ANNUAL REPORT 2020/2021

KBC ANCORA BACKGROUND

1998

KBC Ancora was incorporated on 18 December 1998 as Cera Ancora SA (Société anonyme). Cera Ancora's capital was formed by the contribution of 35,950,000 Almanij shares and approximately EUR 12.4 million in cash, subscribed virtually entirely by Cera (then 'Cera Holding') Cera Ancora was thus an almost wholly owned subsidiary of Cera.

2001

The foundations were laid in 2000 for the fundamental restructuring of Cera Ancora and of Cera, with approval being granted on 12 and 13 January 2001, respectively. The restructuring was carried out in implementation of a settlement reached in conclusion of a legal dispute which went back to the merger in 1998 of CERA Bank, ABB and Kredietbank.

On the one hand, the restructuring of Cera Ancora led to the conversion of Cera Ancora NV to Almancora SCA, the splitting of the Almancora shares, so that the capital of the company was represented by 55,929,510 shares, and an increase (through contributions and purchase) of the participating interest in Almanij to 55,929,510 shares (28.56%). On the other hand, the restructuring of Cera gave Cera members the right to three Almancora shares for each cooperative D-share surrendered on withdrawal.

Almancora was listed on the stock exchange for the first time on 4 April 2001. From that date onwards it was possible to trade the shares on the 'double fixing' segment of the Brussels Stock Exchange.

2005

On 2 March 2005 the structure of the Almanij/KBC group was simplified by means of a merger in the form of the acquisition of Almanij by KBC Bank-insurance Holding.

The merger to form KBC Group had a number of important consequences for Almancora:

As a result of the merger Almancora acquired KBC Group shares on 2 March 2005, based on an exchange ratio of 1.35 KBC Group shares for each Almanij share.
Until the merger, the shareholder stability of the Almanij/KBC group was guaranteed by Cera, Almancora and the Other Permanent Shareholders via a shareholder agreement. Following the merger this was replaced by a new shareholder agreement, to which MRBB also became a party. The core shareholders of the KBC group were henceforth Cera, Almancora, MRBB and the Other Permanent Shareholders.
The disappearance of Almanij also brought to an end the reserving of profit at Almanij level.

2007

On 15 June 2007 the company name Almancora was changed to KBC Ancora and the Almancora share was split by a factor of 1.4 (seven new KBC Ancora shares per five existing Almancora shares). The purpose of these two changes was to make the link between the KBC Ancora share and the KBC Group share even more explicit.

The split also means that since 15 June 2007, Cera members who withdraw with their D-shares have the right to receive 4.2 KBC Ancora shares in exchange for each D-share surrendered. This 'reimbursement on withdrawal' means that the proportion of Cera's participation in KBC Ancora to be distributed will decline steadily over time.

Since 15 June 2007, the KBC Ancora share has been listed on the continuous segment of the Euronext Brussels stock exchange.

On 8 August 2007, Cera and KBC Ancora reported that their joint participating interest in KBC Group had been increased to over 30%. Exceeding the 30% threshold was important in the context of the law on public takeover bids which came into effect in Belgium on 1 September 2007. Under this law, participating interests of more than 30% which were in existence at the time the law came into force are exempt from any obligation to issue a bid, whereas after that date exceeding this threshold carried a mandatory requirement to issue a public bid.

2012

KBC Group increased its capital by EUR 1.25 billion in December 2012 through the issue of new shares. KBC Ancora supported this capital increase, but did not participate in it itself. Cera participated less than proportionately in

the capital increase. As a result of the increase, the joint participating interest of Cera and KBC Ancora fell below the 30% threshold. Cera and KBC Ancora did however contribute additional KBC Group shares which they already held to the shareholder agreement between Cera, KBC Ancora, MRBB and the Other Permanent Shareholders, so that this agreement continues to represent more than 30% of the total number of KBC Group shares.

2013

Since July 2013, KBC Ancora has a new lender for EUR 325 million of its debt, which had previously been provided by KBC Bank. KBC Ancora sold 4.7 million KBC Group shares in November 2013. The proceeds of this sale were used to repurchase a loan with a nominal amount of EUR 175 million, which had been provided to KBC Ancora by KBC Bank in 2007. Both transactions had a positive impact on the capital position of KBC Bank.

2014

On 1 December 2014 Cera and KBC Ancora, together with MRBB and the Other Permanent Shareholders, extended their collaboration as a syndicate in updated form with respect to KBC Group for a further term of ten years, thereby ensuring the continued shareholder stability and supporting the further development of the KBC group. Cera, KBC Ancora, MRBB and the Other Permanent Shareholders contributed all their shares to the shareholder agreement, together representing 40% of the total number of KBC Group shares in issue.

