Agfa-Gevaert NV

Earnings Release • Nov 14, 2014

PRESS RELEASE

Agfa Press Office Septestraat 27 B – 2640 Mortsel Belgium

Johan Jacobs Corporate Press Relations Manager

T +32 3 444 80 15 F +32 3 444 44 85 E johan.jacobs@agfa.com

Regulated information – November 14, 2014 - 7:45 a.m. CET

Agfa-Gevaert publishes its third quarter 2014 results

• Positive cash flow generation resulted in a low level of net financial debt
• Net result was positive for the fourth consecutive quarter
• Gross profit margin improved significantly to 30.8 percent
• Adaptation of the product portfolio should allow the Group to limit the revenue decline in the quarters to come

Mortsel (Belgium), November 14, 2014 - Agfa-Gevaert today announced its third quarter 2014 results.

"Quarter after quarter, we continue to improve the efficiency of our operations and to increase our gross profit margin. In spite of the weak global economy, the rigorous management of our operational costs brings us closer to our short-term target of reaching a 10 percent recurring EBITDA percentage. Our top line decline is the result of the soft investment climate in mature markets, while our traditional consumable business suffers from the lower growth rates in most of the emerging markets. The measures we recently took to address our restructuring costs clearly help to deliver a sustained positive net result. Finally, our working capital management adds to the delivery of a positive net operating cash flow. We are confident that the adaptation of our product portfolio to the new economic situation will allow us to even better cater to the needs of our customers in the near future. This should enable us to limit the erosion of our top line in the quarters to come," said Christian Reinaudo, President and CEO of the Agfa-Gevaert Group.

Agfa-Gevaert Group – third quarter 2014

in million Euro	Q3 2013	Q3 2014	% change
Revenue	689	636	-7.7%
Gross profit (*)	192	196	2.1%
% of revenue	27.9%	30.8%
Recurring EBITDA (*)	46	51	10.9%
% of revenue	6.7%	8.0%
Recurring EBIT (*)	26	34	30.8%
% of revenue	3.8%	5.3%
Result from operating activities	17	29	70.6%
Result for the period	(6)	9
Net cash from (used in) operating activities	42	16

(*) before restructuring and non-recurring items

The Agfa-Gevaert Group's third quarter revenue declined by 7.7 percent. Like in the previous quarters, the Group's top line suffered from the overall economic weakness and the unstable political situation in certain regions. The uncertain investment climate in the US healthcare sector continued to weigh on the Agfa HealthCare business group's revenue.

The success of its efficiency programs and positive raw material effects allowed the Group to improve its gross profit margin by almost 3 percentage points to 30.8 percent of revenue.

As a percentage of revenue, Selling and General Administration expenses amounted to 19.2 percent.

R&D expenses amounted to 37 million Euro, versus 35 million Euro in last year's third quarter.

Recurring EBITDA (the sum of Graphics, HealthCare, Specialty Products and the unallocated portion) and recurring EBIT improved to 8.0 percent and 5.3 percent of revenue respectively.

Restructuring and non-recurring items resulted in an expense of 5 million Euro, versus an expense of 9 million Euro in the third quarter of 2013. This decrease resulted from the success of a number of targeted actions in this field.

The net finance costs amounted to 15 million Euro, versus 17 million Euro in the third quarter of 2013.

Tax expenses amounted to 5 million Euro, compared to 6 million Euro in the third quarter of 2013.

In spite of the tough economic conditions in most of its markets, the Group achieved a positive net result for the fourth consecutive quarter. Net profit amounted to 9 million Euro. In last year's third quarter, a net loss of 6 million Euro was booked.

Financial position and cash flow

• At the end of the quarter, total assets were 2,572 million Euro, compared to 2,568 million Euro at the end of 2013.
• Inventories amounted to 580 million Euro (114 days), versus 597 million Euro (102 days) in the third quarter of 2013. Trade receivables (minus deferred revenue and advanced payments from customers) amounted to 388 million Euro (55 days), versus 436 million Euro (57 days) in the third quarter of 2013, and trade payables were 225 million Euro (44 days), versus 230 million Euro (39 days).
• Net financial debt amounted to 175 million Euro, versus 261 million Euro at the end of last year's third quarter, and 217 million Euro at the end of 2013.
• Net cash from operating activities amounted to 16 million Euro.

