE

As of December 31, 2017, the hedging reserve comprises the effective portion of the cumulative net change in fair value of metal swap agreements and foreign exchange contracts designated as cash flow hedges.

During 2016 and 2017, the Group concluded a number of metal swap agreements with an investment bank. These swap agreements have been designated as 'cash flow hedges'; hedging the Group's exposure to fluctuations in commodity prices related to highly probable forecasted purchases of commodities. It relates to commodity contracts that were entered into and continue to be held for the purpose of the receipt of commodities in accordance with the Group's expected usage requirements.

The portion of the gain or loss on the swap contracts that is determined to be an effective hedge is recognized directly in other comprehensive income (December 31, 2017: 7 million Euro, December 31, 2016: 2 million Euro).

In the course of 2017, the Group designated foreign exchange contracts as 'cash flow hedges' of its foreign currency exposure in Pound Sterling, US Dollar and Chinese Renminbi related to highly probable forecasted revenue over the following 15 months. During 2016, the Group designated foreign exchange contracts as 'cash flow hedges' of its foreign currency exposure in Pound Sterling related to highly probable forecasted revenue over the following 12 months. The portion of the gain on the forward exchange contracts that is determined to be an effective hedge is recognized directly in other comprehensive income (December 31, 2017: 3 million Euro, December 31, 2016: minus 1 million Euro).

23.5 REMEASUREMENT OF THE NET DEFINED BENEFIT LIABILITY

Remeasurements of the net defined benefit liability comprise both the impact of the first time adoption of the 2011 amendment of IAS 19 and all subsequent remeasurements of the net defined benefit liabilities.

Remeasurements of the net defined benefit liability primarily relate to actuarial gains and losses and return on plan assets, excluding the amounts included in net interest on the net defined benefit liabilities.

The evolution for the year 2017 is as follows:

MILLION EURO	Dec. 31, 2016	Remeasurement of the net defined benefit liability	Tax impact	Dec. 31, 2017
		Note 24.1.3	Note 12.4
Remeasurement of the net defined benefit liability
Related to material countries	(956)	56	(3)	(903)
Related to non-material countries	(20)	(1)	1	(20)
TOTAL	(976)	55	(2)	(923)

The movement of the year, net of tax amounts is an increase of 53 million Euro. Deferred taxes related to the effects of remeasurements are also recognized in other comprehensive income. The tax effect is further explained in note 12.4.

23.6 TRANSLATION RESERVE

The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations, as well as from the translation of financial instruments that hedge the Company's net investment in a foreign subsidiary. Until May 2016, the Group utilized forward exchange contracts to hedge the foreign currency exposure of the Group's net investment in one of its subsidiaries in the United States (note 7.1.3). As from May 2016, the Group has revoked the designation of the hedge. The gain on the hedging instrument relating to the effective portion of the hedge that was recognized in Other Comprehensive Income (December 2017: 10 million Euro, December 2016: 10 million Euro) shall be reclassified from equity to profit or loss on the disposal of the foreign operation. During 2016, an amount of 8 million Euro was reclassified from translation reserve to financial result on disposal of a foreign operation, being the abandonment of operating activities in Venezuela.

23.7 DIVIDENDS

In 2016, no dividend has been paid out based on the decision of the General Assembly of Shareholders of Agfa-Gevaert NV on May 10, 2016. For 2017, no dividend has been paid out based on the decision of the General Assembly of Shareholders of Agfa-Gevaert NV on May 9, 2017. For 2018, no dividend has been recommended by the Board of Directors.

23.8 NON-CONTROLLING INTERESTS

Non-controlling interests have a material interest in seven subsidiaries of the Group in greater China and the ASEAN region (December 31, 2017: 31 million Euro, December 31, 2016: 36 million Euro). In Europe, there are two subsidiaries in which non-controlling interests have an interest that is of minor importance to the Group (December 31, 2017: 1 million Euro, December 31, 2016: 1 million Euro).

In greater China and the ASEAN region, the Group and its business partner Shenzhen Brother Gao Deng Investment Group Co., Ltd combined as of 2010 their activities aiming at reinforcing the market position in this region. Shenzhen Brother Gao Deng Investment Group Co., Ltd has a 49% stake in Agfa Graphics Asia Ltd., the holding company of the combined operations of both parties. The subsidiaries of Agfa Graphics Asia Ltd. are

Agfa (Wuxi) Printing Plate Co. Ltd.
Agfa ASEAN Sdn. Bhd.
Agfa Imaging (Shenzhen) Co. Ltd.
Agfa Singapore Pte. Ltd.
Agfa Taiwan Co Ltd.
Shanghai Agfa Imaging Products Co., Ltd.

Based on the current governance structure, the Group has determined that it has control over these subsidiaries.

At December 31, 2017, the accumulated amount of non-controlling interests attributable to Shenzhen Brother Gao Deng Investment Group Co., Ltd amounts to 31 million Euro.

The profit allocated to non-controlling interests of this business partner amounts to 8 million Euro. Exchange differences on translation of foreign operations attributable to non-controlling interests decreased with 3 million Euro during 2017.

In the course of 2017, dividends due to Shenzhen Brother Gao Deng Investment Group Co., Ltd (2017: 10 million Euro, 2016: 12 million Euro) have been paid.

The following table presents financial information for the companies in which the business partner Shenzhen Brother Gao Deng Investment Group Co., Ltd has a non-controlling interest of 49%, prepared in accordance with IFRS.

The information is before intercompany eliminations with other companies in the Agfa-Gevaert Group.

MILLION EURO	2016	2017
Current assets	79	67
Non-current assets	17	15
Current liabilities	23	17
Non-current liabilities	1	1
Net assets Agfa Graphics Asia Ltd. and its subsidiaries (consolidated)	72	64
Carrying amount of non-controlling interests in Agfa Graphics Asia Ltd. and its subsidiaries (49%)	36	31
Revenue	128	114
Profit for the year	20	15
Profit allocated to non-controlling interests in Agfa Graphics Asia Ltd. and its subsidiaries (49%)	10	8
Other Comprehensive Income: translation differences	(4)	(5)
Other Comprehensive Income allocated to non-controlling interests in Agfa Graphics Asia Ltd. and its subsidiaries (49%)	(2)	(3)
Total Comprehensive Income allocated to non-controlling interests in Agfa Graphics Asia Ltd. and its subsidiaries (49%)	8	5
Cash Flows from operating activities	18	7
Cash Flows from investing activities	(3)	(1)
Cash Flows from financing activities	(25)	(19)
Dividends paid to non-controlling interests during the year (1)	(12)	(10)

(1) Included in cash flows from financing activities.

23.9 OTHER COMPREHENSIVE INCOME, NET OF TAX

2016

				Attributed to owners of the Company
MILLION EURO	Translation reserve	Hedging reserve	Revaluation reserve	the net defined benefit Remeasurement of liability	TOTAL	Non-controlling Interests	COMPREHENSIVE INCOME TOTAL OTHER
Exchange differences on translation of foreign operations	28	-	-	-	28	(2)	26
Net gain (loss) on hedge of net investment in foreign operation, net of tax	3	-	-	-	3	-	3
Exchange differences on disposal of foreign operations reclassified to profit or loss	8	-	-	-	8	-	8
Effective portion of changes in fair value of cash flow hedges, net of tax	-	5	-	-	5	-	5
Net changes in fair value of cash flow hedges reclassified to profit or loss, net of tax	-	-	-	-	-	-	-
Net changes in fair value of cash flow hedges transferred to initial carrying amount of hedged items, net of tax	-	10	-	-	10	-	10
Net change in fair value of available-for-sale financial assets	-	-	(2)	-	(2)	-	(2)
Remeasurement of the net defined benefit liability, net of tax	-	-	-	(135)	(135)	-	(135)
TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAX	39	15	(2)	(135)	(83)	(2)	(85)

	Attributed to owners of the Company
MILLION EURO	Translation reserve	Hedging reserve	Revaluation reserve	the net defined benefit Remeasurement of liability	TOTAL	Non-controlling Interests	COMPREHENSIVE INCOME TOTAL OTHER
Exchange differences on translation of foreign operations	(40)	-	-	-	(40)	(3)	(43)
Net gain (loss) on hedge of net investment in foreign operation, net of tax	-	-	-	-	-	-	-
Exchange differences on disposal of foreign operations reclassified to profit or loss	-	-	-	-	-	-	-
Effective portion of changes in fair value of cash flow hedges, net of tax	-	28	-	-	28	-	28
Net changes in fair value of cash flow hedges reclassified to profit or loss, net of tax	-	(5)	-	-	(5)	-	(5)
Net changes in fair value of cash flow hedges transferred to initial carrying amount of hedged items, net of tax	-	(14)	-	-	(14)	-	(14)
Net change in fair value of available-for-sale financial assets	-	-	1	-	1	-	1
Remeasurement of the net defined benefit liability, net of tax	-	-	-	53	53	-	53
TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAX	(40)	9	1	53	23	(3)	20

24. EMPLOYEE BENEFITS

24.1 SUMMARY

Employee benefit liabilities

MILLION EURO	December 31, 2016	December 31, 2017
Liabilities for post-employment benefits	1,226	1,121
Long-term termination benefits	38	28
Liabilities for post-employment and long-term benefit plans	1,264	1,149
Other employee benefits	13	13
Non-current	1,277	1,162
Current	132	128
Total employee benefit liabilies	1,409	1,290

Employee benefit expenses

MILLION EURO	2016	2017
Wages and salaries	661	674
Social security contributions	128	125
Expenses related to post-employment benefits	81	72
Cash-settled share-based payments	-	-
Total employee benefit expenses	870	871

Liabilities and expenses related to post-employment benefits

MILLION EURO		December 31, 2016		December 31, 2017
	Belgium/ Germany/ UK/US	Other countries	TOTAL	Belgium/ Germany/ UK/US	Other countries	TOTAL
Liabilities for post-employment benefits	1,183	43	1,226	1,079	42	1,121
	97%			96%

MILLION EURO	2016			2017
	Belgium/ Germany/ UK/US	Other countries	TOTAL	Belgium/ Germany/ UK/US	Other countries	TOTAL
Contributions to defined contribution plans	6	4	10	5	4	9
Expenses related to defined benefit plans	69	2	71	61	2	63
Expenses related to post-employment benefits	75	6	81	66	6	72
	93%			92%

represent 96% (2016: 97%) of the total net defined benefit liability of the Group. The defined benefit plans of the Group's 'Material countries' are further disclosed in notes 24.2 and 24.3.

Long-term termination benefits result from the Group's commitment to either terminate the employment before the normal retirement date, or provide termination benefits as a result of an offer made to encourage voluntary redundancy. At December 31, 2017, long-term termination benefits amounted to 28 million Euro (38 million Euro at December 31, 2016) and mainly relate to severance payments in connection with early retirement arrangements with employees of the Group's Belgian entities. The balance at December 31, 2017 is expected to be settled gradually over the next eight years.

Other employee benefits comprise a long-term disability plan in the US, the plans "Jubilee" and "Pensionsurlaub" in Germany and some other long-service leave and service awards. At December 31, 2017, they amounted to 13 million Euro (13 million Euro at December 31, 2016).

At December 31, 2017 current employee benefit liabilities amounted to 128 million Euro (132 million Euro at December 31, 2016) and comprise liabilities for social expenses for 25 million Euro (25 million Euro at December 31, 2016), payroll liabilities for 8 million Euro (8 million Euro at December 31, 2016) and other personnel commitments such as annual vacation leave, annual variable payments, severance payments and disability benefit liabilities for 95 million Euro (99 million Euro at December 31, 2016).

In 2017, employee benefit expenses remained stable: 871 million Euro compared to 870 million Euro in 2016.

24.2 DEFINED CONTRIBUTION PLANS

Agfa-Gevaert Group companies have paid in 2017 for their defined contribution plans 9 million Euro contributions to publicly or privately administered pension funds or insurance contracts (10 million Euro in 2016). Once the contributions have been paid, the Group companies have no further payment obligation.

The regular contributions constitute an expense for the year in which they are due.

Defined contribution plans in Belgium are for the purpose of the IFRS accounting treatment not considered as defined contribution plan but instead as defined benefit plan. More information on these plans is provided hereafter.

24.3 DEFINED BENEFIT PLANS

24.3.1 Belgian defined contribution plans with return guaranteed by law

Belgian 'Defined Contribution' plans are subject to the Occupational Pensions Act of April 2003. In accordance with article 24 of the Occupational Pensions Act, affiliated persons are entitled to a guaranteed return with regard to contributions made by the organizer of the plan and by the employee. Until December 31, 2015, the minimum guaranteed return amounted to 3.25% on employer contributions and of 3.75% on employee contributions.

The Act of December 18, 2015, which entered into force on January 1, 2016 has introduced several amendments to the Act of April 28, 2003. As of January 1, 2016, the guaranteed return is aligned with the percentage (65% in 2016 and 2017) of the average return on June 1 over the last 24 months of Belgian State linear bonds ('OLOs') with a maturity of 10 years, with a minimum of 1.75% and a maximum of 3.75%. The interest rate was set at 1.75% on January 1, 2016. Henceforth the guaranteed return is comprised of only one interest rate for both personal contributions made by the employee and contributions made by the employer.

With regard to the application of the guaranteed return in case of modification of the interest rate,

the Act of December 18, 2015 introduced the 'horizontal method' applicable for all insured plans which guarantee a fixed return up to the retirement age (so-called Branch 21 insured products) and the 'vertical method' in all other situations. Within our Belgian group companies, all insured pension plans are managed via 'Branch 21' insured products.

The application of the 'horizontal method' is comparable to a fixed-rate term deposit account. The previous interest rate is applicable until exit, retirement or abolition of the pension engagement – whichever occurs first – to the contributions due on the basis of the plan rules before the modification. The new interest rate is then applicable to contributions due on the basis of the plan rules from the modification onwards until the first of the aforementioned occurrences.

Therefore, for all of the Group's defined contribution plans with return guaranteed by law, the minimum return of 3.25% (employer contributions) and 3.75% (employee contributions) still apply for contributions made until December 31, 2015. For these contributions, affiliated persons are entitled to at least a return of 3.25%/3.75% until retirement age (or exit/abolition of the pension engagement). For contributions made as from 2016 the employer is committed to a minimum return of 1.75% until occurrence of retirement age, exit or abolition of the pension engagement.

In recent years, insurance companies generally applied technical interest rates – i.e. agreed interest rates excluding profit-sharing – below the minimum return guaranteed by law. Consequently, not all actuarial and investment risks relating to these insured plans are transferred to the insurance company managing the plans and therefore do not meet the definition of defined contribution plans under IFRS. They are by default classified as defined benefit plans.

The law about occupational pension plans published on December 18, 2015 has also impacted the accounting treatment of defined contribution plans with return guaranteed by law. Similar to the measurement of all other defined benefit plans, the net pension liability related to defined contribution plans with return guaranteed by law is calculated as the difference between the present value of the defined benefit obligation (DBO) and the fair value of the plan assets. The first time application as per December 31, 2016 of this calculation method resulted in a liability amounting to 4 million Euro of which the impact has been reflected in Other Comprehensive income for 2016.

As at December 31, 2017, following insured defined contribution plans are operational:

1. Top Performance Plan: This plan concerns deferred compensation for bonuses attributed to employees of Agfa-Gevaert NV, Agfa NV (former Agfa Graphics NV), Agfa HealthCare NV and Agfa Finance NV. Given that this plan is with discretionary contributions, the PUC method excluding future contributions is used.
2. Pension plan for employees of Agfa HealthCare NV: This plan concerns recurring contributions attributed to employees of Agfa HealthCare NV in Ghent. The PUC method including future contributions is applied.
3. Pension plan for executives: This plan concerns recurring contributions attributed to executives of Agfa-Gevaert NV. The PUC method including future contributions is applied.
4. Group insurance plan for executives of Agfa-Gevaert NV: This plan concerns recurring contributions attributed to executives of Agfa-Gevaert NV, Agfa HealthCare NV and Agfa NV. The PUC method including future contributions is applied.
5. Group insurance plan for employees of Agfa HealthCare NV: Formerly managed by a pension fund called 'A2P', the reserves of this fund have been transferred to an insurer in the course of 2014. This plan concerns recurring contributions attributed to employees of Agfa HealthCare NV. The PUC method including future contributions is applied.

All these plans are fully financed by employer contributions except for the Group insurance plan for executives which is financed by both employer and employee contributions.

In 2017, the annual employer contributions paid or accrued for the Group's Belgian defined contribution plans with return guaranteed by law amounted in total to 15 million Euro (2016: 14 million Euro). The Group expects a similar expense to accrue for 2018.

In 2017, insurance companies offer technical interest rates that range between 0.25% and 4.75% (0.50% to 4.75% in 2016). Decisive factors in this context are the date an employee joins a plan and whether the insurer guarantees an interest rate on future premiums.

For each of the aforementioned defined contribution plans, the following table provides by plan information on the type of return guaranteed by the insurer and the evolution of the technical interest rates applied by the different insurers during 2017 and previous years as well as the proposed technical interest rates for 2018.

	Description of the plan	Type of return guaranteed by insurer	Interest rates provided by insurer (i.e. excluding profit sharing)
			2014	2015	2016	2017/2018
1	Top Performance Plan	Guaranteed return on reserves	2%	1.50%	1%	0.75 %
2	Pension plan for employees of Agfa HealthCare NV	Guaranteed return on reserves and future premiums	3.25% on the level of both employer and employee contributions at 31/12/2012; 1.75% for new entries as from January 2013 and premium increases between 31/12/2012 and 31/03/2015; 0.50% as from July 2015 up to 1/10/2016; and 0.25% afterwards.
3	Pension plan for executives of Agfa-Gevaert NV	Guaranteed return on reserves and future premiums	1.75%	1.75%	1.50 %	0.75%
4	Group insurance plan for executives	Guaranteed return on reserves and future premiums	3.25% on the level of both employer and employee contributions at 31/12/2012; 1.75% for new entries as from January 2013 and premium increases between 31/12/2012 and 31/03/2015; 1.00% as from april 2015 up to 1/7/2016; 0.50% up to 1/4/2017 and 0.25% afterwards.
5	Group insurance plan for employees of Agfa HealthCare NV	Guaranteed return on reserves	2.25%	2.25% until 1/07/2015; 1.5% as from July 2015	1.50% until 1/07/2016; 1.0% as from July 2016	1.50% until 1/07/2016; 1.0% as from July 2016 up to April 2017; and 0.75% afterwards

24.3.2 Defined benefit plans excluding defined contribution plans with return guaranteed by law

The Group's post-employment defined benefit plans primarily relate to retirement benefits. The Group Pension Committee, created as a subcommittee of the Executive Committee (Exco) of the Group assists the Exco in the oversight and supervision of the different pension plans and other post-employment arrangements that exist within the Group.

