Agfa-Gevaert NV

Quarterly Report • Aug 25, 2021

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS AS OF JUNE 30, 2021

The condensed interim financial statements as of June 30, 2021 as well as the related explanatory notes have not been subject to a review of KPMG Bedrijfsrevisoren.

1.1 Condensed consolidated statement of financial position

in million Euro	Note	June 30, 2021	December 31, 2020
ASSETS
Non-current assets		783	714
Goodwill	10	273	265
Intangible assets		17	19
Property, plant and equipment		128	127
Right-of-use assets		76	78
Other financial assets	18	8	7
Assets related to post-employment benefits	12	61	-
Trade receivables	18	14	15
Receivables under finance lease	18	75	68
Other assets		14	16
Deferred tax assets		117	120
Current assets		1,389	1,490
Inventories		445	389
Trade receivables	18	293	297
Contract assets		69	64
Current income tax assets		57	63
Other tax receivables		32	15
Financial assets		11	9
Receivables under finance lease		19	29
Other receivables	18	1	9
Other assets		24	18
Derivative financial instruments	18	6	9
Cash and cash equivalents	18	428	585
Non-current assets held for sale		2	4
Total assets		2,172	2,204
Equity		713	620
Equity attributable to owners of the Company		662	570
Share capital		187	187
Share premium		210	210
Retained earnings		1,332	1,412
Other reserves		4	(76)
Translation reserve		(28)	(42)
Post-employment benefits: remeasurements of the net defined benefit liability		(1,043)	(1,122)
Non-controlling interests		52	51

The notes on pages 9 to 30 are integral part of these consolidated condensed interim financial statements.

Condensed consolidated statement of financial position (continued)

in million Euro	Note	June 30, 2021	December 31, 2020
Non-current liabilities		873	1,046
Liabilities for post-employment and long-term termination benefit plans	12	784	956
Other employee benefits		13	13
Loans and borrowings	18	53	54
Provisions		17	16
Deferred tax liabilities		5	4
Trade payables	18	-	-
Contract Liabilities		2	2
Other liabilities		-	1
Current liabilities		586	538
Loans and borrowings	18	27	29
Provisions		34	63
Trade payables	18	240	198
Contract Liabilities		120	103
Current income tax liabilities		26	23
Other tax liabilities		35	24
Other payables	18	8	8
Employee benefits		90	88
Other liabilities		3	1
Derivative financial instruments	18	3	2
Total equity and liabilities		2,172	2,204

1.2 Condensed consolidated statement of profit or loss and condensed consolidated statement of comprehensive income

Condensed consolidated statement of profit or loss

in million Euro	Note	6 months ending June 30, 2021	6 months ending June 30, 2020
Continuing operations
Revenue	13	836	832
Cost of sales		(584)	(577)
Gross profit		252	255
Selling expenses		(113)	(113)
Research and development expenses		(49)	(47)
Administrative expenses		(79)	(71)
Net impairment loss on trade and other receivables, including contract assets		-	(2)
Other operating income	7	26	9
Other operating expenses	7	(10)	(58)
Result from operating activities	6	27	(27)
Interest income (expense) – net		(1)	(3)
Interest income	14	1	1
Interest expense	14	(2)	(3)
Other finance income (expense) – net		(3)	(14)
Other finance income	14	6	4
Other finance expense	14	(9)	(18)
Net finance costs		(4)	(17)
Profit (loss) before income tax	9	23	(43)
Income tax expense		(14)	(7)
Profit (loss) for continuing operations		9	(51)
Profit (loss) from discontinued operations, net of tax		-	720
Profit (loss) for the period		9	670
Profit (loss) attributable to:
Owners of the Company		10	668
Non-controlling interests		(1)	1
Earnings Per Share ( euro)		0.06	3.98
EPS from continuing operations (euro)		0.06	-0.3
EPS from discontinuing operations (euro)		-	4.29

The notes on pages 9 to 30 are integral part of these consolidated condensed interim financial statements

Condensed consolidated statement of comprehensive income

The condensed consolidated statement of comprehensive income for the current interim period (second quarter ending June 30, 2021) with comparative statements of comprehensive income for the comparable interim period for the immediately preceding year, as required by IAS34.20, has been included in addendum.

in million Euro	6 months ending June 30, 2021	6 months ending June 30, 2020
Profit (loss) for the period	9	670
Profit (loss) for the period from continuing operations	9	(51)
Profit (loss) for the period from discontinuing operations	-	720
Other comprehensive income, net of tax
Items that are or may be reclassified subsequently to profit or loss:	12	(16)
Exchange differences:	15	(19)
Exchange differences on translation of foreign operations	15	(19)
Cash flow hedges:	(3)	3
Effective portion of changes in fair value of cash flow hedges	3	(2)
Change in fair value of cash flow hedges reclassified to profit or loss	(2)	1
Adjustment for amounts transferred to initial carrying amount of hedged item	(4)	5
Income taxes	0	-
Items that will not be reclassified subsequently to profit or loss:	81	(1)
Equity investments at fair value through OCI – change in fair value	2	(1)
Remeasurements of the net defined benefit liability	82	-
Income taxes on remeasurement of the net defined benefit liability	(3)	-
Total other comprehensive income for the period, net of tax:	92	(17)
Total other comprehensive income for the period from continuing operations	92	(17)
Total other comprehensive income from discontinuing operations	-	-
Total comprehensive income	102	653
attributable to:
Owners of the Company (continuing operations)	101	(67)
Non-controlling interests (continuing operations)	1	-
Owners of the Company (discontinuing operations)	-	720
Non-controlling interests (discontinuing operations)	-	-

The notes on pages 9 to 30 are integral part of these consolidated condensed interim financial statements