in million Euro	Q3 2013	Q3 2014	% change
Revenue	365	328	-10.1%
Recurring EBITDA (*)	23.8	22.1	-7.1%
% of revenue	6.5%	6.7%
Recurring EBIT (*)	14.4	14.7	2.1%
% of revenue	3.9%	4.5%

Agfa Graphics – third quarter 2014

(*) before restructuring and non-recurring items

Agfa Graphics' revenue decreased by 10.1 percent to 328 million Euro. The overall economic weakness weighed on the business group's top line. In the prepress segment, the analog business continued to decline strongly, while the digital computer-to-plate (CtP) business suffered from competitive pressure. Although to a lesser extent than the prepress segment, the inkjet segment also suffered from the global weak economy.

Due to the success of targeted projects to improve efficiency and positive raw material effects, Agfa Graphics' gross profit margin improved from 25.8 percent in the third quarter of 2013 to 28.4 percent. Recurring EBITDA reached 22.1 million Euro (6.7 percent of revenue). Recurring EBIT amounted to 14.7 million Euro (4.5 percent of revenue).

In the third quarter, Agfa Graphics introduced a number of innovative solutions to the newspaper segment of the prepress market. As the new Advantage N-TR HS platesetter runs at speeds of up to 350 plates per hour, it helps newspaper publishers to extend their editorial and advertizing deadlines. Also in this segment,

the new Attiro clean-out unit is aimed at publishers running Agfa Graphics' N94- VCF violet chemistry-free printing plates. Attiro saves users money on maintenance and gum, while contributing to a more sustainable prepress process. In the commercial segment of the prepress market, Agfa Graphics introduced Apogee 9, the latest release of its PDF-based workflow solution. Apogee 9 allows commercial printers to automate their workflow and it helps them to expand into the wide-format inkjet market. Furthermore, the new high-end thermal platesetter Avalon N16-80 XT offers high-production commercial printers and packaging printers high production speeds and superb image quality.

Also in the commercial segment, Agfa Graphics launched the 'Ten Years of Azura' campaign, celebrating the 10th anniversary of the innovative and sustainable chemistry-free printing plate. The campaign was kicked-off during a joint press conference with the Japanese Daicolo company, which is the world's No.1 Azura user. They are the first company in the world to achieve a 1 million m² total of Azura use. Azura is the most used chemistry-free printing plate in the world. Agfa Graphics signed several comprehensive prepress contracts with commercial printers in the third quarter. Examples are EPC Direct (UK); WmD and Johnen Druck (Germany); Pequigraf (Argentina); Grafica Brasil (Brazil); G-Box & Grafotec (Mexico); Docklands Press, New Creation Print, UniPrint and Tekprint & Design (Australia).

In the field of digital printing, Agfa Graphics announced that it will start distributing the MGI company's solutions in the United States. This agreement follows similar successful partnerships in Switzerland, Italy, France, Sweden, and Australia.

In the third quarter, Agfa Graphics' innovative high-speed Jeti Titan HS inkjet printing system continued its success. The first Jeti Titan HS in the Oceania region will be installed at Catalyst Graphics (Australia). Examples of other companies that selected the Jeti Titan HS system are XL Media (Congo), De Lite Engineering / Al Hubedyia (Kuwait) and Albion Screen Printing (Canada). Recently, the Jeti Titan HS wide-format inkjet printing system was selected as 'Product of the Year' at the 2014 SGIA Expo in Las Vegas.

Q3 2013	Q3 2014	% change
274	259	-5.5%
23.6	26.2	11.0%
8.6%	10.1%
13.9	17.6	26.6%
5.1%	6.8%

Agfa HealthCare – third quarter 2014

(*) before restructuring and non-recurring items

Still impacted by adverse currency effects, Agfa HealthCare's revenue decreased by 5.5 percent. On a currency comparable basis, the decrease amounted to 4.3 percent, which is a clear improvement compared to the previous quarters of the year. The economic weakness in most of the emerging markets continued to impact the business group's top line. Sales of the Imaging segment's traditional film products continued to decline strongly. In the segment's digital radiography business (consisting of Computed Radiography, Direct Radiography and the hardcopy business), the DR product range continued its strong revenue growth. The IT segment's radiology IT solutions continued to suffer from the uncertainty in the US healthcare market, where the government is inciting hospitals to invest in Electronic Medical Records (EMR), rather than departmental IT. Agfa HealthCare responds to these changing market conditions with Enterprise Content Management Solutions and Enterprise Imaging Solutions that enrich the EMR with documents and medical images. This strategy is starting to bear fruit.