The Committee advises the Exco on benefit plan design matters such as amendment to or termination – in whole or in part – of the benefit plans and their respective funding arrangements. Next to providing advice to the Exco, the Group Pension Committee is also responsible for advising local management, i.e. local management of the pension funds as well as local management of the sponsoring employers of the benefit plans – in fulfilling their responsibilities in relation to pension matters.

The Group Pension Committee has set a strategic asset allocation for its major plans that are financed through a separate pension fund. The committee reviews the asset allocation targets regularly to ensure that they remain appropriate to the pension fund liability profiles.

For the management of the plan assets, the Group Pension Committee is assisted by the Group Pension Investment Committee. The Group Pension Investment Committee has issued a Group Investment Guideline which was approved by the Group Pension Committee. The Group Pension Committee monitors the proper application of this guideline.

The Group, through its Group Pension Committee, investigates liability reduction solutions and seeks to de-risk the Group's post-employment benefit liabilities. Investment risk and longevity risk are two risks that are specifically examined. In recent years, the Group Pension Committee has proposed different measures that have been realized, among which the withdrawal of the post-retirement medical benefit plan in the US (2013), the offer to pay out lump sums to non-active participants with deferred vested rights in the Agfa Corporation Pension Plan (2013) and the pension buyout project related to the Agfa-Gevaert Fabriekspensioen Plan in Belgium (2014).

With regard to the retired participants of the Agfa Corporation Pension Plan, the Group has realized in 2016 an annuity buy-out contract for a single premium amount of 143 million Euro. As such liabilities associated with monthly benefit payments of 1,000 US dollar or less, amounting in aggregate to 140 million Euro, could be settled.

Furthermore, in 2016 a wind-down of the pension plan in Canada took place. The present value of the defined benefit obligation settled amounted to 26 million Euro. Both projects have resulted in a settlement loss of 3 million Euro each.

The Group's major defined benefit plans generally cover all employees and generally provide benefits that are related to an employee's remuneration and years of service. Its characteristics and associated risks are explained in more detail hereafter.

Belgium

In Belgium, the defined benefit obligation is mainly related to a basic plan called 'Fabriekspensioen' that is financed through contributions paid to an external Organization for Financing Pensions (OFP). This fund has the duty to foresee the payments of the pensions promised by its participating employers, being Agfa-Gevaert NV, Agfa NV (former Agfa Graphics NV), Agfa HealthCare NV and Agfa Finance NV to the beneficiaries of the plan.

The 'Fabriekspensioen' covers the majority of employees of aforementioned employers. New entrants of Agfa Europe NV whose business has been transferred to either its legal successor Agfa HealthCare NV or Agfa NV, accrue as from January 2000 benefits under another defined benefit plan, being a defined contribution plan with return guaranteed by law. The same defined benefit plan applies to new entrants of Agfa HealthCare NV.

For the 'Fabriekspensioen', the plan participants are eligible for a benefit based on a last yearly income formula. As this funded pension plan is still open to new entrants and the accrual of new benefits, the plan exposes the Company to a salary increase risk, next to an interest rate risk, an investment risk and a longevity risk. Although this plan has been set up as an annuity plan, more than 95% of the members choose for the option of a lump sum pension payment at the retirement age.

The legal and regulatory framework for the 'Fabriekspensioen' is based on the applicable Belgian law, i.e. the law of October 27, 2006 on the supervision of institutions for occupational retirement provision and the law on supplementary pensions (WAP), applicable as from January 1, 2004. Based on this legislation a funding valuation is prepared annually. The valuation method, used to determine the contributions to the Belgian OFP, is the 'aggregate cost method'. The contribution is expressed as an annual fixed percentage of payroll in order to finance the total service liability. The new financing plan, prepared based on the December 31, 2016 data, will result in increased contribution rates as from 2018, mainly due to a decrease of the discount rate assumption, aligned with long-term expectations on return. According to the latest actuarial valuation report on the Belgian OFP, the funded percentage was 121,53% (2016: 135,12%). The Board of Directors of the 'Pensioenfonds Agfa-Gevaert OFP' bears the ultimate responsibility for the management of the assets and liabilities of the 'Fabriekspensioenplan'. They have delegated investment oversight of the plan's assets to the Local Investment Committee who in turn operates within the framework set by the Group Pension Committee. The Statement of Investments Principles (SIP), prepared by the Local Investment Committee in accordance with the Group Investment Guidelines, has been formally ratified at the Extraordinary General Meeting of the 'Pensioenfonds Agfa-Gevaert OFP' on February 7, 2014. The Local Investment Committee needs to ensure that plan assets are invested effectively and prudently, in full compliance with all applicable laws, and for the benefit of plan participants and beneficiaries.

Germany

In Germany, no legal or regulatory minimum funding requirements apply, and as such the Group's German defined benefit retirement plans are all unfunded plans.

The German pension plans include a basic plan related to pension relevant salary up to the Social Security Ceiling (SSC) and a supplementary plan covering benefits attributed on pension relevant salary above the Social Security Ceiling.

In Germany we distinguish the 'old pension plan' that was closed to new entries as from 2005 and closed to future accruals as from 2010 and the 'new pension plan' applicable to employees joining as from 2005. In 2010 the population that benefited from the former 'old pension plan' that was closed to future accruals as of December 31, 2009 also joined the 'new pension plan', however comprising supplementary benefit entitlements compared with the employees joining as from 2005. Both plans comprise a basic and supplementary plan.

Additionally, Agfa is obliged to provide pension plans according to the Collective Labour Agreement (CLA) regulation of the Chemical Sector.

Under the 'old pension plan', the basic plan is managed by the Bayer Pensionskasse (Penka). The Bayer Pensionskasse is a multi-employer plan accounted for as if it were a defined contribution plan (IAS 19.34 (a)). The plan is a defined benefit plan under control of the Group's former parent company Bayer AG. It is accounted for as a defined contribution plan as the Group has no right to obtain the necessary data for defined benefit plan accounting. In case of a deficit, this plan may expose the Group to investment and actuarial risk. The Group however considers these risks as insignificant. From 2004 onward, Agfa has been responsible to adjust the pension payments processed by the Bayer Pensionskasse according Sec. 16, 1 and 2 of the German Pension Act (BetrAVG – Betriebsrentengesetz).

The base pension including the adjustments processed according to the aforementioned legal regulations up to the year 2003 are paid by the Penka directly. Consequently, the liability in the books of Agfa resulting from this basic plan solely relate to the responsibility of Agfa to adjust the pension payments.

The benefits accrued under the supplementary plan are accounted for as a defined benefit plan. They are based on 'contributions' (1) calculated as a fixed percentage of pension relevant salary above the SSC. Then, an age independent factor is used for converting those 'contributions' (1) into individual pension entitlements.

The pension entitlements based on the 'old pension plan' are closed to future accruals as of December 31, 2009.

The old pension plan is only applicable for employees with entry date prior to 2005. They have stopped accruing additional benefits in the Bayer Pensionskasse at the end of 2009. As of 2010, these employees started participating in the new pension plan (Rheinische Pensionskasse).

The 'new pension plan' also includes a basic pension plan, i.e. benefits entitlements on the pension relevant salary up to the SSC, and a supplementary pension plan accruing benefits on pension relevant salary above the SSC. The basic plan is funded through contributions paid to the Rheinische Pensionskasse. Employees partly (50%) contribute to the Rheinische Pensionskasse by deferred compensation. Once the contributions have been paid to the Rheinische Pensionskasse, in principle the group companies have no further payment obligation. This plan is consequently accounted for as a defined contribution plan. The new supplementary plan, which is also accounted for on the balance sheet as a direct pension commitment, foresees no upper ceiling for pension relevant salary.

The benefits accrued under the supplementary plan are based on 'contributions' (1) calculated as a fixed percentage of pension relevant salary above the SSC. Contrary to the old pension plan, 'contributions' (1) are then converted into pension entitlements based on age-dependent pension factors and considering a pre-determined annual increase of those entitlements. As of 2012, the plan foresees an option to pay out lump sums instead of monthly pension payments.

Employees who previously benefited from the 'old pension plan' that was closed to future accruals as of December 31, 2009, got supplementary pension entitlements based on a matching 'fifty-fifty' approach meaning that the employer pays contributions to the extent of the employee contributions. The structure itself is similar to the new supplementary pension plan as described above.

The pension plan according to the CLA of the Chemical Sector is based on 'contributions' (1) that are converted into individual pension entitlements using age-dependent pension factors. Employees also partly contribute to this plan by deferred compensation.

In Germany, Agfa provides to a minor extent also benefits that are related to plans which result from former acquisitions. The related plans are all closed to future accruals.

The defined benefit liability in Germany also includes pension plans that are fully based on deferred compensation models. The benefits accrued under these plans are based on the annually deferred compensation amount of each beneficiary converted into pension entitlements and in some cases additionally considering a pre-determined annual increase of those entitlements. For a part of the workforce, i.e. HealthCare IT employees, there are pension plans managed by different external funds (Pensionskassen). These plans are mainly financed by deferred compensation models and are accounted for as defined contribution plans.

Additionally, top management of Agfa HealthCare IT in Germany is provided with a salary related pension scheme, processed by a congruently funded multi-employer plan (kongruent rückgedeckte Unterstützungskasse).

The different closed defined retirement benefit plans as well as the plans that remain open expose the Company to actuarial risks such as interest rate risk, pension indexation risk and longevity risk.

(1) 'Contributions' in this context means a calculation base which is used to finally determine the pension entitlements.

UK

In the UK, the defined benefit retirement plan called Agfa UK Pension Plan was closed to new entrants with effect from June 30, 2002. On January 1, 2010 the decision was taken to close the defined benefit pension scheme to further accruals. As from 2010, members are able to accrue benefits under a defined contribution retirement plan.

The closed Agfa UK Pension Plan is financed through contributions paid by its participating employers, being at year-end 2017: Agfa-Gevaert NV, Agfa HealthCare UK Ltd and Agfa Graphics Ltd. The plan members are eligible for a benefit based on a final average pay formula. From the age of 55, benefits accrued under this plan can be paid partly in cash with the remainder paid in monthly payments.

If the benefit is taken before the normal retirement age of 65 there is an actuarial reduction of the benefit's value.

Deferred plan members are entitled to an inflation increase, based on CPI (Consumer Price Index), of their accrued benefits until retirement payments are taken.

Pension payment increases are in line with RPI (Retail Price Index) with a minimum increase of 3% and a maximum increase of 5%. Next to inflation risk, the frozen defined benefit plan exposes the Company to actuarial risks such as investment risk, interest rate risk and longevity risk. The defined benefit plan is governed by a benefit trust whose decision making body is a Board of Trustees. They have a fiduciary duty to act solely in the best interests of the beneficiaries according to the trust rules and UK law.

The required funding is determined by a funding valuation carried out every three years based on legal requirements and funding valuation assumptions that meet the UK regulatory body's current requirements and are also agreed between the Company and the Trustees. Following the latest funding valuation which took place in 2016, Agfa has entered in January 2017 into an agreement with the trustees to contribute 48 quarterly fixed payments for the next 12 years, starting in January 2017. In anticipation of this agreement the Company has paid in 2016 a one-time contribution payment of 6 million Euro (5 million Pound Sterling).

US

In the US, Agfa Corporation sponsors have one major defined benefit plan, the Agfa Corporation Pension Plan, which is frozen to new entrants and the accrual of new benefits. Agfa HealthCare Corporation, Agfa Materials Corporation and Agfa Finance Corporation are participating employers in said pension plan.

The plan participants are eligible for a benefit based on a final average pay formula. This frozen defined benefit plan exposes the Company to actuarial risks such as investment risk, interest rate risk and longevity risk.

The defined benefit plan assets are held in a trust. The Board of Directors of Agfa Corporation, the plan sponsor, delegate investment decisions and oversight of the plan's assets to a local investment committee, the Benefits Plan Investment Committee (BPIC). The BPIC members have a fiduciary duty to act solely in the best interests of the beneficiaries according to the trust agreement and US law. The legal and regulatory framework for the plan is based on the applicable US legislation Employee Retirement Income Security Act (ERISA). Based on this legislation a funding valuation is prepared annually. Participant-beneficiaries do not contribute to the plan. The plan sponsor and participating employers contribute such amounts as are deemed necessary on

an actuarial basis to provide sufficient funds to meet the benefits to be paid to plan members. Minimum contributions are based on the requirements prescribed by the provisions of the Employee Retirement Income Security Act (ERISA) of 1974 and the Pension Protection Act of 2006 (PPA). Pursuant to the PPA, each year the actuary is required to certify the Plan's funded percentage. The plan received its most recent certification for the 2017 plan year using actuarial assumptions mandated by the Internal Revenue Service (IRS), and the actuary determined that the funded percentage was 75,50% (2016: 91.95%).

With regard to the Agfa Corporation Pension Plan, management realized in 2016 an annuity buyout for retirees with monthly benefit of 1,000 US dollar or less. Liabilities associated with these benefits amounting to 140 million Euro have been settled through payment of a single premium of 143 million Euro from the plan assets, resulting in a settlement loss of 3 million Euro. The settlement price was also higher that the liability being held for IRS funding purposes, resulting in an increased funding shortfall and a drop of the funded percentage from 91,95% to 75,75% even though in 2016 an extra contribution of 9 million Euro (10 million US dollar) had been paid.

24.3.3 Evolution net defined benefit liability and its components

The following three tables show a reconciliation from the opening balances to the closing balances for the net defined benefit liability and its components.

		2016		2017
MILLION EURO	Retirement plans (excl. Belgian DC-plans)	Belgian DC-plans with return guaranteed by law	TOTAL	Retirement plans (excl. Belgian DC-plans)	Belgian DC-plans with return guaranteed by law	TOTAL
Net liability at Jan. 1	1,088	-	1,088	1,179	4	1,183
Defined benefit cost included in profit or loss	55	-	55	47	14	61
Total remeasurements included in OCI	136	-	136	(54)	(2)	(56)
Net transfer in	-	-	-	-	-	-
Change in accounting estimates related to DC-plans with return guaranteed by law	-	4	4	-	-	-
Cash flows
Employer contributions	(38)	-	(38)	(26)	(15)	(41)
Benefits paid directly by the Company	(44)	-	(44)	(43)	-	(43)
Currency effects: charge (or credit)	(18)	-	(18)	(25)	-	(25)
Net liability at Dec. 31	1,179	4	1,183	1,078	1	1,079

Evolution net defined benefit liability during 2016 and 2017

The 2016 employer contributions have been impacted by one-time payments for US and UK amounting to 15 million Euro in aggregate.

Defined benefit costs for 2016 and 2017

	2016	2017
MILLION EURO		Retirement plans (excl. Belgian DC-plans)	Belgian DC-plans with return guaranteed by law	TOTAL
Service cost
Service cost, exclusive of employee contributions	22	22	14	36
Past service cost	-	-	-	-
(Gain) loss on settlements	3	-	-	-
Total service cost	25	22	14	36
Net interest cost
Interest expense on DBO	67	50	3	53
Interest (income) on plan assets	(38)	(26)	(3)	(29)
Total net interest cost	29	24	-	24
Administrative expenses and taxes	1	1	-	1
DEFINED BENEFIT COST INCLUDED IN PROFIT OR LOSS	55	47	14	61
Actuarial losses (gains)
Experience losses (gains) on plan liabilities	(19)	-	-	-
Demographic assumptions	(5)	(32)	-	(32)
Financial assumptions	226	24	(3)	21
Total actuarial losses (gains)	202	(8)	(3)	(11)
Return on plan assets excl. Interest income	(66)	(44)	(1)	(45)
TOTAL REMEASUREMENTS INCLUDED IN OCI	136	(52)	(4)	(56)
TOTAL DEFINED BENEFIT COST RECOGNIZED IN PROFIT OR LOSS AND OCI	191	(5)	10	5

The total defined benefit cost for 2017 for the Group's material countries amounted to a cost of 5 million Euro (2016: 191 million Euro cost). Of this amount, 61 million Euro expense is reflected in the Group's Consolidated Statement of Profit or Loss over 2017 (2016: 55 million Euro expense). The balance, being 56 million Euro credit for 2017 (136 million Euro cost for 2016) is reflected in 'Other Comprehensive Income' under 'Remeasurements of the net defined benefit liability'. These remeasurements originate from changes in demographic and financial assumptions as well as from experience adjustments on the fair value of assets. Details are provided below. In 2016, the defined benefit cost in profit or loss for the Group's material countries includes a settlement loss amounting to 3 million Euro, resulting from annuity placements for retirees with monthly benefit of 1,000 US dollar, or less related to the Agfa Corporation Pension Plan.

Evolution defined benefit obligation, fair value of assets and funded status during 2016 and 2017

The defined benefit obligation, plan assets and funded status for the Group's material countries are shown below.

	2016		2017
MILLION EURO	Retirement plans (excl. Belgian DC-plans)	Belgian DC-plans with return guaranteed by law	TOTAL	Retirement plans (excl. Belgian DC-plans)	Belgian DC-plans with return guaranteed by law	TOTAL
CHANGE IN DEFINED BENEFIT OBLIGATION
Defined benefit obligation at January 1	2,245	-	2,250	2,220	190	2,410
Service cost
Current service cost, exclusive of employee contributions	22	-	22	22	14	36
Past service cost	-	-	-	-	-	-
(Gain) loss on settlements	3	-	3	-	-	-
Interest expense	67	-	67	50	3	53
Cash flows
Benefit payments	(249)	-	(249)	(100)	(13)	(113)
Employee contributions	-	-	-	-	2	2
Premiums Paid	(1)	-	(1)	(1)	(1)	(2)
Remeasurements
Effect of changes in demographic assumptions	(6)	-	(6)	(32)	-	(32)
Effect of changes in financial assumptions	226	-	226	24	(3)	21
Effect of experience adjustments	(19)	-	(19)	(2)	2	-
Currency effects: charge (or credit)	(68)	-	(68)	(71)	-	(71)
Change in accounting policy related to DC-plans with return guaranteed by law	-	190	190	-	-	-
Defined benefit obligation at December 31	2,220	190	2,410	2,110	194	2,304
CHANGE IN PLAN ASSETS
Fair value of assets at January 1	1,156	-	1,156	1,041	186	1,227
Interest income	38	-	38	26	3	29
Employer contributions	82	-	82	69	15	84
Employee contributions	-	-	-	-	2	2
Benefit payments	(249)	-	(249)	(100)	(13)	(113)
Administrative expenses and taxes	(1)	-	(1)	(1)	-	(1)
Premiums Paid	(1)	-	(1)	(1)	(1)	(2)
Transfer out	-	-	-	-	-	-
Return on plan assets (excluding interest income)	66	-	66	44	1	45
Currency effects: (charge) or credit	(50)	-	(50)	(46)	-	(46)
Change in accounting policy related to DC-plans with return guaranteed by law	-	186	186	-	-	-
Fair value of assets at December 31	1,041	186	1,227	1,032	193	1,225
FUNDED STATUS AT DECEMBER 31
Funded status	1,179	-	1,179	1,078	1	1,079
Effect of asset ceiling/onerous liability	-	-	-	-	-	-
Impact of change in accounting policy related to DC-plans with return guaranteed by law	-	4	4	-	-	-
Net liability (asset) at December 31	1,179	4	1,183	1,078	1	1,079

At December 31, 2017, the total defined benefit obligation for the Group's material countries, excluding defined contribution plans with return guaranteed by law, amounted to 2,110 million Euro (2,220 million Euro at December 31, 2016). Of this amount, 1,391 million Euro (1,456 million Euro at December 31, 2016) is related to wholly or partly funded plans and 719 million Euro (764 million Euro at December 31, 2016) is related to unfunded plans.