1.3 Condensed consolidated statement of cash flows

In million Euro	Note	6 months ending June 30, 2021	6 months ending June 30, 2020
Profit (loss) for the period		9	670
Income taxes		14	-
Share of (profit)/loss of associates – net of tax		-	-
Net finance costs		4	17
Operating result		27	687
Adjustments for:
Depreciation, amortization		17	21
Depreciation right-of-use assets		14	17
Impairment losses		-	-
Exchange results and changes in fair value of derivatives		2	(2)
Recycling of hedge reserve		(2)	1
Government grants and subsidies		(5)	(4)
Losses on the sale of intangible assets and PPE		(7)	(1)
Result on disposal of discontinued operations	8	-	(701)
Expenses for defined benefit plans and long-term termination benefits		13	15
Accrued expenses for personnel commitments		35	42
Write-downs / reversal of write-downs on inventories		5	5
Impairment losses / reversal of impairment losses on receivables		-	2
Additions / reversals of provisions		(5)	40
Operating cash flow before changes in working capital		95	123
Changes in:
Inventories		(64)	(70)
Trade receivables		14	54
Contract assets		(3)	(8)
Trade payables		33	8
Contract liabilities		14	39
Other working capital		3	(11)
Cash out for employee benefits	12	(206)	(110)
Cash out for provisions		(25)	(14)
Changes in lease portfolio		4	-
Cash settled operating derivatives		5	(4)
Cash generated from operating activities		(128)	8
Income taxes paid		(1)	(10)
Net cash from (used in) operating activities		(130)	(2)
of which related to discontinued operations		-	28

The notes on pages 9 to 30 are integral part of these consolidated condensed interim financial statements

Condensed consolidated statement of cash flows (continued)

in million Euro	Note	6 months ending June 30, 2021	6 months ending June 30, 2020
Capital expenditure		(14)	(14)
Proceeds from sale of intangible assets & PPE		11	3
Acquisition of subsidiary, net of cash acquired	15	-	(1)
Disposal of discontinued operations, net of cash disposed of	8	-	914
Repayment of loans granted to third parties		1	-
Interest received		1	1
Dividends received		-	-
Net cash from (used in) investing activities		(1)	903
of which related to discontinued operations		-	912
Interests paid		(2)	(4)
Purchase of treasury shares		(9)	-
Proceeds from borrowings	11	-	57
Repayment of borrowings	11	(2)	(246)
Payment of lease liabilities		(15)	(19)
Proceeds/(payments) of derivatives		1	(4)
Other financing income (costs) incurred		1	(4)
Net cash from (used in) financing activities		(26)	(220)
of which related to discontinued operations		-	(4)
Net increase (decrease) in cash and cash equivalents		(157)	681
Cash and cash equivalents at 1 January		585	99
Net increase (decrease) in cash and cash equivalents		(157)	681
Effect of exchange rate fluctuations on cash held		(1)	(5)
Gains / (losses) on marketable securities		(1)	-
Cash and cash equivalents at 30 June *		427	775*

*Bank overdrafts are presented in minus of cash and cash equivalents ( June 30, 2021 : 1 million euro; June 30, 2019 : - million euro)

1.4 Condensed consolidated statement of changes in equity

Attributable to owners of the Company in million Euro
	capital Share	premium Share	Retained earnings	Reserve for own shares	tion reserve Revalua	Hedging reserve	ment of the net defined Remeasure liability benefit	Translation reserve	Total	Non-controlling interests	Total equity
Balance at January 1, 2020	187	210	803	(82)	1	(3)	(1,028)	(5)	83	47	130
Comprehensive income for the period
Profit (loss) for the period	-	-	668	-	-	-	-	-	668	1	670
Other comprehensive income net of tax	-	-	-	-	(1)	3	-	(18)	(16)	(1)	(17)
Total other comprehensive income for the period	-	-	668	-	(1)	3	-	(18)	652	-	652
Transactions with owners recorded directly in equity – changes in ownership
Dividends	-	-	-	-	-	-	-	-	-	-	-
Reclasses of remeasurement on defined benefit liability related to entities divested	-	-	(4)	-	-	-	4	-	-	-	-
Total of transactions with owners recorded directly in equity	-	-	(4)	-	-	-	4	-	-	-	-
Balance at June 30, 2020	187		210 1,467	(82)	-	-	(1,024)	(23)	735	47	782
Balance at January 1, 2021 Comprehensive income for the period	187		210 1,412	(82)	-	7	(1,122)	(42)	570	51	620
Profit (loss) for the period	-	-	10	-	-	-	-	-	10	(1)	9
Other comprehensive income net of tax	-	-	-	-	2	(3)	79	14	91	2	92
Total other comprehensive income for the period	-	-	10	-	2	(3)	79	14	101	1	102
Transactions with owners recorded directly in equity
Dividends	-	-	-	-	-	-	-	-	-	-	-
Purchase of own shares	-	-	-	(9)	-	-	-	-	(9)	-	(9)
Cancellation of own shares	-	-	(90)	90	-	-	-	-	-	-	-
Total of transactions with owners recorded directly in equity	-	-	(90)	81	-	-	-	-	(9)	-	(9)
Balance at June 30, 2021	187		210 1,332	(1)	2	3	(1,043)	(28)	662	52	713

On March 10, 2021, the Group has announced a share buyback program with a volume up to 50 million Euro. The program allows shareholders to benefit from the sale of part of the HealthCare IT activities in 2020 and show the Group's confidence in its ongoing transformation process.

At December 31, 2020, the issued capital of the Group amounted to 187 million Euro represented by 171,851,042 fully paid shares. At December 31,2020, the Group held 4,099,852 own shares. At December 31, 2020, the outstanding ordinary shares amount to 167,751,190 shares.

In the first half-year of 2021, the Group has purchased 2,291,353 own shares for an amount of 9 million Euro. These shares, except for 294,469 shares were cancelled in the course of the first half-year of 2021 together with the formerly held own shares. In total 6,096,736 own shares were cancelled in the course of the second quarter of 2021 for an amount of 91 million Euro. At June 30, 2021 the outstanding shares amount to 165,459,837 shares.

1.5 Selected explanatory notes to the condensed consolidated interim financial statements as of June 30, 2021

1. Reporting entity

Agfa-Gevaert NV (the "Company") is a company domiciled in Belgium. The condensed interim financial statements of the Company as at and for the six months ended June 30, 2021 comprise the Company and its subsidiaries (together referred to as the "Group") and the Group's interest in associates. The consolidated financial statements of the Group as at and for the year ended December 31, 2020 are available on the Company's website: www.agfa.com.