2019

End of August 2019, KBC Ancora, has decided to make a limited adjustment to the dividend policy. This adjustment means that, with effect from the current financial year, 90% of the distributable recurring result for the financial year will be paid out as dividend. Compared to the previous dividend policy, this means a reduction of 10%. As KBC Ancora is holding more cash within the business as a result, this will enable the outstanding financial liabilities to be reduced more quickly. That makes KBC Ancora's balance sheet more resilient against shocks.

On 25 October 2019, an Extraordinary General Meeting decided to transform KBC Ancora from a partnership limited by shares (SCA) into a public limited company (SA) with sole (statutory) manager with effect from 1 January 2020. In doing so, use was made of the possibilities offered by the 'renewed' SA to grant the sole manager the same rights in the articles of association as in an SCA, so that the change of legal form has no impact on the anchoring structure.

2020

The Extraordinary General Shareholders Meeting of KBC Ancora of 30 October 2020 has decided to introduce loyalty voting rights. This means that double voting rights are granted to each KBC Ancora share that, in accordance with Article 27 of the Articles of Association, has been registered in the register of registered shares in the name of the same shareholder for a period of at least two years without interruption. The other shares are entitled to one vote. Dematerialised shares do not benefit from double voting rights.

Annual Report 2020/2021

KBC Ancora

Legal form: Public limited liability company Registered office: Muntstraat 1, 3000 Leuven, Belgium LEI 549300I4XZ0RR3ZOSZ55 Company number: 0464.965.639 www.kbcancora.be

Letter from the Chairman of the Board of Directors and the Managing Directors	6
Declaration by the responsible individuals	9
Investor information	10
Share price, discount and traded volumes	10
Key figures as at balance sheet date Balance sheet and result Cash flow table Dividend	13 13 14 15
Distribution of KBC Ancora shares KBC Ancora shareholder structure The road to the market	16 16 16
Group structure	17
Almancora ASBL	17
Almancora Société de gestion SA.	18
KBC Ancora SA	18
Statutory director's report	19
Declaration in connection with risks	19
Declaration concerning effective corporate governance Management structure Board of Directors of Almancora Société de gestion SA Composition of the Board of Directors Powers of the Board of Directors Functioning of the Board of Directors Committees appointed within the Board of Directors Day-to-Day Management Committee Audit Committee Appointments Committee Remuneration Committee Auditor Main features of the evaluation process for the Board of Directors, its committees and its individual members Remuneration report for the financial year Miscellaneous information Internal control and risk management Code of conduct in respect of conflicts of interest Code of conduct to prevent market abuse Annual notification pursuant to Article 74, §8 of the law of 1 April 2007 on public takeover bids Guidelines for the exercise of directorships Openness in investor communication Declaration concerning results and other information	19 20 20 21 22 23 24 24 24 26 26 27 27 28 33 34 35 35 35 36 36 37

Balance sheet as at 30 June 2021	37
Assets	37
Liabilities	40
Profit and loss account for the financial year 2020/2021	42
Income	42
Expenses	42
Result and proposed profit appropriation	44
Additional information	44
No consolidated financial statements for KBC Ancora	45
Financial year 2020 and available information for 2021 on KBC Group	45
Past financial year of KBC Group	45
First half of KBC Group's financial year 2021	48
Outlook for the financial year 2021/2022	51
Financial report	52
Balance sheet	52
Profit and loss account	53
Notes	54
Auditor's report	59
Auditor's report on the financial year	59
Auditor's report on the interim dividend	64
Other information	66

LIST OF CHARTS

Chart 1: Trend in KBC Ancora and KBC Group share price during the last financial year	10
Chart 2: Trend in discount of the KBC Ancora share relative to its intrinsic value over the last
financial year	11
Chart 3: Traded volumes of KBC Ancora shares on a daily basis in the past financial year	11
Chart 4: Trend in KBC Ancora and KBC Group share prices relative to the BEL20-Index in the last
financial year	12
Chart 5: Trend in KBC Ancora and KBC Group share prices relative to Dow Jones EURO STOXX
Bank Index in the last financial year	13
Chart 6: Group structure	17
Chart 7: Trend in equity per KBC Group share (quarterly)	38
Chart 8: Trend in KBC Group share price (daily)	39

LIST OF TABLES

Table 1: Summary of stock market figures in recent financial years	12
Table 2: Basic figures as at balance sheet date	13
Table 3: Summary of results in recent financial years	14
Table 4: Cash flow table for the most recent financial years	15
Table 5: Composition of the Board of Directors of Almancora Société de gestion SA and summary
of attendance	21
Table 6: Remuneration of non-executive directors of Almancora Société de gestion	31
Table 7: Remuneration of Day-to-Day Management Committee of KBC Ancora (in EUR)	32
Table 8: Trend in remuneration of B and C directors and of members of the Day to Day
Management Committee of KBC Ancora (in EUR)	32
Table 9: Shareholder structure of KBC Ancora (situation up to 30 June 2021)	33
Table 10: Trend in KBC Ancora income	42
Table 11: Trend in KBC Ancora costs	43
Table 12: Costs within the cost-sharing agreement with Cera	43
Table 13: Profit figures and key ratios of KBC Group for the financial years 2020 and 2019	48
Table 14: KBC Group profits in the first half of the financial years 2021 and 2020	50