At December 31, 2017, the financing deficit for the Belgian defined contribution plans with guaranteed return amounted to 1 million Euro (4 million Euro at December 31, 2016). The net pension liability for these plans is calculated as the difference between the present value of the defined benefit obligation (DBO) amounting to 194 million Euro (190 million Euro at December 31, 2016) and the fair value of the plan assets amounting to 193 million Euro (186 million Euro at December 31, 2016). At December 31, 2017, the present value of the defined benefit obligation of the 'Top Performance Plan' and the 'Group insurance plan for executives of Agfa-Gevaert NV' represent in aggregate 89% of the total DBO (89% at December 31, 2016) whereas the funding gap is almost fully attributable to the Top Performance Plan. General information on defined benefit plans with return guaranteed by law together with the characteristics of these plans are provided under note 24.3.1.

In 2017, the benefit payments for the Group's material countries amounted to 113 million Euro. The benefit payments in 2016 amounted to 249 million Euro and comprise for 143 million Euro settlement payments for an annuity buy-out project with regard to the Agfa Corporation Pension Plan in the US.

MILLION EURO	December 31, 2013	December 31, 2014	December 31, 2015	December 31, 2016	December 31, 2017
Fair value of plan assets	1,006	1,131	1,156	1,227	1,225
Present value of defined benefit obligation	1,884	2,280	2,245	2,410	2,304
Surplus/(Deficit) in the plan	(878)	(1,149)	(1,089)	(1,183)	(1,079)

History of asset values, defined benefit obligation and deficit for the period 2013 until 2017

24.3.4 Defined benefit obligation

Principal actuarial assumptions at the reporting date

The liabilities and defined benefits cost of the Group's retirement plans are determined using actuarial valuations that involve several actuarial assumptions. At the end of the reporting periods 2016 and 2017, the following principal actuarial assumptions (weighted averages) have been used.

MILLION EURO	December 31, 2016	December 31, 2017
Discount rate	2.31%	2.27%
Future salary increases	2.15%	2.29%

The above stated average discount rate and salary increases have been determined based on the actuarial assumptions applied in the different defined benefit plans of the Group's material countries weighted by the defined benefit obligation of the respective plans.

The discount rates used are determined by reference to the rates available on high-quality corporate bonds, that have a credit rating of at least AA from a main rating agency, that have maturity dates approximating the terms of the Group's obligations.

Weighted average duration

The Group has consistently calculated the weighted average duration by taking the average of the durations obtained via sensitivities +25 bps and -25 bps on the discount rate for the retirement plans of the Group's material countries. At December 31, 2017 the weighted average duration is 13 years (14 years at December 31, 2016).

Sensitivity analysis

The following information illustrates the sensitivity to a change as at December 31, 2017 in certain assumptions for the retirement plans of the Group's material countries.

MILLION EURO	Effect on Dec. 31, 2016 Defined benefit obligation	Effect on Dec. 31, 2017 Defined benefit obligation
25 bp decrease in discount rate	87	78
25 bp increase in discount rate	(80)	(75)
Change in mortality table, assuming employees live one year longer	58	54
Change in mortality table, assuming employees live one year shorter	(58)	(55)

24.3.5 Plan assets

For the Group's material countries, plan assets comprise following major asset classes:

MILLION EURO	December 31, 2016	December 31, 2017
Cash, cash equivalents and other	41	6
Equity instruments	309	378
Debt instruments	691	645
Assets held by insurance company (1)	186	196
TOTAL	1,227	1,225

(1) DC plans with return guaranteed by law

95% of the equity and debt instruments are invested through passive management (index tracking). At year-end 2016 and 2017, the fair value of assets does not comprise equity or debt instruments of the Company or its subsidiaries.

24.3.6 Expected defined benefit costs and cash flows for 2018

For 2018, the Group expects for the defined benefit plans of its material countries a total defined benefit cost in profit or loss of 58 million Euro, comprising of 35 million Euro service and administrative expenses and taxes (of which 14 million Euro related to defined contribution plans in Belgium) and 23 million Euro net interest costs.

During the next fiscal year 2018, the Group expects to contribute 73 million Euro for its material retirement plans. This amount excludes the contribution payments for the defined contribution plans in Belgium. The expected cash out is 4 million Euro higher than the Company's cash out for 2017 which amounted to 69 million Euro comprising of 26 million Euro employer contributions and 43 million Euro benefit payments directly paid by the Company to the beneficiaries. The increase is mainly explained by the Agfa Corporation Pension Plan for which a 4 million USD contribution is expected whereas in 2017 no contribution has been made.

24.4 SHARE-BASED PAYMENT TRANSACTIONS

On March 1, 2016 the Group established a cash-settled share-based payment plan for specific participants indicated by the Board of Directors. Participants are granted a Stock Appreciation Right Bonus giving right to a cash bonus reflecting the increase of the Company stock on the Euronext Brussels over a reference period of three years.

In total 657,000 stock appreciation rights were allocated to the members of the plan, with a vesting period of 3 years starting as from March 1, 2016. The fair value of the rights are determined at each closing date using a Black & Scholes model, and presented as a liability with corresponding changes on fair value recognized in profit or loss (2017: 0.3 million Euro, 2016: 0.2 million Euro).

At December 2017, the outstanding stock appreciation rights amounted to 641.000.

Following key parameters were used in the valuation model:

Fair Value of Stock Appreciation rights at December 31, 2017	3.89 euro
Grant date price	3.47 euro
Expected volatility	35.7%
Grant date	March 1, 2016

25. LOANS AND BORROWINGS

MILLION EURO	2016	2017
Non-current liabilities	74	47
Revolving credit facility	(2)	(1)
EIB loan	32	6
Liabilities to banks	2	-
Debentures	42	42
Current liabilities	37	39
EIB loan	26	26
Liabilities to banks	11	13

25.1 REVOLVING CREDIT FACILITY

In 2015, the Company renegotiated a revolving credit facility with a notional amount of 400 million Euro having a maturity date July 2020. In general, drawdowns under these lines are made for short periods, but the Group has the discretion to rollover the liability under the existing committed loan agreement. These loan facilities are unsecured.

At December 31, 2017, there were no drawdowns under this facility. Transaction costs amounting to 1 million Euro were included in the initial measurement of the financial liability and are amortized using the effective interest method over the duration of the facility.

The split over the relevant periods is as follows:

MILLION EURO	Notional amount		Outstanding amount			Interest rate
Maturity date	2016	2017	2016	2017	Currency	2016	2017
2020	400	400	(2)	(1)		-	-
TOTAL	400	400	(2)	(1)	EUR

25.2 LIABILITIES TO BANKS

25.2.1 Long-term facilities

Maturities of long-term unsecured facilities were as follows:

MILLION EURO	2016			2017
Maturing	Outstanding amount	Interest rate	Outstanding amount	Interest rate
between 1-5 years: EIB loan	32	4.33% - 4.36%	6	4.33% - 4.36%
between 1-5 years: other facilities	2	local interest rate + spread	-	-
> 5 years	-	-	-	-
TOTAL	34		6

Long-term facilities mainly comprise the loan agreement with the European Investment Bank (EIB) that the Group concluded in the fourth quarter of 2010. The EIB is lending 130 million Euro to finance research, development and innovation (RDI) projects in HealthCare IT and imaging technology of the Group, undertaken from 2010 up to 2013. The amount of the loan shall not exceed 50% of the total costs of the projects.

A first amount of 70 million Euro has been withdrawn in 2011, maturing until August 2018. A second amount of 60 million Euro has been withdrawn in 2012, maturing until February 2019. The long-term portion of the EIB loan amounts to 6 million Euro, the short-term portion amounts to 26 million Euro.

In the course of 2014, the Company negotiated a loan agreement with the Export Development Canada (EDC) for a nominal amount of 50 million Euro. EDC is lending 50 million Euro to finance research and development activities by Agfa HealthCare Inc. (Canada), with maturity date June 2019. The funds could be requested over a commitment period of two years ending June 2016. The Company has decided not to use this facility.

In 2016, the 'other non-current facilities to banks' related to a local loan agreement in Argentina maturing in 2018. The local floating interest rate is the 'Badlar Privada Corregia Promedio' + 5.5% spread.

25.2.2 Short-term facilities

Short-term facilities comprise the short-term portion of the EIB loan (26 million Euro) and other local bank facilities in Latin-America, which are mainly unsecured. The weighted average interest rate of these other local bank facilities is 11.11% (2016: 8.99%).

25.3 DEBENTURES

In May 2005, the Company issued a bond with nominal value of 200 million Euro. The bond carried a 4.375% coupon and matured in June 2015. Interests are payable annually in arrears. The issue price was 101.956%. The bond is carried at amortized cost.

In May 2014, the Company launched a public exchange offer on aforementioned bond. The holders of the existing bond were able to exchange their existing bonds for new bonds with a nominal amount of 1,000 Euro having a gross coupon of 5.35% per annum maturing in June 2019. Existing bonds for an aggregate amount of 42 million Euro were tendered into the exchange offer. Existing bonds for an aggregate nominal amount of 147 million Euro have been repaid in June 2015.

25.4 RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES

The table below details changes in the Group's liabilities arising from financing activities, including both cash and non-cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the Group's consolidated statement of cash flows as cash flows from financing activities.

		Cash flows from financing activities		Non-cash changes
MILLION EURO	Balance at Jan. 1, 2017	Interests paid	Net repay ment of borrowings	Effect of changes in foreign exchange rate	Capitalised borrowing costs	Interest expense on loans and borrowings	Balance at Dec. 31, 2017
Revolving credit facility	(2)	-	-	-	1	-	(1)
EIB loan	58	(2)	(26)	-	-	2	32
Liabilities to banks	13	(5)	3	(2)	-	4	13
Debentures	42	(2)	-	-	-	2	42
Total loans and borrowings	111	(9)	(23)	(2)	1	8	86

26. PROVISIONS

26.1 NON-CURRENT

As of December 31, 2017, non-current provisions amounted to 5 million Euro (2016: 4 million Euro). Other non-current provisions comprise mainly a provision for onerous rent.

MILLION EURO	Environmental	Restructuring	Other	TOTAL
Provisions at December 31, 2016	1	-	3	4
Provisions made during the year	-	-	1	1
Provisions used during the year	-	-	-	-
Provisions reversed during the year	-	-	-	-
Exchange differences	-	-	-	-
Transfers	-	-	-	-
Provisions at December 31, 2017	1	-	4	5

26.2 CURRENT

As of December 31, 2017, current provisions amounted to 66 million Euro (2016: 74 million Euro).

MILLION EURO	Environmental	Trade-related	Restructuring	Other	TOTAL
Provisions at December 31, 2016	4	45	16	9	74
Provisions made during the year	-	56	11	6	73
Provisions used during the year	(2)	(51)	(15)	(3)	(71)
Provisions reversed during the year	-	(5)	(3)	(1)	(9)
Exchange differences	-	(2)	1	-	(1)
Transfers	-	2	-	(2)	-
Provisions at December 31, 2017	2	45	10	9	66

Provisions for environmental protection relate to future re-landscaping, landfill modernization and the remediation of land contaminated by past industrial operations.

Provisions for trade-related commitments at closing date and related flows during the year primarily include provisions for bonuses and rebates related to goods and services purchased by customers in the accounting period, commissions to agents, warranty provisions, commercial litigations and onerous contracts.

Provisions for restructuring mainly comprise employee related costs. Most of the additions for this year refer to employee termination costs.

Other current provisions comprise provisions for onerous rent, legal claims from former staff and a legal claim regarding import duties.

27. DEFERRED REVENUE AND ADVANCE PAYMENTS

Deferred revenue comprises amounts invoiced in accordance with contractually agreed terms but unearned whereas advance payments reflect the amounts paid by customers who have not yet received an invoice and to whom the Company still has to fulfil its commitment, i.e. delivery of goods and/or services.

As of December 31, 2017, deferred revenue and advance payments amounted to 128 million Euro (2016: 141 million Euro) and primarily result from milestone billing in arrangements combining multiple deliverables such as software, hardware, services, … (multiple-element arrangements) and from the advance billing of service and maintenance contracts.

The application of the Group's accounting policy on recognition of revenue with regard to multipleelement arrangements requires management to judge whether or not an arrangement comprises multiple elements, and if so, whether reliable vendor-specific objective evidence of fair value exists for those elements.

Allocating the total arrangement fee, including any discounts, to each deliverable based on vendor specific objective evidence of fair value involves the use of significant estimates and assumptions. Changes to the elements in a multiple-element arrangement and the respective fair value of the related elements could materially impact the amount of earned and unearned revenue.

28. OTHER PAYABLES

The other payables at December 31, 2017 amounting to 12 million Euro, mainly comprises of accrued interests on liabilities, liabilities against staff resulting from compensation of travel and other personnel related expenses and earn out related to the acquisition of Bodoni Systems Limited which will be paid over the next two years (note 6).

29. OPERATING LEASES

29.1 LEASES AS LESSEE

The Group leases mainly buildings and cars under a number of operating lease agreements. The future lease payments under these non-cancellable operating leases are due as follows:

MILLION EURO	2016	2017
Not later than one year	43	41
Between one and five years	83	76
Later than five years	10	7
TOTAL	136	124

29.2 LEASES AS LESSOR

The Group leases out business accommodation and other equipment under operating leases. Non-cancellable operating lease rentals are as follows:

MILLION EURO	2016	2017
Not later than one year	1	1
Between one and five years	1	-
Later than five years	-	-
TOTAL	2	1

30. COMMITMENTS AND CONTINGENCIES

30.1 CONTINGENT LIABILITIES

Contingent liabilities resulted entirely from commitments given to third parties and comprise:

MILLION EURO	2016	2017
Bankguarantees	46	41
Other	1	1
TOTAL	47	42

Total purchase commitments in connection with major capital expenditure projects for which the respective contracts have already been awarded or orders placed amounted to 1 million Euro as of December 31, 2017 (2016: 1 million Euro).

30.2 LEGAL RISKS/CONTINGENCIES

The Group is currently not involved in any major litigation apart from those related to the AgfaPhoto insolvency and a distribution dispute with Ningbo Haoyi Medical Equipment Co Ltd. (and related companies).

Ningbo

In the frame of the reorganization of Agfa HealthCare's hardcopy distribution channels in China, Agfa HealthCare terminated in September 2017, the agreement with one of its key hardcopy film distributors in China. On February 11, 2018, Ningbo filed for arbitration with the China International Economic and Trade Arbitration Commission. Ningbo also filed a lawsuit in Ningbo. The Group believes that it has strong lines of defense in this lawsuit and is defending itself vigorously.

AgfaPhoto

In connection with the divestment of the Consumer Imaging business of Agfa-Gevaert AG and certain of its subsidiaries, the Group entered into various contractual relationships with AgfaPhoto Holding GmbH, AgfaPhoto GmbH and their subsidiaries in various countries (the 'AgfaPhoto group'), providing for the transfer of its Consumer Imaging business, including assets, liabilities, contracts and employees, to AgfaPhoto group companies.

Subsequent to the divestment, insolvency proceedings have been opened with respect to AgfaPhoto GmbH and a number of its subsidiaries in both Germany and other countries. The Group had been sued through lawsuits or other actions in various countries in connection with a number of disputes. The Group believes that it has meritorious defences in these lawsuits and other actions and is defending itself vigorously.

With respect to this divestment, the receiver of AgfaPhoto GmbH initiated various arbitration proceedings before the ICC International Court of Arbitration in Paris. In the only arbitration proceeding still pending, the receiver claims alleged damages suffered as a result of inter alia, undercapitalization of AgfaPhoto GmbH and causation of the insolvency of AgfaPhoto GmbH. The Group believes that it has meritorious defences with respect to these claims and is defending itself vigorously. Due to what we believe to be a highly speculative nature of the claims asserted by the receiver of AgfaPhoto GmbH, we deem it impossible to arrive at a reliable estimate of the financial implications of this arbitration proceeding. As new developments occur or more information becomes available, it is possible that the assumptions and estimates in these matters will change.

31. RELATED PARTY TRANSACTIONS

31.1 TRANSACTIONS WITH DIRECTORS AND MEMBERS OF THE EXECUTIVE MANAGEMENT (KEY MANAGEMENT PERSONNEL)

Key management personnel compensation (excluding employer's social contribution) included in profit or loss can be detailed as follows:

		2016	2017
MILLION EURO	Directors	Executive Management	Directors	Executive Management
Short-term employee benefits	0.6	4.4	0.6	3.7
Post-employment benefits	-	0.4	-	0.3
Share-based payment	-	-	-	-
TOTAL	0.6	4.8	0.6	4.0

As of December 31, 2017, there were no loans outstanding neither to members of the Executive Management nor to members of the Board of Directors.

Pension provisions for members and retired members of the Executive Management, amounting to 17 million Euro, are reflected in the statement of financial position of the Group at December 31, 2017. Key management personnel remuneration is also included in the Remuneration Report see pages 198-203.

31.2 OTHER RELATED PARTY TRANSACTIONS

Transactions with related companies are mainly trade transactions. The revenue and expenses related to these transactions are immaterial to the consolidated financial statements as a whole.

The Group and its business partner Shenzhen Brother Gao Deng Investment Group Co., Ltd. combined as of 2010 their activities aiming at reinforcing both partners' market position in Greater China and ASEAN region.

Shenzhen Brother Gao Deng Investment Group Co., Ltd. has a 49% stake in Agfa Graphics Asia Ltd., the holding company of the combined operations of both parties. See also note 23.8 Non-controlling Interests.

The following table summarizes the transaction values and the outstanding balances between the Group and Shenzhen Brother Gao Deng Investment Group Co., Ltd. In the course of 2017, Shenzhen Brother Gao Deng Investment Group Co., Ltd. received a dividend of 10 million Euro (49%).