Agfa HealthCare's gross profit margin improved by over 2 percentage points from 33.6 percent of revenue to 35.9 percent. Its successful efficiency programs and favorable raw material effects allowed the business group to considerably improve its profitability. Recurring EBITDA reached 26.2 million Euro (or 10.1 percent of revenue). Recurring EBIT improved by more than 26 percent to 17.6 million Euro (or 6.8 percent of revenue).

In the field of Imaging, Agfa HealthCare announced its Fast Forward Digital Radiography Upgrade Program. The program aims to support and improve hospitals' and imaging departments' digital imaging evolution. Furthermore, Agfa HealthCare signed several major imaging contracts. The Loma Linda University Medical Center (California, USA) will upgrade to Direct Radiography (DR) through Agfa HealthCare's upgrade program. The center will install 11 DX-D Retrofit DR systems to convert existing CR-based X-ray rooms to DR, as well as five wireless DX-D 100 mobile DR systems. Also in the USA, Summa Health System (Ohio)

aims to achieve improved image quality and X-ray dose management, as well as cost savings with Agfa HealthCare's Computed Radiography (CR) and DR solutions.

In the UK, the Northern Devon Healthcare NHS Trust's main hospital and eight of its community hospitals have replaced their existing digital radiography systems with Agfa HealthCare's CR 30-X and DX-G CR-solutions, including the MUSICA image processing software.

The newly opened Beirut Medical Centre – Saint Antoine de Padoue (Beirut, Lebanon), has installed Agfa HealthCare's DX-D 400 DR and CR 10-X CR systems.

In the field of radiology IT, Agfa HealthCare continued the global launch of its new Agility medical imaging management platform. The solution is now live at 87 hospital sites across 13 countries in South America, North America, Africa, Europe, Russia and the Middle East.

Furthermore, the business group is positioning its Enterprise Imaging Solutions and its Enterprise Content Management Solutions as powerful additions to EMR's. Agfa HealthCare has been selected to equip the major Dutch academic hospitals Vrije Universiteit Medisch Centrum (VUmc) and Academisch Medisch Centrum (AMC) with a Vendor Neutral Archive and an Enterprise Imaging Solution, which enriches the EMR with images.

In the field of Healthcare Information Solutions, Agfa HealthCare further improved its strong position in the German speaking region of Europe. Among the German care organizations that started using ORBIS hospital and clinical information solutions are St-Jozefshospital (Krefeld), Maria-Hilf Krankenhaus der Alexianer (Krefeld), Klinik Nürtingen, Gemeinschaftsklinikum Mayen Koblenz, Psychiatrischen Dienste Aargau AG, and SRH Wald-Klinikum Gera.

Q3 2014 % change
49 -2.0%
3.4
6.9%
2.4
4.9%

Agfa Specialty Products – third quarter 2014

(*) before restructuring and non-recurring items

Mainly due to the lower silver price, Agfa Specialty Products' revenue decreased to 49 million Euro. Agfa Specialty Products' future-oriented businesses (mainly Security, Synaps Synthetic Paper and Orgacon Electronic Materials), as well as the Printed Circuit Board business performed well.

The business group's recurring EBITDA amounted to 3.4 million Euro (6.9 percent of revenue) and recurring EBIT to 2.4 million Euro (4.9 percent of revenue).