BOARD OF DIRECTORS OF ALMANCORA SOCIÉTÉ DE GESTION SA

Standing, from left to right: Katelijn Callewaert, Marc De Ceuster, Johan Massy, Henri Vandermeulen, Joseph Peeters, Liesbet Okkerse

Seated, from left to right: Rita Van kerckhoven, Herman Vandaele, Franky Depickere, Luc Vandecatseye Not in photo: Christiane Steegmans

Letter from the Chairman of the Board of Directors and the Managing Directors

KBC Ancora's results for the financial year

KBC Ancora recorded a profit of EUR 529.7 million in the financial year 2020/2021, compared with a profit of EUR 60.8 million in the previous financial year. The result was due in very large part to the reversal of the remaining impairments on the participating interest in KBC Group.

In 2009, substantial impairments were applied to the participating interest in KBC Group in response to the impact of the financial crisis. In 2017 a substantial amount of impairments (EUR 646.5 million) has already been reversed, leading to an increase in the net book value per KBC Group share to EUR 39.84. The historical book value is EUR 46.44 per share. Given that both the IFRS equity value of the KBC Group share and the stock market price of the KBC Group share have for some considerable time been well above this historical book value the Board of Directors took the view that as at 30 June 2021, there was no longer any reason to maintain the remaining impairments on the KBC Group shares. The reversal of these impairments produced non-recurring income of EUR 511.7 million. Without this reversal, KBC Ancora would have ended the financial year 2020/2021 with a profit of EUR 18.0 million.

The recurring result was made up of limited dividend income from the participating interest in KBC Group as well as the usual operating costs and costs of debt.

In line with the recommendations of the European Central Bank, KBC Group did not distribute an interim dividend in November 2020, and limited the dividend that was paid in May 2021 to EUR 0.44 per KBC Group share. KBC Ancora accordingly received dividends totalling EUR 34.1 million in the year under review on its participating interest in KBC Group, compared with EUR 77.5 million in the preceding financial year.

KBC Ancora's expenses consisted of the usual items. Operating costs amounted to EUR 2.4 million, EUR 0.1 million more than in the previous financial year. Interest charges came to EUR 13.8 million, a reduction of EUR 0.7 million compared with the previous financial year.

The following appropriation of profit will be proposed to the General Meeting of Shareholders to be held on 29 October 2021:

addition of EUR 26.5 million (5% of the profit for the financial year) to the legal reserve;
addition of EUR 486.1 million to the unavailable reserves. This amount represents 95% of the non-recurring result deriving from the reversal of impairments. The remaining 5% of the reversal of impairments (EUR 25.6 million) is accounted for by the increase in the legal reserve;
addition of EUR 1.8 million to the available reserves; This amount represents 10% of the recurring result, after addition of 5% of this result to the legal reserve;
distribution of a dividend of EUR 15.7 million (EUR 0.20 per share), which was paid to shareholders as an interim dividend on 10 June 2021. This amount represents 90% of the recurring result available for distribution, after formation of the legal reserve;
carry-forward of the balance of EUR 0.4 million, or EUR 0.005 per share, to the next financial year.

The (slightly modified) dividend policy, as announced in August 2019, was thus applied for the first time. This means that, barring exceptional circumstances, 90% of the distributable recurring result for the financial year (i.e. after adjustment for any exceptional results and after the compulsory formation of the legal reserve) will be paid out as (interim) dividend. This is a reduction of 10% compared to the previous dividend policy, and will enable the outstanding financial debt to be reduced more quickly, That makes KBC Ancora's balance sheet more resilient against shocks and, from May 2022, on the next loan maturity date, will in principle lead to an accelerated reduction in the interest charges payable.

This amended dividend policy was in principle to have applied for the first time to the interim dividend which (barring exceptional circumstances) would have been made payable at the beginning of June 2020. However, in the light of the COVID-19 pandemic the Board of Directors decided not to distribute an interim dividend in respect of the financial year 2019/2020, nor to propose a final dividend. KBC Ancora will apply the funds which were retained within the company as a result of this decision to the loans totalling EUR 100 million which mature in May 2022.

Balance sheet

KBC Ancora's total assets amounted to EUR 3.7 billion on 30 June 2021, an increase of EUR 514.0 million due chiefly to the reversal of impairments discussed above.