	Transaction value for the year ended December 31		Balance outstanding at December 31
MILLION EURO	2016	2017	2016	2017
Sales to Shenzhen Brother Gao Deng Investment Group Co., Ltd.	37	20	10	4
Purchases from Shenzhen Brother Gao Deng Investment Group Co., Ltd.	33	23	1	1
Dividend	12	10	-	-

32. EARNINGS PER SHARE

32.1 BASIC EARNINGS PER SHARE

The calculation of basic earnings per share at December 31, 2017, was based on the profit (loss) attributable to owners of the Company of 37 million Euro (2016: 70 million Euro and a weighted average number of ordinary shares outstanding during the year ended December 31, 2017, of 167,751,190 (2016: 167,751,190).

The weighted average number of ordinary shares is calculated as follows:

Number of ordinary shares at January 1, 2017	Effect of options excercized during 2017	Weighted average number of ordinary shares at December 31, 2017
167,751,190	-	167,751,190

EURO	2016	2017
Basic earnings per share	0.42	0.22

32.2 DILUTED EARNINGS PER SHARE

The calculation of diluted earnings per share at December 31, 2017 was based on the profit (loss) attributable to owners of the Company of 37 million Euro (2016: 70 million Euro and a weighted average number of ordinary shares outstanding during the year ended December 31, 2017 of 167,751,190 (2016: 167,751,190).

It should be noted that there are no options outstanding at December 31, 2017.

The weighted average number of ordinary shares (diluted) is calculated as follows:

Number of ordinary shares at January 1, 2017	Effect of stock options on issue	Weighted average number of ordinary shares at December 31, 2017
167,751,190	-	167,751,190

EURO	2016	2017
Diluted earnings per share	0.42	0.22

The average fair value of one ordinary share during 2017 was 4.05 Euro per share.

33. INVESTMENTS IN SUBSIDIARIES AND ASSOCIATES AGFA-GEVAERT GROUP

The ultimate parent of the Group is Agfa-Gevaert NV (BE 0404 021 727), Mortsel (Belgium). The Company is the parent company for the following significant subsidiaries.

Consolidated companies, December 31, 2017
Name of the company	Location	Effective interest %
Agfa (Pty.) Ltd.	Isando/Rep. of South Africa	100
Agfa (Wuxi) Imaging Co., Ltd.	Wuxi/PR China	99.16
Agfa (Wuxi) Printing Plate Co. Ltd.	Wuxi/PR China	51
Agfa ASEAN Sdn. Bhd.	Kuala Lumpur/Malaysia	51
Agfa Corporation	Elmwood Park/United States of America	100
Agfa de Mexico S.A. de C.V.	Mexico D.F./Mexico	100
Agfa Finance Corp.	Wilmington/United States of America	100
Agfa Finance Inc.	Toronto/Canada	100
Agfa Finance Italy SpA	Milan/Italy	100
Agfa Finance NV - BE 0436 501 879	Mortsel/Belgium	100
Agfa Finco NV - BE 0810 156 470	Mortsel/Belgium	100
Agfa Graphics Argentina S.A.	Buenos Aires/Argentina	100
Agfa Graphics Asia Ltd.	Hong Kong/PR China	51
Agfa Graphics Ecuador CIA. LTDA	Quito/Ecuador	100
Agfa Graphics Ltd.	Leeds/United Kingdom	100
Agfa Middle East FZCO	Dubai/United Arab Emirates	100
Agfa NV - BE 0456 366 588	Mortsel/Belgium	100
Agfa Graphics S.r.l.	Milano/Italy	100
Agfa HealthCare - Knightsbridge GmbH	Vienna/Austria	60
Agfa HealthCare AG	Dübendorf/Switzerland	100
Agfa HealthCare Argentina S.A.	Buenos Aires/Argentina	100
Agfa HealthCare Australia Limited	Scoresby/Australia	100
Agfa HealthCare Brasil Importacao e Servicos Ltda.	Sao Paulo/Brazil	100
Agfa HealthCare Chile Ltda.	Santiago de Chile/Chile	100
Agfa HealthCare Colombia Ltda.	Bogota/Colombia	100
Agfa HealthCare Corporation	Greenville/United States of America	100
Agfa HealthCare Denmark A/S	Copenhagen/Denmark	100
Agfa HealthCare France S.A.	Artigues près Bordeaux/France	100
Agfa HealthCare Equipments Portugal Lda.	Sintra/Portugal	100
Agfa HealthCare Finland Oy AB	Espoo/Finland	100
Agfa HealthCare Germany GmbH	Bonn/Germany	100
Agfa HealthCare Ges.mbH	Vienna/Austria	100
Agfa HealthCare GmbH	Bonn/Germany	100
Agfa HealthCare Hellas A.E.B.E.	Peristeri/Greece	100
Agfa HealthCare Hong Kong Ltd.	Hong Kong/PR China	100
Agfa HealthCare Hungary Kft.	Budapest/Hungaria	100
Agfa HealthCare Imaging Agents GmbH	Cologne/Germany	100
Agfa HealthCare Inc.	Mississauga/Canada	100

Agfa HealthCare India Private Ltd.	Thane/India	100
Agfa HealthCare Luxembourg S.A.	Bertrange/Luxemburg	100
Agfa HealthCare Malaysia Sdn. Bhd.	Kuala Lumpur/Malaysia	100
Agfa HealthCare Mexico S.A. de C.V.	Mexico D.F./Mexico	100
Agfa HealthCare Norway AS	Oslo/Norway	100
Agfa HealthCare NV - BE 0403 003 524	Mortsel/Belgium	100
Agfa HealthCare Saudi Arabia Company Limited LLC	Riyadh/Saudi Arabia	100
Agfa HealthCare (Shanghai) Co Ltd.	Shanghai/PR China	100
Agfa HealthCare Singapore Pte. Ltd.	Singapore/Republic of Singapore	100
Agfa HealthCare Solutions LLC	Dubai/United Arab Emirates	100
Agfa HealthCare South Africa Pty. Ltd.	Gauteng/Rep. of South Africa	100
Agfa HealthCare Spain S.A.U.	Barcelona/Spain	100
Agfa HealthCare Sweden AB	Kista/Sweden	100
Agfa HealthCare Systems Taiwan Co. Ltd.	Taipei/Taiwan	100
Agfa HealthCare UK Limited	Brentford/United Kingdom	100
Agfa Imaging (Shenzhen) Co. Ltd.	Shenzhen/PR China	51
Agfa Inc.	Mississauga/Canada	100
Agfa Industries Korea Ltd.	Seoul/Korea	100
Agfa Limited	Dublin/Ireland	100
Agfa Materials Corporation	Wilmington/United States of America	100
Agfa Materials Japan Ltd.	Tokyo/Japan	100
Agfa Materials Taiwan Co. Ltd.	Taipei/Taiwan	100
Agfa Scots Ltd.	Edinburgh/United Kingdom	100
Agfa Singapore Pte. Ltd.	Singapore/Republic of Singapore	51
Agfa Solutions SAS	Rueil-Malmaison/France	100
Agfa Sp. z.o.o.	Warsaw/Poland	100
Agfa Taiwan Co. Ltd.	Taipei/Taiwan	51
Agfa-Gevaert A.E.B.E.	Athens/Greece	100
Agfa-Gevaert Aktiengesellschaft für Altersversorgung	Cologne/Germany	100
Agfa-Gevaert Argentina S.A.	Buenos Aires/Argentina	100
Agfa-Gevaert B.V.	Rijswijk/Netherlands	100
Agfa-Gevaert Colombia Ltda.	Bogota/Colombia	100
Agfa-Gevaert de Venezuela S.A.	Caracas/Venezuela	100
Agfa-Gevaert do Brasil Ltda.	Sao Paulo/Brazil	100
Agfa-Gevaert Graphic Systems GmbH	Cologne/Germany	100
Agfa-Gevaert HealthCare GmbH	Cologne/Germany	100
Agfa-Gevaert Japan, Ltd.	Tokyo/Japan	100
Agfa-Gevaert Limited	Scoresby/Australia	100
Agfa-Gevaert Limited	Brentford/United Kingdom	100
Agfa-Gevaert Ltda.	Santiago De Chile/Chile	100
Agfa-Gevaert GmbH	Cologne/Germany	100
Agfa-Gevaert NZ Ltd.	Auckland/New Zealand	100
Agfa-Gevaert S.A.	Pont-à-Marcq/France	99.99
Agfa-Gevaert S.p.A.	Milan/Italy	100
Agfa HealthCare Imaging Agents France S.r.l.	Marcq en Baroeul/France	100

Lastra Attrezzature S.r.l.	Manerbio/Italy 60
Litho Supplies (UK) Ltd.	Derby/United Kingdom	100
Luithagen NV - BE 0425 745 668	Mortsel/Belgium	100
New ProImage America Inc.	Princeton/United States of America	100
New ProImage Ltd.	Netanya/Israel	100
OOO Agfa Graphics	Moscow/Russian Federation	100
OOO Agfa	Moscow/Russian Federation	100
Shanghai Agfa Imaging Products Co., Ltd.	Shanghai/PR China	51
Agfa HealthCare Algérie Sarl	Alger/Algeria	100
Agfa HealthCare Kazakhstan LLP	Almaty/Republic of Kazakhstan	100
Agfa HealthCare Ukraine LLC	Kyiv/Ukraine	100
PT Gevaert-Agfa HealthCare Indonesia	Jakarta/Indonesia	100
Agfa HealthCare IT Brasil Servicis E Serviços Ltda.	Barueri/Brazil	100
Bodoni Systems	Middlesex/United Kingdom	100
Agfa HealthCare Middle East FZ-LLC	Dubai/United Arab Emirates
Agfa HealthCare IT UK Limited	Brentford/United Kingdom	100
Agfa South Africa (Pty) Ltd.	Gauteng/Rep. of South Africa	100
Agfa Australia Pty Ltd.	Scoresby/Australia	100
Agfa Canada Inc.	Mississauga/Canada	100
Agfa US Corp.	Delaware/United States of America	100

Associated companies, December 31, 2017
Name of the company	Location	Effective interest %
My Personal Health Record Express Inc.	New York/United States of America

34. EVENTS SUBSEQUENT TO DECEMBER 31, 2017

In the framework of the reorganization of Agfa HealthCare's hardcopy distribution channels in China, Agfa HealthCare (Shanghai) Co Ltd has signed on December 14, 2017 a contract with Ningbo Hongtai Medical Equipment Limited, a leading distributor of hardcopy film in China, to integrate the distribution and maintenance of Agfa Products in China in the Company's own organization. The transfer of business will take place gradually by geographical area over a period starting in the course of the first quarter of 2018 and ending by June 2020. The initial accounting for this business combination is incomplete at March 22, 2018, the time the consolidated financial statements were authorized for issue by the board of directors. As a consequence, the amount to be recognized for each major class of assets acquired and liabilities assumed could not be disclosed.

Siegwerk Druckfarben AG & Co.KGaA, one of the leading international suppliers of printing inks for packaging applications and labels, and Agfa Graphics, a leading supplier in prepress offset and inkjet print, have entered into an important strategic alliance for digital packaging inks. The contract signed on February 28, 2018 between the two companies includes a business transfer from Agfa Graphics to Siegwerk of a selected OEM customer list, access to know-how, intellectual property and services in the domain of UV curable digital inks for the single pass packaging and labels industry.

35. INFORMATION ON THE AUDITOR'S ASSIGNMENTS AND RELATED FEES

The following fees for the services of KPMG Bedrijfsrevisoren/Réviseurs d'Entreprises were recognized as an expense:

EURO	2016	2017
Fees of the independent auditor with respect to the statutory audit mandate for the Company and the Group (Belgium)	536,067	549,388
Fees for non-audit services rendered by the independent auditor to the Company and the Group
Other attestation	29,425	50,268
Tax	-	-
Other non-audit	-	-
SUBTOTAL	565,492	599,656

Fees of independent auditor's network with respect to a statutory audit mandate at the level of the Group (foreign operations)	1,108,367	1,073,850
Fees for non-audit services rendered by the independent auditor's network to the Group (Belgian and foreign operations)
Other attestation	62,415	64,276
Tax	207,464	180,179
Other non-audit	264,896	1,180,544
SUBTOTAL	1,643,142	2,498,849
TOTAL	2,208,634	3,098,505

The fees for the auditing of financial statements comprise those for the audits of the consolidated financial statements of the Agfa-Gevaert Group and the financial statements of its subsidiaries in Belgium and abroad. Other non-audit fees mainly relate to advice and due diligence assistance.

Statutory auditor's report to the general meeting of Agfa-Gevaert NV on the consolidated financial statements as of and for the year ended December 31, 2017

In the context of the statutory audit of the consolidated financial statements of Agfa-Gevaert NV ("the Company") and its subsidiaries (jointly "the Group"), we provide you with our statutory auditor's report. This includes our report on the audit of the consolidated financial statements for the year ended December 31, 2017, as well as our report on other legal, regulatory and professional requirements. These reports are one and indivisible.

We were appointed as statutory auditor by the general meeting of May 10, 2016, in accordance with the proposal of the board of directors issued on the recommendation of the audit committee and as presented by the workers' council. Our mandate will expire on the date of the general meeting deliberating on the annual accounts for the year ended December 31, 2018. We have not been able to identify the exact date of our initial appointment. However, we can confirm that we have performed the statutory audit of the consolidated financial statements of Agfa-Gevaert NV for at least 40 consecutive financial years.

Report on the audit of the consolidated financial statements

Unqualified opinion

We have audited the consolidated financial statements of the Group as of and for the year ended December 31, 2017, prepared in accordance with International Financial Reporting Standards as adopted by the European Union, and with the legal and regulatory requirements applicable in Belgium. These consolidated financial statements comprise the consolidated statement of financial position as at December 31, 2017, the consolidated statements of profit or loss, consolidated statement of comprehensive income, changes in equity and cash flows for the year then ended and notes, comprising a summary of significant accounting policies and other explanatory information. The total of the consolidated statement of financial position amounts to 2,233 million Euro and the consolidated statement of profit or loss shows a profit for the year of 45 million Euro.

In our opinion, the consolidated financial statements give a true and fair view of the Group's equity and financial position as at December 31, 2017 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 our unqualified opinion

We conducted our audit in accordance with International Standards on Auditing ("ISAs"). Our responsibilities under those standards are further described in the "Statutory auditors' responsibility for the audit of the consolidated financial statements" section of our report. We have complied with the ethical requirements that are relevant to our audit of the consolidated financial statements in Belgium, including the independence requirements.

We have obtained from the board of directors and the Company's officials the explanations and information necessary for performing our audit.

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 of goodwill and indefinite-life intangible assets

We refer to note 3.11 'Impairment testing of goodwill, intangible assets and property, plant and equipment' and to note 13 'Intangible assets and goodwill' of the consolidated financial statements.

• Description

The Group operates in business sectors where financial performance is impacted by competitive pressures and volatile commodity prices (silver and aluminum). In addition, the Group is transitioning to new growth engines (Inkjet and Healthcare IT).

Goodwill and indefinite-life intangible assets are assessed for impairment annually in accordance with IAS 36. Management uses a value-in-use approach to determine whether these assets are impaired at the reporting date as well as the level of impairment charge to be recognized,

Impairment of goodwill and indefinite-life intangible assets is a Key audit matter due to:

The size of the balance (being 23.4% of total assets); and
The level of judgement required by management in its assessment of impairment, which principally relates to the inputs used in both forecasting and discounting future cash flows to determine the value-in-use.

• Our audit procedures

Our audit procedures included, amongst others:

We evaluated the process by which managements' cash flow forecasts were prepared, including testing the underlying calculations and reconciling them to the latest Board of Directors approved financial targets.
We analysed the Group's previous ability to forecast cash flows accurately and challenged the reasonableness of current forecasts by comparing key assumptions to historical results, economic and industry forecasts and internal planning data.
We assessed the appropriateness of the Group's valuation methodology and its determination of discount rates by including valuation specialists in our team.
Furthermore we performed sensitivity analyses around the key assumptions used for the determination and discounting of the cash flow forecasts, in particular discount rates, growth rates and commodity prices. We assessed how management incorporated the specific risk factors faced by the businesses and the Group in their cash flow forecasts and discount rates. Having ascertained the extent of change in the assumptions that either individually or collectively would be required for the goodwill and indefinite-life intangible assets to be potentially impaired, we assessed the likelihood of such a movement in those key assumptions.
Furthermore, we assessed the appropriateness of the Group's disclosures in respect of impairment, which are included in note 13 to the consolidated financial statements.

Recoverability of deferred tax assets and assessment of current tax provisions and tax contingencies

We refer to note 3.7 "Income tax" and note 12 "Income taxes" of the consolidated financial statements.

• Description

The Group has significant tax losses and deductible temporary differences from past business performance for which a deferred tax asset of 115 million Euro has been recognized.

There is an inherent uncertainty involved in assessing the availability of future taxable profits, which determines the extent to which deferred tax assets are or are not recognized.

In addition the Group operates in multiple jurisdictions giving rise to a high level of cross-border transactions and complex taxation arrangements being subject to various country specific tax laws. During the normal course of business local tax authorities may challenge such transactions and transfer pricing arrangements.

The Group has recognized provisions against uncertain tax positions, the estimation of which is subject to management's judgment.

Due to the significance of the balance as well as the judgment involved in the estimations described above, the recoverability of deferred tax assets and assessment of current tax provisions and tax contingencies is a key audit matter for our audit.

• Our audit procedures

Our audit procedures included, amongst others:

We assessed the appropriateness of the Group's assumptions and estimates in determining the level of tax losses and deductible temporary differences to recognise.
We assessed the Group's view of the likelihood of generating sufficient taxable profits to support the recognition of deferred tax assets, which includes an assessment of the long-term business plans, the historical and projected taxable profit forecasts at legal entity level, a consideration of tax planning strategies and sensitivities to changes in assumptions.
We challenged with our tax specialists the Group's assessment of uncertain tax positions and assessed the adequacy of the Group's taxation provisions by considering the reasonableness of the judgements made with regard to the quantification and likelihood of significant exposures and the level of liability required for specific cases.
Furthermore, we assessed the appropriateness of the Group's disclosures in respect of income taxes, which are included in note 12 to the consolidated financial statements.

Measurement of post-employment benefits

We refer to note 24 "Employee benefits" and note 3.21 "Employee benefits" of the consolidated financial statements.

• Description

The Group provides retirement benefits in most countries in which it operates. Retirement benefits are organized through defined contribution plans as well as defined benefit plans. The Group funds its obligations in relation to those plans via insurance plans and segregated assets in Pension Funds. The net defined benefit liability for Belgium, Germany, UK and US together represents 96% of the total net defined benefit liability.