2. Statement of compliance

These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union up to 30 June 2021. They do not include all of the information required for the full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended December 31, 2020. These condensed consolidated interim financial statements were authorized for issue by the Board of Directors on August 24, 2021.

3. Significant accounting policies

The Group has applied in these condensed consolidated interim financial statements the accounting policies and IFRS standards effective for the closing period June 2021. The accounting policies applied in these interim financial statements are the same as those applied in the Group's consolidated financial statements as at and for the year ended 31 December 2020.

Following new standards or amendments to IFRS are effective as from January 1, 2021 but are either not material or do not have a material impact on the Group's financial statements for the first half year of 2021. It relates to 'amendments to IFRS9, IAS 39 and IFRS7 Interest Rate Benchmark Reform – Phase 2' which had no impact on the Group's financial statements.

The Group did not take into account standards issued but not yet effective for June 2021.

4. Functional and presentation currency

The condensed consolidated interim 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. Due to the use of rounding, the sum of line items presented in a table may not always match with (sub)totals as this total itself has been rounded to the nearest million and is not the sum of rounded data.

5. Critical accounting estimates and judgements

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from estimates.

In preparing the condensed consolidated interim financial statements, the judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements as at and for the year ended December 31, 2020.

6. Alternative performance measures

Management has presented the performance measures 'Adjusted EBIT' and 'Adjusted EBITDA' because it monitors these performance measures by division and believes that these measures are relevant to an understanding of the financial performance of the Group's operating segments.

'Adjusted EBIT' is the result from operating activities before restructuring and non-recurring items. 'Adjusted EBITDA' is the result from operating activities before depreciation, amortization, restructuring expenses and non-recurring items.

Restructuring expenses mainly relate to employee related termination costs. These costs are presented in other operating expenses.

During the first half year of 2021 restructuring costs amounted to an income of 4 million Euro and mainly relate to the update of provisions regarding the closure of manufacturing sites in Europe partially offset by employee termination costs. These are comprised in other operating expenses (see note 7).

During the first half year of 2020, restructuring costs amounted to 43 million Euro and are mainly related to the closure of two factories in France and Leeds, UK (38 million Euro) and employee related termination costs. Faced with a significant and structural decline in demand in the extremely competitive offset printing market, Agfa has to optimize its printing plate manufacturing capacity by adjusting it to the changing market conditions. The decline in demand is characterized by a strong drop in printing plate volumes and substantial price erosion. Both plants produce Agfa's Thermofuse printing plates. The market demand for this product declines even more substantially than for most other Agfa printing plates. Unfortunately, the market forecasts do not suggest any improvement in the years to come. These costs are shown in other operating expenses (see note 7).

During the first half year of 2021 non-recurring costs amount to 1 million Euro and mainly relate to costs related to the strategic transformation projects, partially offset by a gain on the sale of the closed manufacturing site in Leeds UK and a pension settlement in Sweden. The latter are presented in other operating income (see note 7).

During the first half year of 2020, non-recurring costs amount to 6 million Euro and mainly relate to costs related to strategic transformation projects and other costs.

Reconciliation of adjusted EBIT to results from operating activities

in million Euro	2021	2020
Adjusted EBITDA from continuing operations	56	55
Depreciation & amortization on intangible operations	(17)	(17)
Depreciation right-of-use assets (IFRS 16 impact)	(14)	(15)
Adjusted EBIT from continuing operations	24	23
Restructuring	4	(43)
Non-recurring	(1)	(6)
Results from continuing operating activities	27	(27)

7. Sundry other operating income and expense

The following overview tables provide the content of the other operating income and expenses :

In million Euro	2021	2020
Gains on sale of property, plant & Equipment	7	-
Exchange gains and changes in fair value of derivatives	4	2
Settlement gain of Swedish pension plan	5	-
Finance lease income	3	3
Recharges of costs	3	1
Release of personnel accruals of last year	2	-
Sundry	2	3
Total sundry other operating income	26	9

In million Euro	2021	2020
Restructuring expenses /(income)	(4)	43
Exchange gains and changes in fair value of derivatives	5	5
Provisions, bank charges, fees, long term disability charge and other	6	7
Housing expenses	3	3
Total sundry other operating expense	10	58

8. Discontinued operations

Divestment 2020

On May 4th, 2020, the Agfa-Gevaert Group has successfully completed the sale of part of Agfa HealthCare's IT business to the Dedalus Group at an enterprise value of 975 million Euro, subject to working capital and net debt adjustments.

The part that has been sold consists of the Healthcare Information Solutions activities (Electronic Health Record, the ORBIS platform) and the Integrated Care activities in Germany, Austria, Switzerland, France and Brazil as well as the Imaging IT activities to the extent that these activities are tightly integrated into the Healthcare Information Solutions activities in these geographies.

In North America and all other international markets, Agfa HealthCare pursues its Imaging IT software business, which is not included in the sale. Based on the flagship Enterprise Imaging platform and the IMPAX solutions, Agfa HealthCare will continue to deliver superior value to its Imaging IT customers.

The sale of this business is a major step in Agfa's transformation process. Given the uncertainty of the current economic context, at this point in time we choose to use the majority of the proceeds of the sale to secure the future of our company, to further execute the strategies of our divisions and to address long term liabilities. Part of the proceeds of the sale have been used to increase the funding ratio of the Company's funded pension plans in Belgium, the UK and the USA, which will significantly decrease the future pension cash-outs (see note 12).

in million Euro	6 months 2021	4 months 2020
Revenue	-	87
Cost of sales	-	(42)
Gross profit	-	45
Selling expenses	-	(9)
Research and development expenses	-	(17)
Administrative expenses	-	(6)
Net impairment loss on trade and other receivables, including contract assets	-	-
Other operating expenses	-	(1)
Other operating income	-	-
Results from continuing operating activities	-	12
Interest income (expense) - net	-	-
Other finance income (expense)-net	-	1
Income tax expense	-	7
Profit ( loss) from operating activities - net of tax	-	19
Gain on the sale of discontinued operations	-	701
Income tax on gain on sale of discontinued operations	-	-
Profit (loss) from discontinued operations –net of tax	-	720