Results after nine months

Agfa-Gevaert Group – year to date

in million Euro	9m 2013	9m 2014	% change
Revenue	2,126	1,909	-10.2%
Gross profit (*)	606	585	-3.5%
% of revenue	28.5%	30.6%
Recurring EBITDA (*)	143	148	3.5%
% of revenue	6.7%	7.8%
Recurring EBIT (*)	83	96	15.7%
% of revenue	3.9%	5.0%
Result from operating activities	96	88	-8.3%
Result for the period	5	38
Net cash from (used in) operating activities	57	79

(*) before restructuring and non-recurring items

Agfa Graphics – year to date

in million Euro	9m 2013	9m 2014	% change
Revenue	1,116	994	-10.9%
Recurring EBITDA (*)	59.3	71.4	20.4%
% of revenue	5.3%	7.2%
Recurring EBIT (*)	31.5	48.8	54.9%
% of revenue	2.8%	4.9%

(*) before restructuring and non-recurring items

Agfa HealthCare – year to date

in million Euro	9m 2013	9m 2014	% change
Revenue	844	766	-9.2%
Recurring EBITDA (*)	73.7	71.2	-3.4%
% of revenue	8.7%	9.3%
Recurring EBIT (*)	44.4	44.8	0.9%
% of revenue	5.3%	5.8%

(*) before restructuring and non-recurring items

Agfa Specialty Products – year to date

in million Euro	9m 2013	9m 2014	% change
Revenue	166	149	-10.2%
Recurring EBITDA (*)	13.6	8.5	-37.5%
% of revenue	8.2%	5.7%
Recurring EBIT (*)	10.4	5.2	-50.0%
% of revenue	6.3%	3.5%

(*) before restructuring and non-recurring items

End of message

Management Certification of Financial Statements and Quarterly Report

This statement is made in order to comply with new European transparency regulation enforced by the Belgian Royal Decree of 14 November 2007 and in effect as of 2008. "The Board of Directors and the Executive Committee of Agfa-Gevaert NV, represented by Mr. Julien De Wilde, Chairman of the Board of Directors, Mr. Christian Reinaudo, President and CEO, and Mr. Kris Hoornaert, CFO, jointly certify that, to the best of their knowledge, the consolidated financial statements included in the report and based on the relevant accounting standards, fairly present in all material respects the financial condition and results of Agfa-Gevaert NV, including its consolidated subsidiaries. Based on our knowledge, the report includes all information that is required to be included in such document and does not omit to state all necessary material facts."

Statement of risk

This statement is made in order to comply with new European transparency regulation enforced by the Belgian Royal Decree of 14 November 2007 and in effect as of 2008. "As with any company, Agfa is continually confronted with – but not exclusively - a number of market and competition risks or more specific risks related to the cost of raw materials, product liability, environmental matters, proprietary technology or litigation." Key risk management data is provided in the annual report available on www.agfa.com.

Contact:

Viviane Dictus

Director Corporate Communication Septestraat 27 2640 Mortsel - Belgium T +32 (0) 3 444 71 24 F +32 (0) 3 444 44 85 E viviane.dictus@agfa.com Johan Jacobs Corporate Press Relations Manager T +32 (0)3/444 80 15 F +32 (0)3/444 44 85 E johan.jacobs@agfa.com

The full press release and financial information is also available on the company's website: www.agfa.com

Consolidated Statement of Profit or Loss (in million Euro)

	Q3 2013	Q3 2014	% change	9m 2013	9m 2014	% change
Revenue	689	636	-7.7%	2,126	1,909	-10.2%
Cost of sales	(497)	(440)	-11.5%	(1,520)	(1,324)	-12.9%
Gross profit	192	196	2.1%	606	585	-3.5%
Selling expenses	(86)	(81)	-5.8%	(272)	(248)	-8.8%
Research & Development expenses	(35)	(37)	5.7%	(110)	(109)	-0.9%
Administrative expenses	(43)	(43)		(135)	(129)	-4.4%
Other operating income	22	19	-13.6%	119	54	-54.6%
Other operating expenses	(33)	(25)	-24.2%	(112)	(65)	-42.0%
Results from operating activities	17	29	70.6%	96	88	-8.3%
Interest income (expense) - net Interest income	(4) -	(3) -	-25.0%	(13) 1	(11) 1	-15.4%
Interest expense	(4)	(3)	-25.0%	(14)	(12)	-14.3%
Other finance income (expense) - net	(13)	(12)	-7.7%	(41)	(31)	-24.4%
Other finance income	1	4	300.0%	4	8	100.0%
Other finance expense	(14)	(16)	14.3%	(45)	(39)	-13.3%
Net finance costs	(17)	(15)	-11.8%	(54)	(42)	-22.2%
Profit (loss) before income taxes	-	14		42	46	9.5%
Income tax expense	(6)	(5)	-16.7%	(37)	(8)	-78.4%
Profit (loss) for the period	(6)	9	250.0%	5	38	660.0%
Profit (loss) attributable to:
Owners of the Company	(8)	6	175.0%	-	31
Non-controlling interests	2	3	50.0%	5	7	40.0%
Results from operating activities	17	29	70.6%	96	88	-8.3%
Restructuring and non-recurring items	(9)	(5)	-44.4%	13	(8)
Recurring EBIT	26	34	30.8%	83	96	15.7%
Outstanding shares per end of period	167,751,190	167,751,190		167,751,190	167,751,190
Weighted number of shares used for calculation	167,751,190	167,751,190		167,751,190	167,751,190
Earnings per share (€)	(0.05)	0.03		0.00	0.18