Post-employment benefits is a Key Audit Matter due to:

The size of the balance (1,121 million Euro which represents 50.2% of total liabilities); and
The significant estimates made in valuing the Group's post-employment benefit obligations and underlying assets. Small changes in assumptions and estimates used to value the Group's net post-employment benefit liabilities would have a significant effect on the Group's financial position.

• Our audit procedures

Our audit procedures included, amongst others:

We updated our understanding of the Group's valuation process.
We assessed the competence, objectivity and capabilities of the external actuarial experts engaged by management.
We challenged the key assumptions, being the discount rates, inflation rates and mortality expectations underlying the valuation of the Group's post-employment benefit obligations with the support of our actuarial specialists. This included a comparison of key assumptions used against externally derived data.
We verified the accuracy of the census data underlying the actuarial valuation and reconciled the fair value of the plan assets with external confirmations.
We assessed of the overall reasonableness of the valuation outcome.
Furthermore, we assessed the appropriateness of the Group's disclosures in respect of employee benefits, which are included in note 24 to the consolidated financial statements.

Revenue recognition

We refer to note 3.3 for the accounting policies related to revenue recognition of the consolidated financial statements.

• Description

For the year ended December 31, 2017, the Group recorded revenue amounting to 2,443 million Euro. We identified the recognition of revenue as a key audit matter because revenue is one of the key performance indicators of the Group (including bonus arrangements) and is, therefore, subject to an inherent risk of manipulation by management to meet targets or expectations and because errors in the recognition of revenue could have a material impact on the Group's profit for the year.

• Our audit procedures

Our audit procedures included, amongst others:

Evaluating the design, implementation and operating effectiveness of key controls (including IT environment) over the existence, accuracy and timing of revenue recognition.
Challenging the revenue recognition policies adopted by the Group by making inquiries of management and inspecting a sample of sales contracts to understand the contractual components, the delivery terms and to assess the Group's timing of revenue recognition with reference to the requirements of the prevailing accounting standards.
Assessing whether revenue had been recognized in the appropriate accounting period by comparing a sample of sales transactions around the year-end with relevant underlying documents (e.g. delivery documentation).
Inspecting manual adjustments to revenue, enquiring of management as to the reason for such adjustments and comparing the details of the adjustments with relevant underlying documentation.
Testing a sample of deferred and accrued revenue ending balances and compared these to supporting evidence.

Board of directors' responsibilities for the preparation of the consolidated financial statements

The board of directors is responsible for the preparation of these 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.

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 as to 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 the users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional skepticism throughout the audit. We also perform the following procedures:

Identify and assess the risks of material misstatement of the consolidated financial statements, 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 controls 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 board of directors;
Conclude on the appropriateness of 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 auditors' report to the related disclosures

in the consolidated financial statements 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 auditors' report. However, future events or conditions may cause the Group to cease to continue as a going concern;

• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions

and events in a manner that achieves fair presentation;

• Obtain sufficient 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. For 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.

Report on the other legal, regulatory requirements and professional requirements

Responsibilities of the Board of Directors

The board of directors is responsible for the preparation and the content of the board of directors' annual report on the consolidated financial statements and the other information included in the annual report.

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 as applicable in Belgium, our responsibility is to verify, in all material respects, the board of directors' annual report on the consolidated financial statements and the other information included in the annual report, and to report on these matters.

Aspects concerning the board of directors' annual report on the consolidated financial statements and other information included in the annual report

Based on specific work performed on the board of directors' annual report on the consolidated financial statements, we are of the opinion that this report is consistent with the consolidated financial statements for the same period and has been prepared in accordance with article 119 of the Companies' Code. In the context of our audit of the consolidated financial statements, we are also responsible for considering, in particular based on the knowledge gained throughout the audit, whether the board of directors' annual report on the consolidated financial statements and other information included in the annual report:

• Chapter 1 Letter to the Shareholders and Key Figures 2017

contain material misstatements, or information that is incorrectly stated or misleading. In the context of the procedures carried out, we did not identify any material misstatements that we have to report to you. We do not express any form of assurance on the board of directors' annual report on the consolidated financial statements and other information included in the annual report.

The Group has not yet finalized its analysis of the non-financial information required by article 119 §2 of the Companies' Code and therefore the information included in the board of directors' annual report on the consolidated financial statements is not complete. Moreover the management has not identified a specific European or International accepted framework to serve as the basis for preparing the non-financial information. Therefore we are unable to comment on whether this non-financial information has been prepared, in all material respects, in accordance with the requirements of article 119§2 of the Companies' Code. In addition, we do not express any form of assurance regarding the individual elements included in this non-financial information.

Information about the independence

Our audit firm and our network have not performed any engagement which is incompatible with the statutory audit of the consolidated accounts and our audit firm remained independent of the Group during the term of our mandate.
The fees for the additional engagements which are compatible with the statutory audit referred to in article 134 of the Companies' Code were correctly stated and disclosed in the notes to the consolidated financial statements.

Other aspect

• This report is consistent with our additional report to the audit committee on the basis of Article 11 of Regulation (EU) No 537/2014.

Antwerp, April 6, 2018

KPMG Bedrijfsrevisoren / Réviseurs d'Entreprises Statutory auditor represented by

H. Van Donink Réviseur d'Entreprises / Bedrijfsrevisor

Statutory accounts

The following pages are extracts of the statutory annual accounts of Agfa-Gevaert NV prepared under Belgian accounting policies. The management report of the Board of Directors to the Annual General Meeting of Shareholders and the annual accounts of Agfa-Gevaert NV as well as the Auditor's Report, will be filed with the National Bank of Belgium within the statutory stipulated periods. These documents are available on request from Agfa's Investor Relations department and at www.agfa.com/investorrelations.

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 Agfa-Gevaert Group. The Statutory Auditor's Report is unqualified and certifies that the non-consolidated financial statements of Agfa-Gevaert NV for the year ending December 31, 2017 give a true and fair view of the financial position and results of the Company in accordance with all legal and regulatory dispositions.

INCOME STATEMENTS

	MILLION EURO	2016	2017
	I. Operating income
A.	Turnover	452	446
B.	Stocks of finished goods, work and contracts in progress (increase +, decrease -)	(9)	7
C.	Own work capitalised	18	22
D.	Other operating income	103	103
E.	Non-recurring operating income	1	1
	TOTAL OPERATING INCOME	565	579
	II. Operating charges
A.	Raw materials, consumables
	1. Purchases	225	242
	2. Stocks (increase -, decrease +)	(1)	(2)
B.	Services and other goods	93	99
C.	Remuneration, social security costs and pensions	205	202
D.	Depreciation of and other amounts written off formation expenses, intangible and tangible fixed assets	34	33
E.	Amounts written off stocks, contracts in progress and trade debtors (appropriations +, write-backs -)	(1)	(1)
F.	Provisions for liabilities and charges (appropriations +, uses and write-backs -)	(12)	(7)
G.	Other operating charges	7	6
H.	Non-recurring operating charges	8	0
	TOTAL OPERATING CHARGES	558	572
III.	Operating profit/loss	7	7
IV.	Financial income	116	120
V.	Financial charges	(162)	(146)
VI.	Gain/ loss for the period before taxes	(39)	(19)
VII.	Transfer from deferred taxes	0	0
VIII.	Income taxes	0	(3)
IX.	Gain/ loss of the period	(39)	(22)
X.	Transfer from untaxed reserves	134	0
XI.	Gain/ loss of the period available for appropriation	95	(22)
	Appropriation account
A.	Profit to be appropriated	465	309
	1. Gain (loss) of the period available for appropriation	95	(22)
	2. Accumulated profits (losses)	370	331
B.	Withdrawals from capital and reserves	0	0
C.	Transfer to capital and reserves	134	0
D.	Accumulated profits (losses)	331	309
F.	Profit to be distributed	0	0

FINANCIAL POSITION

	MILLION EURO	December 31, 2016	December 31, 2017
Assets
I.	Formation expenses	2	2
II.	Intangible fixed assets	21	16
III.	Tangible fixed assets	17	23
IV.	Financial fixed assets	2,791	2,764
V.	Amounts receivable after more than 1 year	0	0
VI.	Stocks and contracts in progress	99	109
VII.	Amounts receivable within one year	588	302
VIII.	Current investments	17	16
IX.	Cash at bank and in hand	59	13
X.	Deferred charges and accrued income	3	3
		3,597	3,248

Liabilities
I.	Capital	187	187
II.	Share premium account	211	211
IV.	Reserves	416	416
V.	Accumulated profits	331	309
VI.	Investment grants	1	1
		1,146	1,124

VII.	Provisions and deferred taxes	37	30
VIII.	Amounts payable after more than one year	75	48
IX.	Amounts payable within one year	2,332	2,044
X.	Accrued charges and deferred income	7	2
		3,597	3,248

The Company has decided to apply the Belgian Corporate Governance Code 2009 as reference code. The Code can be consulted on the website www.corporategovernancecommittee.be.

Unless otherwise stated in the relevant sections of this Statement, the Company is completely in line with the Belgian Corporate Governance Code 2009. The complete Corporate Governance Charter of the Company is published on the website: www.agfa.com/investorrelations.

This Corporate Governance Statement is also in line with the Law on Corporate Governance of April 6, 2010, as published in the Belgian State Gazette on April 23, 2010. The Law on Corporate Governance can be consulted on the website of the Belgian State Gazette www.staatsblad.be.

The Remuneration Report is part of this Corporate Governance Statement.

The governance structure of the Company is built up round the Board of Directors, the Chief Executive Officer (CEO) and the Executive Committee (ExCo). The Board of Directors is assisted by a Nomination and Remuneration Committee and an Audit Committee.

Corporate Governance Statement

Board of Directors

As the ultimate management body of the Company, the Board of Directors is empowered to carry out any necessary or useful actions for the achievement of the corporate purpose, the exception being the powers reserved by law for the General Meeting of Shareholders (such as amendments to the articles of association, capital increases other than through the authorized capital, capital decreases).

The powers and operation of the Board of Directors are described extensively in the Corporate Governance Charter.

The articles of association determine that the Board of Directors meets whenever the interest of the Company so requires or following a request by two directors. In 2017, eight effective meetings took place, as well as a couple of short discussions per conference call.

In the course of 2017, the Board of Directors discussed and decided upon, inter alia: defining the corporate strategy and

key policies, the perspectives for 2018 and the action plans for the years to come, recommendations from the various Committees to the Board of Directors, risk management, the approval of budgets, cost control scenarios, the evolution of important litigations and the approval of the annual accounts.

Directors likely to have conflicting interests with regard to any item on the agenda must disclose the conflict before any deliberation and must abstain from deliberating and voting on that item. More particularly, the directors must not put themselves in conflict situations as described in the Corporate Governance Charter of the Company. Should such an event occur against their will, they must disclose it before any deliberation relating to the conflicting item and must abstain from deliberating and voting on that item.

In 2017, there were no occurrences where a director had directly or indirectly conflicting interests with a decision made by the Board of Directors.

Composition of the Board of Directors

The articles of association of the Company provide that the Board of Directors has at least six members, who do not need to be shareholders and who are appointed for a renewable maximum term of four years. At least half of the members are to be non-executive directors, including a minimum of three independent directors.

As from May 12, 2015, the Board of Directors consists of the following seven members:

Julien De Wilde, Chairman, member since 2006, Director of companies
Pamica NV (1), with permanent representative Michel Akkermans, member since 2008, Director of companies
Mercodi BVBA, with permanent representative Jo Cornu, member since 2002, Director of companies
Willy Duron (1), member since 2008, Director of companies
Hilde Laga (1), member since 2015, Director of companies
Viviane Reding (1), member since 2015, Director of companies
CRBA Management BVBA, with permanent representative Christian Reinaudo, CEO, member since 2010, Director of companies

(1) Independent director in accordance with article 526ter of the Belgian Code of Companies.

The mandates as a director of Pamica NV, with permanent representative Michel Akkermans, and of Willy Duron, expire immediately following the General Meeting of Shareholders of May 8, 2018. They both do not seek re-election as they would loose their status of independant director upon a forth re-election.

To ensure the Board of Directors has a sufficient number of independent directors, it will be proposed to the shareholders to appoint MRP Consulting BVBA, with permanent representative Mr.Mark Pensaert, as independent director for a 4-year term. The Board of Directors is convinced that this candidate has the right competence and quality to become a valuable member of the Board, as it appears from the below mentioned CV.

Mark Pensaert (°1964 – Belgian) holds a Master of Law from the State University of Ghent (Belgium) and later obtained a Master of Law – Specialisation in corporate and securities law from the Cambridge University St. Catharine's College.

He started his career in 1988 in London with Lazard Brothers & Co, one of the leading independent global investment banks with principal offices in New York, Paris and London. Between 1992 and 1996 he was finance director of Interbuild NV and Rombouts NV. In 1996 he became CFO of Carestel NV (currently part of the Autogrill Group). Between 2001 and 2004 he returned to the international M&A business by rejoining Lazard Frères in Paris to help establish and set up the M&A platform for Lazard in the BeNeLux and in 2004 he became a Partner and started the Amsterdam office covering the BeNeLux. In 2008 he joined, as CEO, Leonardo & Co, a spin-off of Lazard, to build out their network in Continental Europe and as from September 2015 he was appointed Chairman of the investment banking division of Alantra Partners, a global investment banking and asset management group quoted on the Madrid Stock Exchange.

CV's of the members of the Board of Directors

Julien De Wilde (°1944 - Belgian) obtained an engineering degree from the Catholic University of Leuven (Belgium). From 1969 onwards he held various managerial positions at Texaco. In 1986 he was appointed member of the European Management Board of Texaco in New York. In 1988 he became head of the research and business development department of Recticel. A year later he became a member of the Executive Board of Alcatel Bell, where he was responsible for strategy and general services. From 1995 to 1998, Julien De Wilde was CEO of Alcatel Bell and from 1999 to 2002, he was Executive Vice-President and member of the Executive Board of Alcatel in Paris, responsible for Europe, the Middle East, Latin America, India and Africa. From July 1, 2002 to May 2006, he was CEO of the Bekaert Group.

Julien De Wilde joined Agfa-Gevaert's Board of Directors in 2006. In April 2008, he became Chairman of the Board of Directors.

Current mandates

Chairman of the Board of Directors of ION NV.
Honorary Chairman Agoria.

Christian Reinaudo (°1954 - French) is a graduate from the 'Ecole de Physique et de Chimie Industrielles de Paris' and holds a doctorate from the 'University of Paris' (France). He started his career with Alcatel (formerly named 'Compagnie Générale d'Electricité') in 1978 in the Research and Development Centre of Marcoussis (France). During his Alcatel period he managed several multi billion Euro businesses and international sales and services organizations. From 1984 to 1996, he held several positions in the Cable Group of Alcatel (now Nexans), from research and development, to manufacturing, procurement, sales support and services. He took the position of President of the Submarine Networks Division in early 1997. Appointed President of the whole Optics Group in 1999, he enters the Executive Committee of Alcatel early 2000 as Executive Vice-President. In 2003, he was appointed President of Alcatel Asia Pacific and moved to Shanghai (China) where he stayed until 2006. During this period he was also the Vice-Chairman of the Board of Directors of Alcatel Shanghai Bell, the Chinese joint venture of Alcatel with the Chinese government. In 2006, he came back to Paris to manage the integration and the transition process associated with the merger of Alcatel and Lucent Technologies. He also became Director in the Board of Directors of Draka Comteq (the Netherlands). In 2007, he was appointed President Northern and Eastern Europe of Alcatel-Lucent and he joined the Board of Directors of Alcatel-Lucent (Belgium). Early 2008, he joined Agfa-Gevaert to be President of Agfa HealthCare.

Christian Reinaudo joined the Agfa-Gevaert Board of Directors in 2010. As from May 1, 2010, he is CEO of Agfa-Gevaert.

Current mandates

• Director of Domo Chemicals GmbH (since October 18, 2016).

Jo Cornu (°1944 - Belgian) graduated as an engineer specializing in electrotechnology and mechanics from the Catholic University of Leuven (Belgium) and later obtained a PhD in electronics from the Carlton University in Ottawa (Canada). Jo Cornu was CEO of Mietec from 1982 to 1984 and later General Manager for Bell Telephone until 1987. From 1988 to 1995 he was member of the Executive Board of Alcatel NV and from 1995 to 1999 he was COO for Alcatel Telecom. Later he became an advisor to the Chairman of the Board of Directors of Alcatel. From 2005 to 2007, Jo Cornu was Chairman of the ISTAG Group (Information Society Technologies Advisory Group) of the European Commission. From the beginning of March 2007 to the end of January 2008, he was Chairman of Medea +, the Eureka Cluster for micro electronics research in Europe. From December 2012 until November 2013, he was chairman of the Board of Directors of Electrawinds SE. From November 2013 to March 2017 he was CEO of the NMBS, the National Belgian Railway Company.

Jo Cornu joined the Agfa-Gevaert Board of Directors in 2002. At the end of November 2007, Jo Cornu was appointed CEO of Agfa-Gevaert. He resigned as CEO as from May 1, 2010.

Current mandates

• CEO NMBS (until March 6, 2017).

Hilde Laga (°1956 - Belgian) is recognized as a Belgian authority in the corporate law advisory field. Until 2014 she combined client work as a lawyer with an esteemed academic career. After obtaining a PhD in Law at the University of Leuven, she founded the law firm Laga, which she led as managing partner and as head of the corporate M&A practice until 2013, and that comprises approximately 150 qualified lawyers. As a professor at the University of Leuven, Hilde Laga lectured corporate law, a subject on which she has written numerous national and international publications. Currently, she is connected as visiting professor. Hilde Laga is a member of the Belgian Corporate Governance Committee and served several years as a member of the Supervisory Board of the Belgian Financial Services and Markets Authority (former CBFA).

Hilde Laga joined the Agfa-Gevaert Board of Directors in 2015.

Current mandates

Chairman of the Board of Directors of GIMV NV.
Director of Barco NV, Greenyard Foods NV, K.U. Leuven and its university hospital.

Viviane Reding (°1951 – Luxembourger) obtained a PhD degree (University Sorbonne, Paris) after which she acted as a professional journalist during twenty years. In 1999, having served ten years in the Luxembourg Parliament and ten years in the European Parliament, she became the European Commissioner for Education, Culture, Youth and Sport. In 2004, she became EU Commissioner for Information Society and Media. In that period, she was instrumental in the reform of the European telecom sector, opening the internal market to competition, as well as in the reform of the European research area, reinforcing the technological research platforms. In 2010, she became the first Vice-President and EU Commissioner responsible for Justice, Fundamental Rights and Citizenship.

Viviane Reding joined the Agfa-Gevaert Board of Directors in 2015.