Result of discontinued operation

in million Euro	2020
Goodwill	(210)
Intangible assets	(47)
Property, plant and equipment	(11)
Right-of-use assets	(22)
Investments in associates	(3)
Deferred tax assets	(12)
Inventories	(2)
Trade receivables	(38)
Contract assets	(41)
Current income tax assets	(4)
Other current assets	(2)
Cash and cash equivalents	(6)
Liabilities for post-employment benefit plans	14
Non-current lease liabilities	16
Deferred tax liabilities	12
Current lease liabilities	7
Provision	9
Trade payables	12
Contract liabilities	66
Current income tax liabilities	16
Other tax liabilities	8
Current employee benefits	18
Total revenue by geographical region (destination perspective)	(220)
Consideration received	948
Deferred purchase price	1
Directly attributable costs	(27)
Gain on disposal	701
Cash inflow from disposal net of cash disposed of and net of directly attributable costs	914

Effect of disposal on the financial position of the Group

The net cash flows attributable to the operating, investing and financing activities of discontinued operations have been provided in the cash flow statement of 2020.

9. Reportable segments

The activities of the Group are grouped into four divisions: Offset Solutions, Digital Print & Chemicals, Radiology Solutions, and Healthcare IT. This divisional structure is technology and solutions based and will allow the business to seek future partnerships.

The Group's management has identified the aforementioned four divisions as its operating segments. They equal the Groups reportable segments. To allow for a more accurate assessment of the performance of the operating segments, some costs of corporate functions at Group level (e.g. Investor relations, Corporate Finance, Internal Audit, Innovation Office, …) are not attributed to the operating segments. These costs are currently reported under 'Corporate Services'.

in million Euro	Offset Solutions			Digital Print & Chemicals		Radiology Solutions		HealthCare IT		Total
	2021	2020	2021	2020	2021	2020	2021	2020	2021	2020
Revenue from continuing operations	352	342	154	141	220	231	111	117	836	832
Adjusted EBIT from continuing operations(*)	0	(9)	6	2	17	28	10	10	33	31
Segment result from continuing operations (**)	2	(52)	6	2	27	26	10	10	45	(14)

For the six months ended

(*) Adjusted EBIT is the result from continuing operating activities before restructuring and non-recurring items. Restructuring expenses mainly relate to employee related termination costs, non-recurring items comprise results from the sale of land and buildings, past service costs related to defined benefit obligations, impairment losses and costs related to the transformation of the Agfa-Gevaert Group.

(**) Segment result is the profit from continuing operating activities allocated to a reportable segment

Reconciliation of profit or loss

For the six months ended

in million Euro	2021	2020
Segment result	45	(14)
Profit (loss) from operating activities not allocated to a reportable segment: mainly related to 'Corporate Services'
	(18)	(13)
Results from continuing operating activities	27	(27)
Other unallocated amounts:
Interest income (expense) – net	(1)	(3)
Other finance income (expense) – net	(3)	(14)
Share of result of equity accounted investees	-	-
Consolidated profit (loss) before income taxes from continuing operations	23	(43)

Reconciliation of Adjusted EBIT

For the six months ended

in million Euro	2021	2020
Segment Adjusted EBIT	33	31
Adjusted EBIT from operating activities not allocated to a reportable segment: mainly related to 'Corporate Services'	(9)	(8)
Adjusted EBIT	24	23
Restructuring	4	(43)
Non-recurring	(1)	(6)
Results from continuing operating activities	27	(27)

10. Impairment testing of goodwill and intangible assets with indefinite useful life

Goodwill and intangible assets with indefinite useful lives are tested for impairment at least annually and upon the occurrence of an indication of impairment. For the purpose of impairment testing, goodwill is allocated to a cash-generating unit (CGU). The Group has identified its operating segments as cash-generating units.

Following goodwill and intangible assets are allocated to the cash generated units at June 2021 and December 2020:

in million Euro		Offset Solutions		Digital Print & Chemicals		Radiology Solutions		HealthCare IT		Total
	June 2021	Dec 2020	June 2021	Dec 2020	June 2021	Dec 2020	June 2021	Dec 2020	June 2021	Dec 2020
Goodwill	-	-	-	-	64	62	209	203	273	265
Intangible assets with indefinite useful life	-	-	-	-	-	-	-	-	-	-

The increase in goodwill June 30, 2021 compared to the December 31, 2020 can be explained by the currency exchange rate differences on goodwill amounts expressed in a foreign currency.

At June 30, 2021 there are no indications for impairment of the goodwill. During the fourth quarter of 2021 – the timing Group's management has chosen to perform its annual impairment tests – formal impairment tests will be performed. In testing the goodwill for impairment, the carrying value of the assets of these CGU's will be compared with their recoverable amount. Recoverable amounts of the CGU's will generally be based upon a value in use calculation using the updated long-term business plans.

11. Proceeds / repayments from borrowings

On March 5, 2021, Agfa-Gevaert NV has closed a three-year multi-currency revolving credit facility of 230 million Euro. This new facility is unsecured and will run until March 2024. However, the agreement provides for an extension of the term of two times one year. The new revolving credit facility will be used for general corporate purposes. The applicable interest rate is Euribor, Libor or its equivalent replacement benchmark rate (Reuters) and a margin. At June 30, 2021 there were no drawdowns under this facility.

In the consolidated statement of cash flows for the half-year ending June 30, 2021, the net change of borrowings amounted to 2 million Euro.