Consolidated Statements of Comprehensive Income for the period ending September 2013 /

September 2014 (in million Euro)

	2013	2014
Profit / (loss) for the period	5	38
Other Comprehensive Income, net of tax
Items that may be reclassified subsequently to profit or loss:
Exchange differences:	(20)	24
Exchange differences on translation of foreign operations	(21)	29
Exchange differences on net investment hedge	2	(8)
Income tax on exchange differences on net investment hedge	(1)	3
Cash flow hedges:	(8)	5
Effective portion of changes in fair value of cash flow hedges	(16)	(8)
Changes in the fair value of cash flow hedges reclassified to profit or loss	-	1
Adjustments for amounts transferred to initial carrying amount of hedged items	8	9
Income taxes	-	3
Available-for-sale financial assets:	3	(1)
Changes in fair value of available-for-sale financial assets	3	(1)
Income taxes	-	-
Items that will not be reclassified subsequently to profit and loss:	-	-
Remeasurements of the net defined benefit liability	-	-
Total other Comprehensive Income for the period, net of tax	(25)	28
Total Comprehensive Income for the period attributable to:	(20)	66
Owners of the Company	(25)	55
Non-controlling interests	5	11

Consolidated Statements of Comprehensive Income for the quarter ending September 2013 /

September 2014 (in million Euro)

	Q3 2013	Q3 2014
Profit / (loss) for the period	(6)	9
Other Comprehensive Income, net of tax
Items that may be reclassified subsequently to profit or loss:
Exchange differences:	(11)	18
Exchange differences on translation of foreign operations	(13)	22
Exchange differences on net investment hedge	3	(7)
Income tax on exchange differences on net investment hedge	(1)	3
Cash flow hedges:	9	(3)
Effective portion of changes in fair value of cash flow hedges	5	(6)
Changes in the fair value of cash flow hedges reclassified to profit or loss	-	1
Adjustments for amounts transferred to initial carrying amount of hedged items	4	-
Income taxes	-	2
Available-for-sale financial assets:	3	(1)
Changes in fair value of available-for-sale financial assets	3	(1)
Income taxes	-	-
Items that will not be reclassified subsequently to profit and loss:	-	-
Remeasurements of the net defined benefit liability	-	-
Total other Comprehensive Income for the period, net of tax	1	14
Total Comprehensive Income for the period attributable to:	(5)	23
Owners of the Company	(6)	16
Non-controlling interests	1	7

Consolidated Statement of Financial Position (in million Euro)

	31/12/2013	30/09/2014
ASSETS
Non-current assets	1,066	1,052
Intangible assets	618	617
Property, plant and equipment	242	231
Investments	11	10
Deferred tax assets	195	194
Current assets	1,502	1,520
Inventories	542	580
Trade receivables	585	529
Current tax assets	95	112
Other receivables and other assets	126	122
Deferred charges	25	29
Derivative financial instruments	3	2
Cash and cash equivalents	126	146
Total assets	2,568	2,572
EQUITY AND LIABILITIES
Equity	368	434
Equity attributable to owners of the Company	325	380
Share capital	187	187
Share premium	210	210
Retained earnings	664	695
Reserves	(91)	(87)
Translation reserve	(28)	(8)
Post-employment benefits: remeasurements of the net defined benefit liability	(617)	(617)
Non-controlling interests	43	54
Non-current liabilities	1,397	1,342
Liabilities for post-employment and long-term termination benefit plans	1,002	979
Other employee benefits	11	11
Loans and borrowings	319	299
Provisions	11	10
Deferred income	1	1
Deferred tax liabilities	53	42
Current liabilities	803	796
Loans and borrowings	24	22
Provisions	160	153
Trade payables	239	225
Deferred revenue and advance payments	121	141
Current tax liabilities	54	53
Other payables	95	88
Employee benefits	97	98
Deferred income	3	4
Derivative financial instruments	10	12
Total Equity and Liabilities	2,568	2,572