Committees established by the Board of Directors

Audit Committee (AC)

The Audit Committee completes the tasks as described in article 526bis§4 of the Belgian Code of Companies and assists the Board of Directors in achieving its mission of control in the broadest sense. Its powers and the way it functions are described extensively in chapter 5.1 of the Corporate Governance Charter.

As from May 12, 2015, the Audit Committee consists of the following three non-executive Directors: Mr. W. Duron, Chairman, Mr. J. De Wilde and Mrs. H. Laga. Two of them are independent directors. They all meet the requirements described in article 526bis§2 of the Belgian Code of Companies, with respect to the expertise in the field of accounting and audit. As Mr. W. Duron will not seek re-election as director, he will be replaced after the General Meeting of Shareholders of May 8, 2018.

The Committee held five meetings in 2017. Amongst other items the following topics were discussed: the verification of the annual accounts 2016, the quarterly results of 2017 and the reports of the internal audit department, the follow-up of important legal issues such as the AgfaPhoto file and the evaluation of risk management in the Group.

Nomination and Remuneration Committee (NRC)

The Nomination and Remuneration Committee has been entrusted by the Board of Directors with responsibilities concerning the nomination for appointment, reappointment or dismissal of Directors and members of the Executive Management, the remunerations policies and the individual remuneration of the Directors and the members of the Executive Management. Operation and functions of the NRC are described extensively in chapter 5.2 of the Corporate Governance Charter. The Nomination and Remuneration Committee consists exclusively of non-executive Directors.

Since May 12, 2015, the Nomination and Remuneration Committee consists of the following three non-executive directors: Mr. J. Cornu, Mr. M. Akkermans and Mrs. V. Reding. Two of them are independent directors. As Mr. M. Akkermans will not seek re-election as director (through his Company Pamica NV), he will be replaced after the General Meeting of Shareholders of May 8, 2018.

The Committee had three meetings in 2017 and the following items, amongst others, were discussed: composition of the Board of Directors and the Committees, the compensation and benefits philosophy, performance and remuneration of the Executive Management and Senior Executives, pension obligations and drafting of the Remuneration Report.

	Board	AC	NRC
Mr. Julien De Wilde	8/8	5/5
Mr. Christian Reinaudo	8/8
Mr. Michel Akkermans	6/8		2/3
Mr. Jo Cornu	8/8		3/3
Mr. Willy Duron	8/8	5/5
Mrs. Hilde Laga	7/8	5/5
Mrs. Viviane Reding	7/8		2/3

Presence at the meetings of the Board of Directors and the Committees

Management of the Company

CEO and Executive Committee (ExCo)

The Executive Management is at present entrusted to a Managing Director/CEO, CRBA Management BVBA, with permanent representative Mr. Christian Reinaudo, assisted by an ExCo. Together they represent the Executive Management.

The CEO is responsible for the implementation of the Company's policy and strategy laid down by the Board of Directors. Consequently, he has the most extensive powers regarding day-to-day management as well as a number of specific special powers. These powers are described extensively in the Corporate Governance Charter.

In order to allow the Board of Directors to exercise its control, the CEO regularly reports about his activities and about the development of the subsidiaries and affiliated companies.

Since February 29, 2012, the ExCo is composed as follows:

Mr. Kris Hoornaert, Chief Financial Officer,
Mr. Stefaan Vanhooren, President Agfa Graphics,
Mr. Luc Delagaye, President Agfa Materials,
Mr. Luc Thijs, President Agfa HealthCare.

As of May 9, 2018, Mr. Kris Hoornaert will be replaced by Mr. Dirk De Man as Chief Financial Officer.

Internal control and risk management systems in relation to financial reporting

Agfa's Executive Management is responsible for the Group's internal control and risk system including those regarding financial reporting as approved by the Board of Directors. Internal control over financial reporting includes the assessment of the relevant risks, the identification and monitoring of key controls and actions taken to correct deficiencies as identified. The Audit Committee reviews the effectiveness of the internal control and risk management systems.

Control environment

Agfa's control environment comprises of central finance functions such as consolidation and reporting, tax, treasury, investor relations on the one hand and finance functions at the level of the three business groups on the other hand.

All finance functions report (in-)directly to the Chief Financial Officer. All Group entities follow uniform central accounting policies and reporting requirements which are described in Agfa's Group Consolidation Accounting Manual.

Risk management

Based on monthly review meetings with the central functions and business group management, the Executive Management has a process in place to identify, assess and follow-up on risks including those with regard to the financial reporting process on a regular basis and reports on those risks to the Audit Committee. These risks are being reviewed by the Audit Committee who might define further actions to the Executive Management.

Control activities

Each business group is responsible for the monitoring of the financial performance and forecasting and reports to the Executive Management on a monthly basis. The consolidation process, based on a more extensive reporting, is performed on a quarterly basis and reviewed by the Executive Management and the Audit Committee who might define actions to the business groups and the central functions.

Information and communication

All entities use uniform central reporting tools and report in accordance with the instructions and reporting guidelines set out by the central reporting department. Financial information (including key performance indicators) is prepared on a consistent basis for each business group and at consolidated level and reviewed by the appropriate responsible. The Executive Management reports to the Audit Committee on all key risk factors on a regular basis.

Monitoring

One of the responsibilities of the financial department is to improve the procedures used to prepare and process financial information. Regular reviews are conducted on the key control procedures in the preparation of financial information in the subsidiaries and at Group level in order to ensure proper application of instructions and guidelines with regards to financial reporting.

Internal Audit performs reviews on the monitoring of internal policies, guidelines and controls both relating to financial reporting and operational matters such as sales, production and R&D. Internal Audit reports to the Audit Committee which monitors the effectiveness.

The Company Secretary has been appointed as Compliance Officer to monitor the Directors' and other designated persons' compliance with the Group's policy with regard to inside information and market manipulation.

Risk factors description

Market, technology and competition risks

As with any company, Agfa is continually confronted with market and competition risks. Its traditional imaging business in Graphics as well as in HealthCare is faced with rapid changes in technology and has in the past been characterized by price erosion.

Agfa is also introducing many new technologies, such as industrial inkjet for Agfa Graphics and computed and direct radiography as well as information systems for Agfa HealthCare. The digital imaging and information marketplace, in which Agfa is increasingly operating, is highly competitive and subject to rapid change.

Cost of raw materials

Agfa relies on other companies to supply certain key raw materials. The most important of these are aluminum and silver. Fluctuating raw material prices and any failure to obtain the needed raw materials on a timely basis could adversely affect Agfa's business, operational result and financial status. Furthermore, Agfa may choose to hedge a portion or the totality of its raw materials exposure, as it deems appropriate.

Product liability

The activities of the Group may expose Agfa to product liability claims. Particularly with respect to its HealthCare activities, Agfa needs to comply completely with regulatory systems in many different countries. To mitigate product liability risks, Agfa has implemented a strict quality policy and control and has concluded a general insurance policy. Agfa has never suffered significant losses with respect to product liability, but there can be no assurance that this will not occur in the future.

Environmental matters

Agfa is subject to many environmental requirements in the various countries in which it operates, including air and waste water emissions, hazardous materials and spill prevention and clean up. Significant operating and capital expenditures are required to comply with applicable standards. Provision is also made for current and reasonably foreseeable compliance and remediation costs.

Intellectual property

Agfa owns, has applications pending for and is licensed under many patents relating to a variety of products as well as software. The Company relies on a combination of patent, copyright, trademark and trade secret legislation, trade secrets, confidentiality procedures, contractual provisions and license arrangements to establish and to protect its proprietary rights.

On the other hand, the Group has a policy of strictly respecting third parties intellectual property rights. Agfa is not aware that any of its products are infringing upon the intellectual property rights of others. However, there can be no assurance that third parties will not claim such infringements in the future.

Litigation

Agfa is currently not involved in any major litigation apart from those related to the AgfaPhoto insolvency and a distribution dispute with Ningbo, which are commented in detail under note 30.2 on p.168 of the financial statements.

Miscellanea

Furthermore, certain risks should be taken into account which could have a negative impact on the Company and its activities. Examples are risks concerning the continuity of production, extraordinary impairment of assets, pension obligations, changes in currency exchange rates and acquisitions.

Evaluation of the Board of Directors and its Committees

The major features of the evaluation process for the Board of Directors and its Committees include assessing how the Board of Directors and its Committees operate, checking that the important issues are suitably prepared and discussed, evaluating the actual contribution of each Director's work and their involvement in discussions and decision-making. The complete evaluation process is extensively dealt with in the chapters 3, 4 and 5 of the aforementioned Corporate Governance Charter.

The last formal evaluation occurred in 2016, in which an internal evaluation process has taken place on the initiative of the Chairman of the Board and in collaboration with the Chairman of the Nomination and Remuneration Committee, involving contacts with the members of the Board of Directors and of the Executive Management in order to evaluate the functioning of the Board and the Executive Management (on individual level as well as on a corporate body level) on the one hand and the cooperation and relation between both bodies on the other hand.

The criteria taken into consideration for the evaluation concerned the size, composition and performance of the Board of Directors and the Committees as well as the quality of the interaction between the Board of Directors and the Executive Management. The results were based on answers given to a questionnaire (containing about seventy questions divided into ten chapters) on the one hand and the feedback provided during individual interviews on the other hand.

In the years where no formal evaluation is scheduled, the Chairman of the Board will informally inquire the Members of the Board and of the Executive Management at regular intervals regarding the functioning of the various corporate bodies.

Diversity

Agfa is active in over 100 countries and has production facilities, R&D centers and sales organizations in over 40 countries. Every day, employees of 79 different nationalities, with various backgrounds, personalities and visions work closely together. Therefore, diversity is a natural given to Agfa. It enriches the organization and contributes directly to the achievements and the image of the company.

To support its vision on diversity, the Board of Directors decided during its meeting on March 3, 2003 to give absolute priority to a policy that provides equal employment opportunities to all employees and applicants. The Board also made very clear that there is no room for discrimination based on race, religion, political orientation, color, sex, age, nationality, disability, or any other classification declared to be impermissible by law.

This decision was recorded in Appendix A: Code of Conduct and Ethical Business Policy Statement, which is part of the Corporate Governance Charter. It was further commented on in Agfa-Gevaert's Diversity Charter. Both documents are available on the company's website: www.agfa.com.

With the Diversity Charter, Agfa wishes to make clear that it is highly committed to diversity. The organization wishes to show its commitment towards gender equality, as well as towards cultural, ethnic and social diversity in today's society. Agfa endorses both the ban on all kinds of discrimination and the principle of equality.

In the Diversity Charter, Agfa commits itself to the following:

1. The company will observe the non-discrimination principle in all its forms and expects its employees to do the same. The policy of the organization is aimed at offering equal employment opportunities to all employees and applicants. No-one is to be discriminated based on race, religion, political orientation, color, sex, age, nationality, disability, sexual orientation or any other classification declared to be impermissible by law. This policy goes for all stipulations, conditions and privileges related to employment, including but not limited to recruitment, hiring, placement, training, promotion, assignment, remuneration, sanctioning and termination of employment.
1. Agfa will train and sensitize management and employees to enable them to deal with the challenges related to non-discrimination and diversity. The organization will take steps, but also expects employees to be aware of and to actively apply the non-discrimination principle.
1. Agfa expects its employees to respect the rights and individualities of all individuals in order to create a work environment in which every employee is able to fully realize his/her potential. The company will create a climate of trust, tolerance and openness, and will actively address all kinds of discrimination. By doing so, it aims to warrant and stimulate a company culture that strives for maximum respect for close colleagues.
1. This charter is fully endorsed by the company's management. Together with the social partners, the management is fully committed to actively support it.

Diversity at Agfa in numbers

As of 2015, the Board of Directors of the Company complies with the legal requirements with regard to gender diversity as included in the Belgian law of July 28, 2011. For more details on the diversity aspects with regard to the members of the Board of Directors (age, sex, educational and professional background), please read the resumes of the members of the Board of Directors included in the Corporate Governance Statement.

The HR graphs on this page provide an overall view of the Agfa-Gevaert Group's recruitments in the past 5 years. The company feels that these numbers offer an objective and balanced view on how the company deals with the various aspects of diversity nowadays.

PERCENTAGE OF MALE/FEMALE WORKFORCE NEW HIRES OVER THE LAST FIVE YEARS

NEW HIRES OVER THE LAST FIVE YEARS PER AGE CATEGORY

AMONGST THE NEW HIRES WE COUNT 75 DIFFERENT NATIONALITIES THE FOLLOWING COUNTRIES ARE THE TOP 9

Policy regarding the appropriation of the result

The Board of Directors' proposals to the General Meeting of Shareholders with regard to the allocation and distribution of the result take into consideration several factors, such as the Company's financial situation, the operating results, the current and expected cash flows and the plans for expansion

Policy regarding the dealing in shares of the Company

Consistent with its principles and values, Agfa-Gevaert formulated a Code of Dealing immediately after the IPO in 1999. The Code contains rules with which Directors and members of senior management have to comply in case they wish to deal in financial instruments of the Company. The Code forbids these persons, inter alia, to deal during well-defined periods preceding the announcement of its financial results and the announcement of other price sensitive information.

Taking into account the Market Abuse Regulation, which became effective on July 3, 2016, Agfa-Gevaert has changed this Code to make it compliant with the current legal regulations. The adapted version of the Code is available on the Company's website as part of the Corporate Governance Charter.

Information related to major events subsequent to December 31, 2017 and information on circumstances that could significantly impact the development of the Group

See note 34 p. 173.

Information on the R&D activities

See chapter Innovation p. 20 through 25.

Information related to the existence of branches of the Company

Agfa-Gevaert NV has a branch office in the United Kingdom (Agfa Materials UK).

Information related to the use of derivative financial instruments

In order to minimize the risk of fluctuations in exchange rates and interest rates, the appropriate hedge contracts were implemented. These mainly include short-term transactions in foreign currencies, option contracts and interest swaps. Their implementation occurs according to uniform guidelines, is subject to internal audits, and is limited to cover for the operational activities, and related money investments and financial transactions. Further detail hereon is provided in the 'Notes to the Consolidated Financial Statements'.

Non-financial information

See section Non-financial reporting p. 14 trough 55.

Auditor

Agfa-Gevaert NV's Statutory Auditor is KPMG Bedrijfsrevisoren, represented by Mr. Harry Van Donink. The Statutory Auditor was reappointed at the General Meeting of Shareholders of May 10, 2016, for another three-year term. Hence, the mandate will expire immediately following the General Meeting of Shareholders of 2019.

More details on the fees in relation to the services provided by KPMG Bedrijfsrevisoren is to be found under note 35 on page 172.

Information with regard to important participations

According to the information available to the Company by virtue of the transparency declarations received in accordance with the relevant legal and statutory stipulations, the main shareholders on date of this Annual Report are the following:

• Classic Fund Management AG with between 3% and 5% of the outstanding stock as from January 1, 2017;
• Dimensional Fund Advisors LP with between 3% and 5% of the outstanding stock as from September 5, 2011;
• Norges Bank with between 3% and 5% of the outstanding stock as from January 2, 2018.
• Capfi Delen Asset Management nv with between 3% and 5% of the outstanding stock as from March 20, 2018.

The Company has 2.39% of its own stock as treasury stock. Hence, the free float currently amounts between 77.61% and 85.61%.

Information related to the implementation of the EU takeover directive

The Board of Directors hereby states that the Annual Report has been drafted in accordance with article 34 of the Royal Decree of November 14, 2007. In this respect the Board of Directors explains that:

A complete overview of the capital structure dated March 23, 2018, is included in the Annual Financial Report;
There are no statutory restrictions with respect to the transfer of securities of the Company or to the exercise of voting rights;
There are no special rights attached to the issued shares of the Company;
The Company has entered into certain financial agreements which would either become effective, be amended and/or terminated due to any change of control over the Company as a result of a public takeover bid;
The Company is not aware of the existence of shareholder agreements resulting in restrictions on the transfer of securities and/or on the voting rights;
The procedure for the appointment and replacement of Members of the Board and the amendment of the Articles of Association of the Company are extensively described in the Articles of association and the Corporate Governance Charter of the Company, both of which can be consulted on the Investor Relations page of the website www.agfa.com;
The powers of the Board of Directors regarding issuing and purchasing stock are extensively described in article 7 and 14 of the Articles of Association of the Company;
All important agreements entered into as from the date of the Royal Decree mentioned above, to which the Company is a party and which contain a 'change of control' clause, have been submitted for approval to the respective annual meetings;
The agreements with the members of the Executive Management no longer contain a 'change of control' clause, following which they would receive compensation if their agreement with the Company would terminate as a result of a change of the control over the Company.

General information about the Company

Agfa-Gevaert NV (Company number 0404.021.727, Register of Legal Entities Antwerp) is a public limited liability company under Belgian law who did a public call for savings, incorporated on June 10, 1964. The registered office of the Company is located at Septestraat 27, in 2640 Mortsel, Belgium.

The full and annotated financial data and statements are available via the website of the Company, www.agfa.com, or at the registered office of the Company itself. Information with respect to environmental matters can be found in the Sustainability Report of the Company which is integrated in this Annual Report.

Availability of information

The Company's Articles of Association are available at the clerk's office of the commercial court of Antwerp (Belgium) and at the registered office of the Company. They can also be found on the website of the Company, www.agfa.com.

The Corporate Governance Charter and the Code of Dealing can be found on the Investor Relations page of the website, www.agfa.com.

The annual accounts are filed with the National Bank of Belgium.

The annual accounts, together with the related reports, are communicated every year to the holders of registered shares and upon request to any interested party.

The Annual Report, containing the statutory and consolidated annual accounts, and including the report of the auditor, can be found on the website www.agfa.com and at the registered office.

The convocation to the General Meeting of Shareholders is published in the financial press and can also be found on the website. As regards financial information, the financial results and the other required information are published on the website of the Company, in compliance with the guidelines of the Financial Services and Markets Authority (FSMA).

The decisions with respect to the nomination and dismissal of members of the Board of Directors are published in the Annexes to the Belgian State Gazette.

Any interested party can register free of charge on www.agfa.com to receive the press releases and required financial information by e-mail.

The Annual Report is available on the website www.agfa.com, in Dutch and English.

The Nomination and Remuneration Committee (NRC) meets at least three times a year to, among others, draw up proposals for the Board of Directors regarding the remuneration policy and remuneration levels for the Directors and the members of the Executive Management.

Agfa Gevaert - Annual Report 2017

Remuneration Report

The remuneration criteria aim to recruit, retain and motivate Directors and Executive Management members complying with the profile determined by the Board of Directors. The remuneration of the non-executive directors takes into account their general role as Board Member and their specific roles as Chairman of the Board, Chairman or Member of a Committee, as well as their responsibilities and time needs resulting from these functions.