For the half-year ending June 30, 2020, the net change of borrowings amounted to 189 million. Proceeds from borrowings amounted to 57 million euro and were related to an increase of the revolving credit facility (50 million euro) in the first quarter of 2020 and an increase in liabilities to banks (7 million euro) also in the first quarter of 2020. In the second quarter of 2020 the proceeds of selling part of the IT business were partly used to repay the financial liabilities. Repayments from borrowings amount to 245 million euro in the second quarter of 2020, being a repayment of the revolving credit facility (200 million euro) and a repayment of liabilities to banks (45 million euro).

in million Euro	June 30, 2021	Dec 31, 2020
Liability for material countries	761	910
Liability for non-material countries	16	38
Long-term termination benefit plans	7	9
Total liability	784	956
Asset for material countries	(61)	-
Total asset (-)	(61)	-
Net liability (asset) for material countries	700	910
Net liability (asset) for non- material countries	16	38
Long-term termination benefit plans	7	9
Total net liability (asset)	722	956

12. Liabilities for post-employment and long-term termination benefit plans

For the measurement of its post-employment benefits as at June 30, 2021, the Group has applied the requirements of IAS19 (revised 2011). As per 30 June 2021, actuarial calculations have been performed for the Group's material countries, being Belgium, Germany, UK and US. The calculations are prepared based on roll-forward procedures per plan, i.e. no detailed calculations per member of a plan. The discount rates used for all material countries as well as the inflation rates for the UK pension plan have been updated and are based on the same methodology as at year-end 2020. All other assumptions among which the demographic assumptions are as per the 2020 year-end. They remain unchanged because there were no updates or events in the first six months of 2021 that prompt for a change in assumption. The applied weighted average discount rate is 1.42% (1.05% at 31 December 2020).

Net defined benefit liability (asset) reconciliation			Material countries Total in Mio	Non material
		DB-plans	Belgian DC-plans	Total	countries (DB-plans + DC-plans with guaranteed return)	Total
	1. Net defined benefit liability (asset) at end of prior
	period	900	9	909	38	947
	2. Defined benefit cost included in P&L	16	6	22	(4)	18
	3. Total remeasurements included in OCI	(80)	-	(80)	(1)	(82)
	4. Other significant events					-
	a. Net transfer in/(out) (including the effect of any business combinations/divestitures)					-
	b. Amounts recognized due to plan combinations					-
	5. Cash flows					-
	a. Employer contributions	(128)	(5)	(133)	(17)	(150)
	b. Employer direct benefit payments	(20)	-	(20)		(20)
	c. Employer direct settlement payments					-
	6. Credit to reimbursements					-
	7. Effect of changes in foreign exchange rates	2	-	2	-	2
	8. Net defined benefit liability (asset) as of end of period	689	10	700	16	715

The table below shows the evolution of the net defined benefit liability for material and nonmaterial countries of the Group :

During the first half year of 2021, the decrease in the carrying amount of the net defined benefit obligation for the material countries, being 209 million Euro is mainly explained by employer contributions and benefits paid directly by the Company amounting in total to 153 million Euro and the impact of 'Remeasurements included in Other Comprehensive Income (OCI)' amounting to minus 80 million euro, partly compensated by a defined benefit cost included in profit or loss for 22 million Euro and a translation difference of 2 million Euro.

The 'Remeasurements recognized in OCI' over the first six months ending June 30, 2021 comprise a positive impact of changes in financial assumptions amounting to 89 million Euro, positive experience adjustments for 4 million Euro and a negative impact of return on plan assets excl. interest income amounting to 12 million Euro. The negative impact of return on plan assets is fully attributable to the buy-in project in UK (see infra). The defined benefit cost of 22 million Euro comprises a defined benefit cost related to the Belgian DC-plans with return guaranteed by law amounting to 6 million Euro. The Group's employer contributions for the first half year 2021 have been impacted by the aforementioned DC-plans for 5 million Euro.

In 2021, the Group's de-risking programs continued with a buy-in project for a group of pensioners of the UK pension plan, extra contributions for the Fabriekspensioen-plan in Belgium and a redemption of the book reserve plan in Sweden. During the first half year of 2021, the Group has made extra pension contributions amounting to 129 million Euro: 16 million Euro in Q1 for the Swedish plan and in Q2 9 million Euro for the Belgian plan and 104 million Euro (£90 million) for the UK pension plan.

A buy-in is an insurance policy that covers a proportion of a pension scheme's liabilities, in this case a subset of the pensioners in-payment (around 70% of the population of pensioners). The policy pays an income equal to the benefits of the members covered and therefore removes the risk of there being insufficient assets to meet those future liabilities. The trustees and sponsoring employer retain ultimate responsibility for meeting members' benefits but the insurance policy is designed to ensure that there are always sufficient funds available. A buy-in is an 'exact match' to the covered liabilities and is held by the scheme as an asset alongside other investments. The buyin program removes the risks of investment, longevity, interest rate changes and inflation for the members covered by the policy. In return for a buy-in policy, the UK pension scheme has paid the insurer an insurance premium in full at the start of the policy. The insurance premium paid logically exceeds the insured asset value as at 30 June 2021 on the IAS19 assumptions (£204,5 million) because of the risks mitigated by the buy-in and consequently has had a negative impact on 'Remeasurements in OCI' (difference between premium paid and insured asset value reflected in 'Return on plan assets excl. interest income'). The buy-in has been funded mainly using the Plan's cash holdings and additional contribution from the Company (£90 million) and the remaining premium has been funded from the Plan's corporate bond and equity portfolio.

A significant increase in corporate bond yields resulting in a decrease in DBO combined with the impact of the buy-in project has moved the overall funding position for the UK pension plan from a shortfall to an estimated surplus at June 30, 2021 amounting to 61 million Euro.

As the Company is no longer required to pay further deficit reduction contributions for the UK pension plan as from the 2nd quarter of 2021 following the £90m lump sum contribution, the Group estimates to limit the regular cash-out for pensions for its material countries at 66 million Euro for the full year 2021 or including the extra contributions of 113 million Euro at 179 million Euro. The regular cash-out for pensions is expected to further decrease from 66 million Euro for 2021 to 52 million Euro for 2026.

In Sweden, a retirement pension could be financed and secured in two ways. Either the company is itself liable for the retirement pension through booking the pension commitments as a liability on the balance sheet, or the company purchases pension insurance from Alecta. The Group's affiliates in Sweden have applied the ITP 2 book reserve method pension which is to be credit insured and administered by PRI Pensionsgaranti. In the course of Q1 2021, the Company has transferred out its pension liabilities to Alecta.