Consolidated Statement of Cash Flows (in million Euro) Unaudited, consolidated figures following IFRS accounting policies

	9m 2013	9m 2014	Q3 2013	Q3 2014
Profit (loss) for the period	5	38	(6)	9
Adjustments for:
Depreciation, amortization and impairment losses	64	52	20	17
Changes in fair value of derivative financial instruments	(1)	1	0	1
Granted subventions	(7)	(6)	(2)	(2)
(Gains) / losses on sale of non-current assets	(1)	0	0	0
Net finance costs	54	42	17	15
Income tax expense	37	8	6	5
	151	135	35	45
Change in inventories	23	(24)	43	(8)
Change in trade receivables	41	71	21	33
Change in trade payables	(46)	(10)	(28)	(20)
Change in deferred revenue and advance payments	9	15	(11)	(14)
Change in other working capital	(10)	(17)	(8)	(11)
Change in non-current provisions	(109)	(62)	(20)	(23)
Change in current provisions	9	(14)	15	17
Cash generated from operating activities	68	94	47	19
Income taxes paid	(11)	(15)	(5)	(3)
Net cash from / (used in) operating activities	57	79	42	16
Interest received	2	2	1	1
Dividends received	0	0	0	0
Proceeds from sale of intangible assets	1	3	0	0
Proceeds from sale of property, plant and equipment	3	2	0	1
Acquisition of intangible assets	(1)	(1)	0	0
Acquisition of property, plant and equipment	(26)	(20)	(11)	(8)
Changes in lease portfolio	10	3	5	4
Net cash from / (used in) investing activities	(11)	(11)	(5)	(2)
Interest paid	(18)	(17)	(4)	(4)
Dividends paid	0	0	0	0
Proceeds from borrowings	0	0	(10)	0
Repayment of borrowings	(49)	(24)	(49)	(14)
Other financial flows	4	(5)	5	(5)
Net cash from / (used in) financing activities	(63)	(46)	(58)	(23)
Net increase (decrease) in cash and cash equivalents	(17)	22	(21)	(9)
Cash and cash equivalents at January 1	125	125
Effect of exchange rate fluctuations	(5)	(2)
Cash and cash equivalents at end of the period	103	145

Consolidated Statement of changes in Equity (in million Euro)

		ATTRIBUTABLE TO OWNERS OF THE COMPANY
in million Euro	Share capital	Share premium	Retained earnings	Reserve for own shares	Revaluation reserve	payment reserve Share-based	Hedging reserve	Remeasurements of the net defined benefit liability	Translation reserve	Total	CONTROLLING S T S INTERE ON N	TOTAL EQUITY
Balance at January 1, 2013, as previously reported	187	210	623	(82)	(1)	-	(2)	(808)	6	133	36	169
Comprehensive income for the period
Profit (loss) for the period	-	-	-	-	-	-	-	-	-	-	5	5
Other comprehensive income, net of tax	-	-	-	-	3	-	(8)	-	(20)	(25)	-	(25)
Total comprehensive income for the period	-	-	-	-	3	-	(8)	-	(20)	(25)	5	(20)
Balance at September 30, 2013	187	210	623	(82)	2	-	(10)	(808)	(14)	108	41	149
Balance at January 1, 2014	187	210	664	(82)	1	-	(10)	(617)	(28)	325	43	368
Comprehensive income for the period
Profit (loss) for the period	-	-	31	-	-	-	-	-	-	31	7	38
Other comprehensive income, net of tax	-	-	-	-	(1)	-	5	-	20	24	4	28
Total comprehensive income for the period	-	-	31	-	(1)	-	5	-	20	55	11	66
Balance at September 30, 2014	187	210	695	(82)	0	-	(5)	(617)	(8)	380	54	434