The NRC determines the level and structure of the remuneration of the Executive Management members in function of the recruitment, retaining and motivation of qualified and competent professionals, taking into account the nature and extension of their individual responsibilities.

Remuneration Policy

As a global positioning for its remuneration policy for management employees, Agfa uses a 'market rate' which is based on a comparison of the yearly 'Total Target Cash' salary with the '67th percentile of the General Market'.

'Total Target Cash' is the sum of the yearly base salary, other fixed arrangements, the 'Global Bonus Plan', sales commissions and other variable arrangements.

To measure the individual positioning against the General Market, Agfa uses the CompaRatio, being the percentage of the current salary package divided by the market rate.

This positioning allows Agfa to:

apply a consistent approach across different geographies;
compare roles within Agfa (regional or functional);
attract and retain talent by differentiating our positioning versus the midpoint of the market;
contain the cost and
benefit from a global view of the market, not limited to a few companies.

In order to have clear information about the market, Agfa uses both the job evaluation method and the global salary surveys provided by Hay (Korn Ferry Group).

The global budget allowed for Merit Increases is established annually and is based on different elements:

the Company's global and local financial situation (cost containment);
the average positioning of Agfa's population vs. the local market. To measure the individual positioning against the market, Agfa applies the CompaRatio's;
the market trends in each country (and in certain cases even sub-country);
the legal constraints;
the respect of the merit budget allowed the year(s) before.

Agfa is committed to 'Pay for Performance'. As such, the compensation evolution should be based on the following five parameters:

criticality of position and scarcity of skills on the market to the organization;
performance and expertise in role;
future potential of the employee;
external (market) benchmark: CompaRatio;
internal benchmark, salaries of peers.

Variabilization. 'Total Target Cash' needs to be in line with Agfa's global policy, internal and external equity in a long term vision. 'Variable' compensation reflects the collective and individual performance:

collective: through the financial results of the Agfa-Gevaert Group, Business Group or Unit in comparison with the objectives;
individual: through the performance appraisal.

The members of the Executive Management are eligible for the 'Executive Management Global Bonus Plan'. This plan is based on three steps:

on target variable;
global budget definition (funding ratio);
allocation between Group and Individual Performance.

On target variable: the 'on target variable' is established in the individual contracts of the members of the Executive Management, and it is the policy of the Company that, upon hiring, this typically is minimum 40% of their yearly base salary.

Global budget definition: an overall bonus envelop (or funding ratio) is determined at the level of the Agfa-Gevaert Group. The bonus funding ratio determines the portion of the total-on-target-bonus that will be paid out. The bonus envelop is distributed to the Business Groups based on a weighted multiplier.

The bonus envelop is a closed envelope, meaning that pay-out can never exceed the 200% that will be paid out when EBITDA results attain at least 150% of the EBITDA budgeted for.

Upon recommendation of the Nomination & Remuneration Committee, the Board has decided in 2015 to review the Global Bonus Plan of the Executive Management, with the objective to also integrate a medium to long term component in such plan. From the year 2017, the gradual transition to the new plan was fully realized. As a consequence, the new Global Bonus Plan for EMM consists now out of four elements:

a 3-year target that will be applied for 25% of the on-target bonus. The 3-year parameter for 2020 is a combination of top line result and EBITDA/Sales%. Both elements will be equally weighed, so both applied for 12.5% of the on target bonus. For both elements, a bottom threshold (below which pay-out will be 0) and a top threshold (as of which maximum pay-out of 200% will be reached) is set. A linear approach will be used between the bottom and top threshold.
a 2-year target that also will be applied for 25% of the on-target bonus. The 2-year parameter for 2019 is EBITDA/ Sales%. A bottom threshold (below which pay-out will be 0) and a top threshold (as of which maximum pay-out of 200% will be reached) is set. A linear approach will be used between the bottom and top threshold.
a 1-year collective performance target that will be applied for 40% of the on-target bonus. The 1-year parameter is EBITDA. A bottom threshold (below which pay-out will be 0) and a top threshold (as of which maximum pay-out of 200% will be reached) is set. Pay-out is linear between the bottom threshold and 130% of the target. As from 131% of the target, pay-out is accelerated.
1-year individual performance targets that will be applied for 10% of the on-target bonus. The individual performance targets can be achieved up to a maximum of 100%.

On August 23, 2017, the Board announced that it had asked the Executive Management to study how to organize the HealthCare IT activities into a stand-alone legal entity structure and organization within the Agfa-Gevaert Group. The implementation of this project has begun since the last quarter of 2017. Given the exceptional character and nature of this project and given its importance for the Agfa-Gevaert Group and its stakeholders, the Board of Directors, upon recommendation of the Nomination & Remuneration Committee, has decided to hold out the prospect of an exceptional bonus to the Executive Management in case this project is duly implemented within agreed timelines. This bonus will come in addition to the Global Bonus Plan for EMM, but has been constructed in such a manner that the sum of this exceptional bonus and the bonus that members of the Executive Management will be entitled to on the basis of the Global Bonus Plan for the EMM, can never exceed that maximum pay-out foreseen under the Global Bonus Plan for the EMM.

Remunerations

Board of Directors

There is no automatic adjustment of the remuneration levels, but they are being reviewed on a regular basis in order to verify whether they are still in line with the policy. The latest adjustment for the members of the Board of Directors was done on the occasion of the Annual Meeting of 2006. The remuneration of the Chairman was defined at the time of his appointment in 2008.

A fix, annual standard remuneration is foreseen, which is different for the Board meetings on the one hand and the Committee meetings on the other hand. There is also a distinction between the remuneration of the Chairman and that of the members. The remuneration covers a predetermined number of meetings. When this number is exceeded on an individual basis, an additional fee per additional meeting is foreseen.

The following standard remunerations are provided:

Board of Directors (for a maximum of seven meetings per calendar year)
Chairman (1)	180,000 Euro
Members	50,000 Euro
AC (for a maximum of five meetings per calendar year)
Chairman	25,000 Euro
Members	12,500 Euro
NRC (for a maximum of three meetings per calendar year)
Chairman	15,000 Euro
Members	7,500 Euro

(1) This remuneration is comprehensive, meaning that it includes the remuneration related to the mandate in the AC as well as the possible variable remunerations provided for the number of meetings exceeding the set maximum.

Additional fix remuneration

of 2,500 Euro for every meeting exceeding the set maximum of seven, five or three meetings per calendar year, for respectively the fixed remuneration for the Board, AC or NRC.

Performance related remuneration

Non-executive directors do not receive any performance related remuneration.

The annual individual remuneration for the members (executives as well as non-executives) of the Board of Directors for the exercise of their mandate for 2017 is as follows:

EURO	Board of Directors	Committees	TOTAL
Mr. Michel Akkermans (1)	50,000.00	7,500.00	57,500.00
Mr. Jo Cornu (2)	52,500.00	15,000.00	67,500.00
Mr. Julien De Wilde	180,000.00	-	180,000.00
Mr. Willy Duron	52,500.00	25,000.00	77,500.00
Mrs. Hilde Laga	50,000.00	12,500.00	62,500.00
Mrs. Viviane Reding	50,000.00	7,500.00	57,500.00
Mr. Christian Reinaudo (3)	52,500.00	-	52,500.00
TOTAL	487,500.00	67,500.00	555,000.00

(1) Permanent representative of PAMICA NV.

(2) Permanent representative of MERCODI BVBA.

(3) Executive director and permanent representative of CRBA Management BVBA.

CEO

After the Annual General Meeting of April 27, 2010, the Board of Directors appointed CRBA Management BVBA, represented by Mr. Christian Reinaudo, as Managing Director/CEO. The agreement with CRBA Management BVBA does not provide for an automatic adjustment. The remuneration is reviewed on a regular basis in order to verify whether it is still in line with the policy. The fix annual remuneration of the CEO, CRBA Management BVBA, represented by Mr. Christian Reinaudo, was set at 1,136,800 Euro. This remuneration also comprises the remunerations of Mr. Reinaudo as a Director in certain Agfa subsidiaries. A variable remuneration 'on target' of 435,500 Euro has also been provided for.

For 2017, the remuneration for the CEO was:

fix remuneration: 1,136,800.00 Euro (1);
variable remuneration: 245,622.00 Euro;
compensation for transport, rent and various insurances: 66,731.76 Euro.

(1) Incl. the remunerations of Mr. Reinaudo as a director in certain Agfa subsidiaries.

No pension or group insurance contributions were paid for the CEO.

The cash component of the variable remuneration was earned for 50% in the short term (max. one year) and for 50% based on multi-year targets.

ExCo

There is no automatic adjustment of the remuneration levels, but they are being reviewed on a regular basis in order to verify whether they are still in line with the policy.

The overall gross fix remuneration for the ExCo in 2017 amounts to 1,649,868.60 Euro (excluding employers' social contributions). The total annual 'on target' variable remuneration amounts to 824,922.00 Euro.

For 2017, the global variable compensation amounts to 491,141.00 Euro (excluding employers' social security contributions). For the members of the ExCo, depending on their personal situation, part of this compensation is converted into a pension allowance.

The pension contributions paid for these members amounted to 293,476.00 Euro and 64,126.10 Euro as benefits in kind.

The cash component of the variable remuneration was earned for 50% in the short term (max. one year) and for 50% based on multi-year targets. The benefits in kind, which may vary from member to member, include a company car, a representation allowance and various insurances (directors' liability, travel and medical insurance, private accidents). In 2017, no severance payments were made to the Executive Management. In the agreements with the Executive Management members, there is no contractual recovery right for a variable remuneration granted based on incorrect financial data.

Shares and options

Nor the CEO, nor the members of the ExCo were granted shares as part of their remuneration. As in previous years, the Board of Directors decided not to grant options to the Executive Management for 2017. There are no longer share options or other rights to acquire shares that have been granted to the members of the Executive Management.

During the 2014 Annual General Shareholders' meeting, the Shareholders decided to approve the proposal of the Board of Directors to activate under certain conditions tranche no. IX of the Long Term Incentive Plan. The key parameters of this tranche are that it is a Long Term Incentive Plan for eligible persons among the members of the Executive Management, executives at Level I and II and certain other employees, where an estimated number of 4,060,000 options can be granted as from the moment that the closing stock price of the shares on Euronext Brussels exceed 3.45 Euro/share during the last 30 calendar days preceding the offering date. After reflection within the NRC on the question whether a share option plan is still the best form of a Long Term Incentive Plan for the Agfa-Gevaert Group, the Board of Directors has decided to launch a 'Stock Appreciation Rights Bonus'-plan, in the course of 2016. Consequently, no share options have been granted under tranche no. IX of the Long Term Incentive Plan. The CEO and the ExCo members were no beneficiaries of the tranche no. I, the only tranche for the time being of the "Stock Appreciation Rights Bonus"-plan.

Severance

The stipulations with regards to severance in the contracts with the different members of the Executive Management can be summarized as follows:

The Board of Directors can withdraw the appointment of CRBA Management BVBA, represented by Mr. C. Reinaudo, with immediate effect. In such case, CRBA Management BVBA will be entitled to an indemnity equal to nine months of remuneration.

The amount is to be calculated on the fixed income that CRBA Management BVBA and Mr. Christian Reinaudo earn yearly from the Agfa-Gevaert Group worldwide, with the exception of any director's fee paid by Agfa-Gevaert NV to CRBA Management BVBA or to Mr. Reinaudo. In case of withdrawal of the appointment for an Event of Serious Fault (being established and confirmed after compliance with a certain internal Board procedure), no indemnity will be due.

In case of termination by the Company (and except for an Event of Serious Fault), Messrs. Hoornaert and Thijs will be entitled to a notice period calculated in conformity with the minimum of art. 82§5 of the Law of July 3, 1978 (three months per five years of seniority, with a minimum of 12 months for Mr. Hoornaert) corrected, as appropriate, in conformity with the provisions of the Law of December 26, 2013. Mr. Vanhooren has no explicit contractual severance clause and falls under the application of general Belgian law. In case of termination by the Company (and except for an Event of Serious Fault), Mr. Delagaye will be entitled to a notice period calculated in conformity with a certain schedule corrected, as appropriate, in conformity with the provisions of the Law of December 26, 2013. This schedule foresees a minimum notice period of six months and a maximum of 15 months upon retirement.

Furthermore, in those cases where they are to comply with the contractual non-compete arrangement, Messrs. Hoornaert, Vanhooren, Delagaye and Thijs will be entitled to an additional indemnity equal to 75% of their gross remuneration for the 12 months of the non-compete.

During its meeting of January 23, 2018, the Board of Directors decided, upon recommendation of the Nomination and Remuneration Committee, to entitle Kris Hoornaert to a severance payment calculated in conformity with the provisions stipulated in his employment contract. The Board of Directors motivated its decision by referring to the impact the execution of the transformation project will have on the function of CFO within the Agfa-Gevaert Group.

Glossary

AOX

Sum of organic halogen compounds in water that can be adsorbed by activated carbon under standardized conditions.

Augmented Intelligence

Technology designed to complement human intelligence. For instance, AI-technology can be used to analyze huge data streams with the aim to find patterns and correlations quickly and effectively.

backsheet

A photovoltaic backsheet is designed to protect the internal components of a solar panel – especially the solar cells and the electrical components – from external influences. At the same time, the backsheet acts as an electrical insulator. These two functions are vital. Solar panels work with high voltages and silicone solar cells and compounds are very sensitive

to degradation. A good backsheet has a major influence on the performance and lifespan of a solar panel.

capacitive sensor

A capacitive sensor detects anything that is conductive or has a dielectric different from that of air. Capacitive sensors replace mechanical buttons.

chemistry-free (printing plate)

A printing plate that does not require chemical processing after imaging.

Clinical Information System (CIS)

These comprehensive, integrated IT solutions are designed for collecting, storing, manipulating and making available clinical information important to the healthcare delivery process. Clinical Information Systems may be limited in extent to a single area (e.g. laboratory systems, ECG management systems) or they may be more widespread and include virtually all aspects of clinical information (e.g. electronic patient records).

CO2

Carbon dioxide, generated by combustion of fuel.

COD

Chemical oxygen demand, the amount of oxygen needed for chemical oxidation of constituents of water.

computed radiography (CR)

The technology of making X-ray images with conventional X-ray equipment but whereby the images are captured on reusable image plates, instead of X-ray film. The information on the plates is read by a digitizer and provides a digital image. Dedicated image processing software (such as Agfa HealthCare's MUSICA) can be used to automatically maximize the quality of the images for diagnostic purposes. The digital images can also be completed with manual inputs (annotations, measurements, etc.) and are ready for archiving on a Picture Archiving and Communication System. see also direct radiography

computer-to-film (CtF)

A process whereby the pages or artwork of printed matter – e.g. the pages of newspapers or magazines – are digitally imaged onto (transparent) film directly from computer files. The films are then chemically processed and used to produce printing plates. see also computer-to-plate

computer-to-plate (CtP)

A process whereby the pages or artwork of printed matter – e.g. the pages of newspapers or magazines – are digitally imaged onto printing plates directly from computer files without the intermediate step of film. see also computer-to-film

contrast media Can be administered to the patient before a medical imaging examination with X-ray, CT and MRI, to highlight specific anatomical structures (mostly vessels).

CT (computed tomography)

A CT scanner uses a series of X-rays to create image 'slices' of the body. Agfa's product portfolio does not include CT scanners, but its Picture Archiving and Communication Systems (PACS) are used for the management and the (3D) visualization of the digital images. Agfa's hardcopy printers are used to produce high quality prints of the images.

CtF

see computer-to-film

CtP

see computer-to-plate

digital radiography

A form of X-ray imaging, where digital technology is used instead of traditional photographic X-ray film. The most commonly used digital radiography technologies are computed radiography and direct radiography.

direct radiography (DR)

Radiographic technology that converts X-ray energy into digital data without the use of intermediate image capturing plates or films. These digital data generate a diagnostic image on a PC. As the data are digital, a wide range of possibilities is available for image optimization or completion as well as for archiving the images on Picture Archiving and Communication Systems.

DR systems are mostly used in centralized radiology environments. see also computed radiography

e-health

Term used to describe the application of information and communication technologies in the health sector.

Electronic Health Record (EHR)

An EHR is created when a person's Electronic Patient Record is linked to his/her non-medical electronic files from organizations such as governments and insurance companies.

Electronic Patient Record (EPR)

The electronic alternative to a patient's paper file. The EPR contains all patient data, such as demographics, examination orders & results, laboratory reports, radiological images and reports, treatment plans, catering needs etc., and can be easily accessed throughout the hospital and, if required, from other sources.

Enterprise Imaging

Agfa HealthCare's Enterprise Imaging platform unites departmental PACS, RIS, advanced 3D functionalities, voice recognition, vendor-neutral archiving, viewer and mobile functionalities. The solution enhances and speeds up image acquisition and retrieval, optimizes system efficiency and performance, enhances patient care, and allows true collaboration across departments, hospitals or regions.

flexo(graphic) printing

Method of printing using flexible, rubber or synthetic printing plates attached to rollers. The inked image is transferred from the plate directly to the paper, or other substrate.

hardcopy

A hardcopy is the printed version of a digital image. Agfa HealthCare's hardcopy printers are used for printing medical images from various sources: CT scans, MRI scans, computed radiography (CR), direct radiography (DR) etc. Agfa produces both the so-called 'wet' and 'dry' printers. Wet laser technology implies the use of aqueous chemical solutions to develop the image. The environmentally friendly dry technology prints the image directly from the computer onto a special film by thermal effect.

Hospital Information System (HIS)

These comprehensive, integrated IT solutions manage the medical, administrative, financial and legal aspects of a healthcare organization.

image processing software

These software applications analyze medical digital images and automatically apply image enhancement techniques to better visualize all details. They improve the workflow in the radiography department and allow the radiologist to work faster and more accurately. Agfa HealthCare's MUSICA software is generally accepted as a standard in the market.

inkjet (system)

Any printer that transfers extremely small droplets of ink onto paper to create an image, from small models for office use over medium models – e.g. for poster printing – to larger equipment for industrial applications.

integrated care solutions

These solutions integrate all healthcare providers, social care organizations, patients, and other stakeholders of whole regions and countries in a virtual network. They collect and analyze data from all stakeholders in order to predict and prevent possible healthcare-related complications, including over and under capacity in hospitals and medical errors. They can play a major role in the management of chronic diseases and they can make it possible to detect developing health issues in a population in an early stage.

membrane

Thin, flexible layer or material designed to separate components of a solution.

membrane switch

A membrane switch is an electrical switch for turning a circuit on and off. Membrane switches are user-equipment interface utilities which can be as simple as a tactile switch for controlling lightning, or as complex as membrane keyboards and switch panels for computers.

modalities

In this report this term is used for the various imaging systems, including radiography equipment, MRI scanners and CT scanners. These systems can all be connected to an Agfa HealthCare Picture Archiving and Communication System (PACS).