First, as per 1 January 2021, the pension liabilities of the ITP 2 book reserve plan of both Agfa HealthCare Sweden AB and Agfa NV Sweden were frozen for the 23 active employees meaning that future accrual of the ITP2 pension plan is paid to Alecta (as an insurance contract) instead of being accounted for on the balance sheet, resulting in a one-time gain reported in profit or loss (plan freeze). The plan/benefits for the active employees have not changed, it is just the financing vehicle that has changed, from balance sheet provision to insurance. The reason Alecta's premiums are accounted for as DC (defined contribution) instead of DB (defined benefit) (the promise is still of DB nature) is due to the fact that Alecta is a multi-employer plan with over 33.000 member companies/participants. Alecta cannot split the assets/liabilities between the member companies and hence the plan is reported as DC in accordance with IFRS.

One month later, 1 February 2021, the remaining liability which represented all previously accrued service were transferred out to Alecta. As such SEK 161million or 16 million Euro has been paid to Alecta and another one-time gain is recognized in profit or loss. The total impact in P&l amounted to SEK 48 million or converted to Euro 4,7 million (nonrecurring income).

13. Revenue

in million Euro	6 months ending June 30, 2021	6 months ending June 30, 2020
Revenue from contracts with customers	834	833
Revenue from other sources: Cash Flow Hedges	2	(1)
Total revenue	836	832

The disaggregation of revenue from contracts with customers at June 30, 2021 as required by IFRS 15 can be presented as follows:

in million Euro	Offset Solutions	Digital Print and Chemicals	Radiology Solutions	Healthcare IT	Total
Geographical region
Asia/Pacific/Africa	129	49	112	11	301
Europe	153	66	59	38	317
Latin America	20	3	20	4	47
Nafta	50	35	29	57	171
Total revenue by geographical region (destination perspective)	352	154	220	111	836
Revenue by nature
Revenue from the sale of goods	330	141	174	32	677
Revenue from the sale of services	22	13	46	79	159
Timing of recognition
Revenue recognized at a point in time	331	141	175	32	679
Revenue recognized over time	21	13	45	79	157

The disaggregation of revenue from contracts with customers at June 30, 2020 can be presented as follows:

in million Euro	Offset Solutions	Digital Print and Chemicals	Radiology Solutions	Healthcare IT	Total
Geographical region
Asia/Pacific/Africa	119	46	118	12	295
Europe	151	57	63	34	305
Latin America	19	2	19	3	43
Nafta	52	36	32	68	189
Total revenue by geographical region (destination perspective)	342	141	231	117	832
Revenue by nature
Revenue from the sale of goods	320	129	184	32	665
Revenue from the sale of services	23	12	48	85	168
Timing of recognition
Revenue recognized at a point in time	323	131	184	32	670
Revenue recognized over time	19	11	48	85	163

14. Net finance costs

For the six months ended June 30, 2021

in million Euro	2021	2020
Interest income on bank deposits	1	1
Interest expense	(2)	(3)
On bank loans	(2)	(3)
On EIB loan	-	-
On debentures	-	-
Interest income (expense) – net	(1)	(3)
Other finance income	6	4
Other finance expense	(9)	(18)
Other finance income (expense) – net	(3)	(14)
Net finance costs	(4)	(17)

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 nonoperating activities; changes in fair value of derivative financial instruments hedging non-operating activities; other finance income (expense).

The decrease in other finance expenses in the first half-year of 2021 compared to the first half-year of 2020 is explained by a decrease of the net interest cost of defined benefit plans (4 million Euro), a decrease of exchange results on non-operating activities (4 million Euro), 2 million Euro interests to be received related to a tax credit of former years and an impairment loss booked on marketable securities (1 million Euro) as a result of negative interests on short-term investments.

15. Business Combinations

During the first half-year of 2021 there were no business combinations.

During 2020, the cash out related to business combinations amounts to 1 million Euro and is related to the agreement with the distributors of hardcopy film in China, a business combination that took place gradually over 2018 and 2019.

	6 months 2020
in million Euro	Agreement with distributors of hardcopy film in China
Intangibles with Finite Useful life
Customer relationships
Deferred Tax Liability
Evolution of deferred consideration liability	1
Goodwill amount recognised
Consideration paid / Net cash outflow	(1)
Gain on remeasurement of deferred contingent consideration

16. Contingencies

There were no significant changes in contingencies as those disclosed in the consolidated financial statements of the Group as at and for the year ended December 31, 2020.

17. Related party transactions

Transactions with Directors and members of the Executive Management

For the six months ended June 30, 2021 there are compared to last year no significant changes in the ordinary compensation of the Executive Management and other key management personnel.

In the first half year 2020, the members of Executive Management were entitled to a special bonus related to key projects (the divestment of part of the HealthCare IT-business to Dedalus and the further development of the strategic partnership with Lucky). More information is provided in the Remuneration Report of the Group for 2020.

Additionally, due to the leave of an executive member in June 2020, a severance payment accrued for in June 2020 has been paid in July 2020. General information on the stipulations in the contracts with the different members of the Executive Management are disclosed in the Remuneration Report of the Group for 2020 (included in Annual Report 2020).

As of June 30, 2021 there were no loans outstanding to members of the Executive Management nor to members of the Board of Directors.

Other related party transactions

Transactions with related companies are mainly trade transactions and are priced at arm's length.

Non-controlling interests have a material interest in nine subsidiaries of the Group in greater China and the ASEAN region (June 30, 2021: 51 million Euro, December 31, 2020: 46 million Euro). In Europe, there are two subsidiaries in which non-controlling interests have an interest that is of minor importance to the Group (June 30, 2021: 1 million Euro, December 31, 2020: 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 the greater China and the Asian 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. Agfa Graphics Asia established a few year ago Agfa HuaGuang (Shanghai) Graphics, in which the new business partner Lucky HuaGuang Graphics Co. Ltd participates for 49%. This strategic alliance allows both business partners to realize growth through optimization of their respective strengths in the field of manufacturing, technology and distribution of graphics prepress products and services.

The subsidiaries of Agfa Graphics Asia Ltd. At June 30, 2021 are

• Agfa (Wuxi) Printing Plate Co. Ltd.
• Agfa ASEAN Sdn. Bhd.
• Agfa Imaging (Shenzhen) Co. Ltd.
• Agfa Singapore Pte. Ltd.
• Agfa Taiwan Co Ltd.
• Agfa Graphics Shanghai Co., Ltd
• Agfa Pty Ltd.
• OOO Agfa Graphics
• Agfa Huaguang (shanghai) Graphics

Based on the current governance structure, the Group has determined that it has control over these subsidiaries. At June 30, 2021, the accumulated amount of non-controlling interests attributable to Shenzhen Brother Gao Deng Investment Group Co., Ltd and Lucky Huaguang Graphics Co Ltd amounts to 51 million Euro. The profit allocated to non-controlling interests of these business partners amounts to (1) million Euro for the 6 months ending June 2021.

		June 2021	June 2020
in million Euro	Transaction values	Balances outstanding	Transaction values	Balances outstanding
Sales of goods and services to Shenzhen Brother Gao Deng Investment Group Co., Ltd.	12	1	12	-
Sales to Lucky HuaGuang Graphics Co., Ltd	6	3	4	2
Purchase of goods from Shenzhen Brother Gao Deng Investment Group Co., Ltd.	34	2	33	2
Purchases from Lucky HuaGuang Graphics Co., Ltd	91	55	34	38
Dividends	-	-	-	-
Prepayment	-	12	-	30

The following table summarizes the transaction values and the outstanding balances between the Group and Shenzhen Brother Gao Deng Investment Group Co, Ltd.:

Prepayments with an outstanding balance of 12 million Euro relate to supplier advances against companies of the Shenzhen Brother Gao Deng Group for whose account the film conversion takes place and from whom aluminum is bought. One advance is amortized based on future film volumes supplied to Agfa Graphics Asia Ltd. The outstanding amount of 12 million Euro is recognized in Other assets. The other prepayment was settled with the purchase of aluminum.

18. Financial instruments

Financial instruments include a broad range of financial assets and liabilities. They include both primary financial instruments such as cash, receivables, debt and shares in another entity and derivative financial instruments.

Financial assets have decreased with 172 million Euro, from 1,027 million Euro at 31 December 2020 to 855 million Euro at 30 June 2021. This evolution is mainly attributable to a decrease in cash and cash equivalents by 157 million Euro from 585 million Euro at 31 December 2020 to 428 million at 30 June 2021.

At the liability side, the carrying amount of financial instruments have increased by 40 million Euro from 290 million Euro at 31 December 2020 to 330 million Euro at 30 June 2021 which is mainly explained by the evolution of the trade payables that have increased with 42 million euro. Other liabilities reflected in the column 'Mandatory at fair value through profit or loss (FVTPL)' relate to a deposit of 3,4 ton silver placed with a metal recovery and refining company valued at quoted market price and valued at fair value (June 30, 2021: 2 million Euro; December 31, 2020 : 2 million Euro).

Basis for determining fair values

costs, as drawdowns are made for short periods.

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

The fair value of investments in equity securities is determined by reference to their quoted market price at the reporting date.

The fair value of forward exchange contracts and swap contracts is calculated using observable forward exchange rates and yield curve data at reporting date. The fair value of swap agreements is calculated as the present value of the estimated future cash flows based on quoted swap rates.

The fair value of trade and other receivables and trade and other payables is not disclosed as it mainly relates to short-term receivables and payables for which their carrying amount is a reasonable approximation of fair value.

The fair value of receivables under finance lease is based on the present value of future minimum lease receivables discounted at a market rate of interest for similar assets.

The fair value of financial liabilities 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 for the current bank liabilities approximates nominal amounts excluding transaction

The table on the following page shows the carrying amounts and fair values of financial assets and liabilities by category and a reconciliation to the corresponding line items in the statements of financial position.

in million Euro	June 30, 2021
		Carrying amount
	Fair value – hedging instruments		Mandatorily at FVTPL - Others	FVOCI – equity instruments	Financial assets at amortized cost	Financial liabilities at amortized cost	Total	Fair Value
Fair Value Hierarchy	(2)	(2)	(3)	(1)
Assets
Other financial assets	-	-	-	7	13	-	19	19
Trade receivables	-	-	-	-	307	-	307*
Receivables under finance lease	-	-	-	-	94	-	94*
Other receivables	-	-	-	-	1	-	1*
Derivative Financial instruments:
Forward exchange contracts used for hedging	-	-	-	-	-	-	-	-
Swap contracts used for hedging	6	-	-	-	-	-	6	6
Other forward exchange contracts	-	0	-	-	-	-	0	0
Other swap contracts	-	0	-	-	-	-	0	0
Cash and cash equivalents	-	-	-	-	428	-	428	428
Total assets	6	1	-	7	843	-	855	-
Liabilities
Loans and borrowings
Revolving credit facility	-	-	-	-	-	(1)	(1)**
Other bank liabilities	-	-	-	-	-	2	2	2
Bank overdrafts	-	-	-	-	-	1	1	1
Lease liabilities	-	-	-	-	-	77	77	77
Debenture	-	-	-	-	-	-	-
Trade payables	-	-	-	-	-	240	240*
Other payables	-	2	- ***	-	-	6	8*
Derivative Financial instruments:
Swap contracts used for hedging	-	-	-	-	-	-	-	-
Forward exchange contracts used for hedging	1	-	-	-	-	-	1	1
Other forward exchange contracts	-	1	-	-	-	-	1	1
Other swap contracts	-	1	-	-	-	-	1	1
Total liabilities	1	4	-	-	-	325	330	-

Fair Value hierarchy:

(1) Fair value hierarchy 1 means that fair value is determined based on quoted prices in active markets.

(2) Fair value hierarchy 2 means that fair value is determined based on inputs other than quoted prices that are observable for the related asset or liability.