MRI (Magnetic Resonance Imaging)

The MRI scanner uses very strong magnetic fields and creates images by pulsing radio waves that are directed at the parts of the body to be examined. Agfa's product portfolio does not include MRI scanners but its Picture Archiving and Communication Systems (PACS) are used for the management and visualization of the digital images. Agfa's hardcopy printers are used to produce high quality prints of the images.

N

Nitrogen.

non-destructive testing

To check the structure and tolerance of materials without damaging or deforming them.

NOX

Nitrogen oxide, generated for example as a result of combustion with air.

offset printing

Printing technique where thin aluminum printing plates are wrapped and fixed round a cylinder on a (litho) printing press. While rotating, the printing plates obtain ink and water. The ink adheres to the image whilst the water prevents ink adhering to the non-printing areas.

The inked image is transferred onto a rubber blanket attached to a second cylinder and then transferred from the blanket to the paper or another medium.

OHSAS 18001

International standard for health and safety management systems (OHSAS stands for Occupational Health and Safety Assessment System).

P

Phosphor.

PACS

see Picture Archiving and Communication System

PET (polyethylene terephthalate or polyester)

Polyethylene terephthalate or polyester is a chemical prepared with a base of ethylene glycol and terephtalic acid. It is the basic raw material for the substrate of photographic film; it is coated with different types of purpose specific chemical layers, such as for medical and graphic purposes.

Picture Archiving and Communication System (PACS)

PACS was originally developed to efficiently manage the distribution and archiving of diagnostic images produced by radiology departments. Due to specific software developments, Agfa HealthCare's systems are also suitable for use by other departments in the hospital, such as cardiology, orthopedics and women's care. Extensive PACS systems are also used to connect all hospital departments that intensively use clinical images on one network. Agfa's MUSICA software is used to process and optimize the images on the PACS system.

platesetter

A platesetter digitally images the pages or artwork of printed matter from the computer onto printing plates, which are then processed and mounted on a printing press.

polymer

A polymer is a large molecule composed of many smaller units (monomers) joined together. Polymers can be natural (e.g. proteins and rubber) or manmade (e.g. plastics and nylon). Conductive polymers conduct electricity. Orgacon™ is the trade name for Agfa Specialty Products' conductive polymer product line.

prepress

The preparation and processing of content and document files for final output to printing plates, including high-resolution scanning of images, color separation, different types of proofs, etc.

printed circuit board (PCB)

A thin plate on which chips and other electronic components are placed. Computers consist, principally, of one or more boards.

printing plate

- for computer-to-film technology

Printing plates consist of a high-quality aluminum substrate with a coating designed to respond to relatively high levels of ultraviolet (UV) light energy. An exposed film is vacuum contacted with a plate. The UV light source copies the artwork from the film onto the plate, whereby the art or page elements are opaque parts of the film and the rest is transparent.

The UV light hits the plate only where the film is transparent. A chemical developing process etches the exposed elements, and leaves the non-exposed parts unchanged. The ink adheres to the exposed – or chemically treated – parts during the printing process.

- for computer-to-plate technology

Printing plate consisting of a high-quality grained and anodized aluminum substrate and a (silver or photopolymer) coating several thousand times more sensitive than that of CtF plates. The lasers used to expose these plates typically operate on thermal energy or visible light. The coatings respond to the laser energy creating chemical/physical changes to the plate surface.

Just as with CtF plates, the CtP plates are chemically processed to create a press-ready plate, though some CtP plate technologies are effectively process-free.

proof (proofing)

Based on the proof – which represents the way the colors will be reproduced on press – the customer (print buyer) decides whether the job is ready to go to the printing press. This 'representation' of the final result is made possible by Agfa's high-tech color management software systems.

Radiology Information System (RIS)

Agfa's RIS solutions are marketed under the name IMPAX.

A RIS is a computer-based solution for the planning, follow-up and communication of all data relating to patients and their examinations in the radiology department, i.e. starting from the moment that an examination is requested up to the radiologist's report. The RIS is strongly linked with the Picture Archiving and Communication System (PACS) (for the images contained in the examinations).

reactive monomers

Molecules of low molecular weight capable of reacting with identical or different molecules of low molecular weight to form polymers.

Regenerative Thermal Oxidation (RTO)

Treatment method for removing volatile organic compounds (VOCs) from industrial emissions.

RFID antenna

RFID stands for radio-frequency identification. It is the use of radio signals to transfer data from a tag attached to an object or embedded in an ID card, for the purposes of automatic identification. The system does not require physical contact between the tag and the identification device as the data are transmitted via an antenna, which is also embedded in e.g. the ID card.

screening

The creation of a pattern of dots of different sizes used to reproduce color or greyscale continuous-tone images. There are various types of screening.

screen printing

The printing procedure, during which a viscous ink is applied through a metal or nylon gauze onto the paper. The gauze is made impermeable – by use of stencils – in the non-printing parts.

UV LED curable ink

UV LED curable inks consist mainly of acrylic monomers. After printing, the ink is transformed into a hard polymerized film by a high dose of UV LED light. UV LED stands for ultraviolet light emitting diode. The advantage of UV LED curable inks is that they dry instantly, can print on a wide range of uncoated substrates and make a very robust image. The ink does not contain hazardous components such as Volatile Organic Compounds (VOC) or solvents and does not evaporate.

VIC

Volatile inorganic compounds.

VNAs

Vendor neutral archives.

VOC

Volatile organic compounds.

wide-format (printer)

A wide-format printer – sometimes also referred to as a large format printer – is a digital printer that prints on sheets or rolls 24-inches/60 cm wide or more.

workflow management software

Software that allows operators to control the prepress process with a software interface. It also streamlines the flow of work by automating individual steps in the process – thus saving time and reducing costs.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION 2013-2017

MILLION EURO	Dec. 31, 2013
ASSETS
Non-current assets	1,066
Intangible assets	618
Property, plant and equipment	242
Investments	11
Deferred tax assets	195
Current assets	1,502
Inventories	542
Trade receivables	585
Current tax assets	95
Other receivables and other assets	126
Deferred charges	25
Derivative financial instruments	3
Cash and cash equivalents	126
TOTAL ASSETS	2,568
EQUITY AND LIABILITIES
Equity	368
Equity attributable to owners of the Company	325
Share capital	187
Share premium	210
Retained earnings	664
Other reserves	(91)
Translation reserve	(28)
Post-employment benefits: remeasurements of the net defined benefit liability	(617)
Non-controlling interests	43
Non-current liabilities	1,397
Liabilities for post-employment and long-term termination benefit plans	1,002
Other employee benefits	11
Loans and borrowings	319
Provisions	11
Deferred income	1
Deferred tax liabilities	53
Current liabilities	803
Loans and borrowings	24
Provisions	160
Trade payables	239
Deferred revenue and advance payments	121
Current tax liabilities	54
Other payables	95
Employee benefits	97
Deferred income	3
Derivative financial instruments	10
TOTAL EQUITY AND LIABILITIES	2,568

CONSOLIDATED STATEMENT OF FINANCIAL POSITION 2013-2017

MILLION EURO	Dec. 31, 2014	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2017
ASSETS
Non-current assets	1,039	1,064	1,066	985
Intangible assets and goodwill	615	622	621	589
Property, plant and equipment	234	214	198	190
Investments in associates	1	1	6	5
Other financial assets	16	16	10	11
Trade receivables	-	6	12	14
Receivables under finance lease	-	49	57	55
Other assets	-	4	13	6
Deferred tax assets	173	152	149	115
Current assets	1,509	1,338	1,286	1,248
Inventories	512	512	483	487
Trade receivables	538	509	493	503
Current income tax assets	62	64	64	63
Other tax receivables	45	26	25	23
Receivables under finance lease	-	33	30	30
Other receivables	103	24	13	14
Other assets	51	40	45	44
Derivative financial instruments	2	2	4	16
Cash and cash equivalents	196	123	129	68
Non-current assets held for sale	-	5	-	-
TOTAL ASSETS	2,548	2,402	2,352	2,233
EQUITY AND LIABILITIES
Equity	146	268	252	307
Equity attributable to owners of the Company	93	228	215	275
Share capital	187	187	187	187
Share premium	210	210	210	210

Retained earnings	709	771	841	878
Other reserves	(92)	(92)	(79)	(69)
Translation reserve	(16)	(7)	32	(8)
Post-employment benefits: remeasurements of the net defined benefit liability	(905)	(841)	(976)	(923)
Non-controlling interests	53	40	37	32
Non-current liabilities	1,443	1,363	1,382	1,241
Liabilities for post-employment and long-term termination benefit plans	1,267	1,185	1,264	1,149
Other employee benefits	12	9	13	13
Loans and borrowings	125	137	74	47
Provisions	14	6	4	5
Trade payables	-	4	6	4
Deferred income	2	1	2	2
Deferred tax liabilities	23	21	19	21
Current liabilities	959	771	718	685
Loans and borrowings	197	44	37	39
Provisions	87	81	74	66
Trade payables	230	202	219	220
Deferred revenue and advance payments	125	141	141	128
Current income tax liabilities	61	60	56	53
Other tax liabilities	63	45	37	34
Other payables	49	46	11	12
Employee benefits	129	130	132	128
Other liabilities	4	5	3	3
Derivative financial instruments	14	17	8	2
TOTAL EQUITY AND LIABILITIES	2,548	2,402	2,352	2,233

During 2016, the Group has consistently applied its accounting policies used in previous years, except for the presentation of trade receivables, trade payables, receivables under finance lease and other assets. As of December 31, 2016 the Group classifies these balances as non-current assets/liabilities to the extent they are due to be settled more than twelve months after the reporting period. Comparative information for the year 2015 has been restated. Furthermore the Group has changed the accounting treatment of defined contribution plans with return guaranteed by law. As a result, the net liability for post-employment benefits at December 31, 2016 has increased by four million euro, impacting other comprehensive income for the same amount. More information is provided in the notes to the Consolidated Financial Statements.

CONSOLIDATED STATEMENT OF PROFIT OR LOSS 2013-2017

MILLION EUR0	2013	2014	2015	2016	2017
Revenue	2,865	2,620	2,646	2,537	2,443
Cost of sales	(2,031)	(1,813)	(1,804)	(1,680)	(1,629)
Gross profit	834	807	842	857	814
Selling expenses	(361)	(336)	(352)	(344)	(336)
Research and development expenses	(146)	(146)	(144)	(141)	(144)
Administrative expenses	(177)	(172)	(170)	(167)	(169)
Other operating income	163	90	110	98	71
Other operating expenses	(150)	(107)	(125)	(137)	(98)
Results from operating activities	163	136	161	166	138
Interest income (expense) - net	(17)	(15)	(11)	(8)	(7)
Other finance income (expense) - net	(54)	(44)	(63)	(43)	(32)
Net finance costs	(71)	(59)	(74)	(51)	(39)
Share of result of equity accounted investees - net of income tax	-	-	-	-	(1)
Profit (loss) before income taxes	92	77	87	115	98
Income tax expense	(43)	(18)	(16)	(35)	(53)
Profit (loss) for the year	49	59	71	80	45
Profit (loss) attributable to:
Owners of the Company	41	50	62	70	37
Non-controlling interests	8	9	9	10	8
Earnings per share
Basic earnings per share (Euro)	0.25	0.30	0.37	0.42	0.22
Diluted earnings per share (Euro)	0.25	0.30	0.37	0.42	0.22

CONSOLIDATED STATEMENT OF CASH FLOWS 2013-2017

MILLION EURO	2013	2014	2015	2016	2017
Profit (loss) for the period	49	59	71	80	45
Adjustments for:
- Depreciation, amortization and impairment losses	86	69	61	72	56
- Changes in fair value of derivative financial instruments	(1)	-	(2)	2	(2)
- Granted subventions	(10)	(9)	(9)	(8)	(9)
- (Gains) losses on sale of non-currrent assets	(1)	(1)	(4)	(12)	1
- Net finance costs	71	59	74	51	39
- Share of result of equity accounted investees - net of income tax	-	-	-	-	1
- Income tax expense	43	18	16	35	53
	237	195	207	220	184
Changes in:
- Inventories	73	46	5	34	(26)
- Trade receivables including cash inflows from securitization	26	64	31	25	(38)
- Trade payables	(36)	(5)	(27)	(18)	7
- Deferred revenue and advance payments	(11)	(3)	9	(5)	(5)
- Other working capital	1	(15)	10	(22)	5
- Non-current provisions and (post-) employee benefits	(158)	(89)	(85)	(70)	(58)
- Current provisions	(10)	(18)	(7)	(2)	(8)
Cash generated from operating activities	122	175	143	162	61
Income taxes paid	(15)	(24)	6	(20)	(22)
Net cash from (used in) operating activities	107	151	149	142	39
Interest received	2	2	2	1	1
Proceeds from sale of intangible assets	2	4	2	2	2
Proceeds from sale of property, plant and equipment	4	4	7	6	4
Proceeds from assets held for sale	-	-	-	14	-
Acquisition of intangible assets	(2)	(1)	(2)	(4)	(3)
Acquisition of property, plant and equipment	(38)	(36)	(35)	(40)	(43)
Changes in lease portfolio	11	6	(5)	(6)	-
Acquisition of subsidiary, net of cash acquired	-	-	(7)	0	(2)
Change in other investing activities	-	(6)	4	(3)	1
Net cash from (used in) investing activities	(21)	(27)	(34)	(30)	(40)
Interest paid	(19)	(17)	(18)	(9)	(9)
Dividends paid to non-controlling interests	-	(5)	(25)	(12)	(10)
Capital increase	-	-	-	-	-
Loans and borrowings	(70)	(22)	(137)	(72)	(23)
Other financial flows	11	(11)	(7)	(15)	(13)
Net cash from (used in) financing activities	(78)	(55)	(187)	(108)	(55)
Net increase (decrease) in cash and cash equivalent	8	69	(72)	4	(56)
Cash and cash equivalents at January 1	125	125	194	122	127
Effect of exchange rate fluctuations	(8)	-	-	1	(3)
Cash and cash equivalents at December 31	125	194	122	127	68

Listing	BRUSSELS STOCK EXCHANGE
Reuters Ticker	AGFAt.BR
Bloomberg Ticker	AGFB: BB/AGE GR
Datastream	B:AGF

SHARE INFORMATION
First day of listing	June 1, 1999
Number of shares outstanding on December 31, 2017	167,751,190
Market capitalization on December 31, 2017	652 million Euro

Shareholder structure (March 23, 2018)

• Classic Fund Management AG with between 3% and 5% of the outstanding stock as from January 1, 2017;
• Dimensional Fund Advisors LP with between 3% and 5% of the outstanding stock as from September 5, 2011;
• Norges Bank with between 3% and 5% of the outstanding stock as from January 2, 2018.
• Capfi Delen Asset Management nv with between 3% and 5% of the outstanding stock as from March 20, 2018.

The Company has 2.39% of its own stock as treasury stock. Hence, the free float currently amounts between 77.61% and 85.61%.

EURO	2013	2014	2015	2016	2017
Earnings per share	0.25	0.30	0.37	0.42	0.22
Net operating cash flow per share	0.64	0.90	0.89	0.85	0.23
Gross dividend	-	-	-	-	-
Year end price	1.76	2.09	5.24	3.673	3.887
Year's high	1.76	2.78	5.40	5.117	4.934
Year's low	1.28	1.73	1.994	2.609	3.601
Average volume of shares traded/day	279,601	260,663	389,059	438,204	269,123
Weighted average number of ordinary shares	167,751,190	167,751,190	167,751,190	167,751,190	167,751,190

Shareholder queries

Investor Relations Department Septestraat 27, B-2640 Mortsel, Belgium

Phone +32-(0)3-444 7124 Fax +32-(0)3-444 4485 [email protected] www.agfa.com/investorrelations

FINANCIAL CALENDAR 2018

Annual General Meeting	May 8, 2018
First quarter 2018 results	May 8, 2018
Second quarter 2018 results	August 22, 2018
Third quarter 2018 results	November 7, 2018

Published by Agfa-Gevaert NV Corporate Communication Septestraat 27, B-2640 Mortsel, Belgium

T +32 3 444 71 24

www.agfa.com

Agfa, the Agfa Rhombus and other mentioned Agfa products and services are trademarks of the Agfa Group. They may be registered in certain jurisdictions in the name of Agfa-Gevaert NV, Belgium, or one of its affiliates. All other trademarks, product names and company names or logos cited herein, are the property of their respective owners.

Layout Mathildestudios, Grembergen (Belgium)

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Agfa-Gevaert NV

3906_10-k_2018-04-06_8776498a-f8a1-42c0-b185-81ade8fbe2e2.pdf

AGFA-GEVAERT ANNUAL REPORT 2017

06. Working@Agfa

FINANCIAL REPORTING

Dear shareholder,

Agfa Graphics

Agfa HealthCare

Agfa Specialty Products

Company profile

Global production and sales network

Agfa Graphics

Agfa HealthCare

Agfa Specialty Products

Agfa, all over the world

AGFA'S MAJOR MANUFACTURING AND R&D CENTERS

Highlights 2017

JANUARY

FEBRUARY

APRIL

APRIL

APRIL

MAY

MAY

MAY

JUNE

AUGUST

SEPTEMBER

NOVEMBER

NOVEMBER

DECEMBER

Annual Report of the Board of Directors to the Shareholders of Agfa-Gevaert NV

Growth

We Embody Print

Info printing: offset will remain the dominant technology for years to come

Sign & Display and Industrial printing: inkjet technology is gaining market share

Agfa Graphics' strategy: Innovation, Growth, Cost Efficiency

Innovation

Growth

Cost efficiency

Agfa HealthCare: Care You Can See TM

Agfa HealthCare's strategy: drive the digitization, improve patient care through integration

Imaging

IT

Imaging IT Solutions

Healthcare Information Solutions

Integrated Care

Agfa Specialty Products: Expertise and Innovation

Innovation

Agfa Graphics

Prepress

Security printing

Inkjet

Industrial printing

Awards

Agfa HealthCare

Medical imaging

Imaging IT solutions

Integrated Care

Healthcare Information Solutions

Agfa Specialty Products

Sustainability

A global approach

Social and personnel issues, respect for human rights and anti-bribery and corruption

SAFETY, HEALTH AND ENVIRONMENT POLICY

Agfa Graphics

Agfa HealthCare

Agfa Specialty Products

Sustainability Report

Production-related environmental protection

Production of film and synthetic paper

Production of printing plates and imaging plates

Production of chemicals

Production of inks

Production of equipment

Environmental impact

Environmental indicators

Summary of environmental achievements

Environment