(3) Fair value hierarchy 3 means that fair value is determined based on inputs that are not based on observable market data

* The Group has not separately disclosed the fair value of trade and other receivables and the fair value of trade and other payables as the carrying amounts of these assets and liabilities is a reasonable approximation of fair value.

** Transaction costs are included in the initial measurement of the financial liability (1 million euro)

*** Related to contingent consideration from business combinations (performance based component). The fair value of the contingent consideration from business combinations is calculated using a discounted cash flow model. The valuation model considers the present value of the expected future payments, discounted using a risk-adjusted discount rate. Significant observable inputs are the expected cash flows and the risk-adjusted discount rate. The estimated fair value would increase (decrease) if the expected performances are higher (lower).

in million Euro		December 31, 2020
		Carrying amount						Fair Value
	Fair value – hedging instruments		Mandatorily at FVTPL - Others	FVOCI – equity instruments	Financial assets at amortized cost	Financial liabilities at amortized cost	Total
Fair Value Hierarchy	(2)	(2)	(3)	(1)
Assets
Other financial assets	-	-	-	5	10	-	15	15
Trade receivables	-	-	-	-	312	-	312*	-
Receivables under finance lease	-	-	-	-	96	-	96*	-
Other receivables	-	-	-	-	9	-	9*	-
Derivative Financial instruments:
Forward exchange contracts used for hedging	-	-	-	-	-	-	-	-
Swap contracts used for hedging	5	-	-	-	-	-	5	5
Other forward exchange contracts	1	-	-	-	-	-	1	1
Other swap contracts	-	3	-	-	-	-	3	3
Cash and cash equivalents	-	-	-	-	585	-	585	585
Total assets	7	3	-	5	1,012	-	1,027	-
Liabilities
Loans and borrowings
Revolving credit facility	-	-	-	-	-	-	-	-
Other bank liabilities	-	-	-	-	-	3	3	3
Bank overdrafts	-	-	-	-	-	-	-	-
Lease liabilities	-	-	-	-	-	79	79	79
Trade payables	-	-	-	-	-	198	198*	-
Other payables	-	3	- ***	-	-	5	8*	-
Derivative Financial instruments:
Swap contracts used for hedging	-	-	-	-	-	-	-	-
Forward exchange contracts used for hedging	-	-	-	-	-	-	-	-
Other forward exchange contracts	-	2	-	-	-	-	2	2
Total liabilities	-	5	-	-	-	285	290	-

Fair Value hierarchy:

(1) Fair value hierarchy 1 means that fair value is determined based on quoted prices in active markets.

(2) Fair value hierarchy 2 means that fair value is determined based on inputs other than quoted prices that are observable for the related asset or liability.

(3) Fair value hierarchy 3 means that fair value is determined based on inputs that are not based on observable market data

* The Group has not separately disclosed the fair value of trade and other receivables and the fair value of trade and other payables as the carrying amounts of these assets and liabilities is a reasonable approximation of fair value.

** Transaction costs are included in the initial measurement of the financial liability (- million euro)

*** Related to contingent consideration from business combinations (performance based component). The fair value of the contingent consideration from business combinations is calculated using a discounted cash flow model. The valuation model considers the present value of the expected future payments, discounted using a risk-adjusted discount rate. Significant observable inputs are the expected cash flows and the risk-adjusted discount rate. The estimated fair value would increase (decrease) if the expected performances are higher (lower).

19. Subsequent events

There are no subsequent events.

Addendum

The information provided in this addendum forms an integral part of the Condensed consolidated interim financial statements as of June 30, 2021. It has not been subject to a review of KPMG Bedrijfsrevisoren.

AGFA-GEVAERT GROUP

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME for the second quarter ending June 2021 / June 2020

Condensed consolidated statement of profit or loss

in million Euro		Q2 ending June 30, 2021	Q2 ending June 30, 2020
Revenue		441	397
Cost of sales		(305)	(277)
Gross profit		135	120
Selling expenses		(58)	(51)
Research and development expenses		(24)	(22)
Administrative expenses		(40)	(34)
Impairment loss on trade and other receivables, including contract assets, net amount		-	(1)
Other operating income		12	4
Other operating expenses		2	(47)
Result from operating activities		28	(31)
Interest income (expense) – net		-	(1)
Interest income		-	-
Interest expense		(1)	(1)
Other finance income (expense) – net		(3)	(8)
Other finance income		2	1
Other finance expense		(4)	(9)
Net finance costs		(3)	(9)
Profit (loss) before income tax		25	(40)
Income tax expense		(9)	(5)
Profit (loss) for the period from continuing operations		15	(45)
Profit (loss) for the period from discontinuing operations, net of tax		-	714
Profit (loss) for the period		15	668
Profit attributable to:
	Owners of the Company	15	667
	Non-controlling interests	-	2

Condensed consolidated statement of comprehensive income

In million Euro	Q2 ending June 30, 2021	Q2 ending June 30, 2020
Profit (Loss) for the period	15	668
Profit for the period from continuing operations	15	(45)
Profit for the period from discontinuing operations	-	714
Other comprehensive income, net of tax
Items that are or may be reclassified subsequently to profit or loss:	2	4
Exchange differences:	2	(2)
Exchange differences on translation of foreign operations	2	(2)
Cash flow hedges:	-	6
Effective portion of changes in fair value of cash flow hedges	3	4
Change in fair value of cash flow hedges reclassified to profit or loss	(1)	1
Adjustments for amounts transferred to initial carrying amount of hedged items	(2)	2
Income taxes	-	-
Items that will not be reclassified subsequently to profit or loss:	80	2
Equity investments at fair value through OCI – change in fair value	1	1
Remeasurements of the net defined benefit liability	82	1
Income tax on remeasurement of the net defined benefit liability	(3)	-
Total other comprehensive income for the period net of tax	81	6
Total other comprehensive income for the period from continuing operations	81	(40)
Total other comprehensive income for the period from discontinuing operations	-	713
Total comprehensive income for the period attributable to :	97	674
Owners of the Company from continuing operations	96	(40)
Non-controlling interests from continuing operations	-	-
Owners of the Company from discontinuing operations	-	714
Non-controlling interests from discontinuing operations	-	-