Assets

The participating interest in KBC Group remained unchanged in the year under review. On the balance sheet date, KBC Ancora held 77,516,380 KBC Group shares. equivalent to 18.60% of the total number of KBC Group shares in issue. Following the reversal of the remaining impairments, the book value of these shares amounts to EUR 46.44 per share. KBC Ancora is the largest shareholder of KBC Group and, together with Cera and the other stable shareholders, is responsible for the anchoring of the KBC group.

In addition to its participating interest in KBC Group, KBC Ancora held cash totalling EUR 64.3 million on the balance sheet date

Creditors

Amounts owed to creditors totalled EUR 344.6 million at the balance sheet date, in line with the figure at the balance sheet date in the previous financial year.

Financial liabilities at the balance sheet date totalled EUR 343 million, with loans maturing in 2022 (EUR 100 million), 2024 (EUR 143 million) and 2027 (EUR 100 million).

Extraordinary General Meeting held in October 2020

The Extraordinary General Meeting of KBC Ancora decided at the end of October 2020 to introduce a system of loyalty voting rights. This means that a double voting right is assigned to each KBC Ancora share which, in accordance with Article 27 of the Articles of Association, has been entered in the shareholders' register in the name of the same shareholder for an uninterrupted period of at least two years. It was also decided at the same meeting to renew the powers of the statutory director in relation to the authorised capital and in relation to the repurchase and reissuing of the company's own shares, and to remove the disclosure threshold of 1% as set out in the Articles of Association. This implies that the lowest disclosure threshold as per the Articles of Association has been set at 3% since then. Cera is the only shareholder to have stated that it exceeds this threshold; it reported at the end of October that it held 67% of the voting rights in KBC Ancora.

Outlook

On 5 August 2021, KBC Group announced a result of EUR 1,350 million for the first half of the financial year 2021, compared with EUR 205 million in the same period in the previous financial year. KBC Group has reaffirmed its intention to distribute an additional gross dividend in the fourth quarter of 2021 of EUR 2.00 per share in respect of the financial year 2020. KBC Group has also stated its intention to distribute an interim dividend of EUR 1.00 per share in November 2021 followed in May 2022 by a final dividend, the amount of which has yet to be determined, in respect of the financial year 2021.

Barring exceptional circumstances, KBC Ancora will take its dividend income in the current financial year into account in determining the interim dividend that it is able to pay out in June 2022, in line with its dividend policy.

During the course of the financial year 2021/2022, KBC Ancora will make the necessary preparations and take the requisite decisions in relation to the loans totalling EUR 100 million which mature in May 2022. The cash position accrued at that time will be addressed for this purpose, with due observance of the usual dividend policy. The cash position as at 30 June 2021 stood at EUR 64.3 million.

Leuven, 26 August 2021

Herman Vandaele Chairman of the Board of Directors Almancora Société de gestion

Franky Depickere Managing Director and permanent representative of Almancora Société de gestion

Katelijn Callewaert Managing Director Almancora Société de gestion

Declaration by the responsible individuals

Declaration pursuant to the European regulations on transparency as imposed by the Belgian Royal Decree of 14 November 2007.

"We, the members of the Board of Directors of Almancora Société de gestion1, statutory director of KBC Ancora SA, hereby declare that, as far as we are aware, a) the KBC Ancora financial statements, which have been prepared in accordance with the financial reporting standards applicable in Belgium, give a true and fair view of the net worth, financial position and results of KBC Ancora; and b) the KBC Ancora annual report gives a true and fair view of the development and results of the business and of the position of KBC Ancora, as well as a description of the principal risks and uncertainties with which the company is confronted."

¹ The individual members of the Board of Directors of Almancora Société de gestion are listed in the 'Group structure' section of this Annual Report.

Investor information

Share price, discount and traded volumes

At the balance sheet date, KBC Ancora had a total of 77,516,380 KBC Group shares in portfolio. Debt less other assets amounted to EUR 280.2 million. KBC Ancora has itself issued 78,301,314 shares. The intrinsic value² of one KBC Ancora share at the balance sheet date accordingly corresponded to the price of 0.99 KBC Group shares less net debt³ per share of EUR 3.58.

Chart 1 traces the performance of the KBC Ancora and KBC Group shares during the last financial year.

² Intrinsic value: value per share calculated on the basis of the stock market price of the underlying listed share, less the net debt.

³ Net debt is defined in this Annual Report as total liabilities less total assets excluding financial assets.

Chart 2 shows the trend in the discount of the KBC Ancora share relative to its intrinsic value over the year under review. This fluctuated between 28% and 41%.

Chart 2: Trend in discount of the KBC Ancora share relative4 to its intrinsic value over the last financial year

Chart 3 illustrates the liquidity of the KBC Ancora share.

Chart 3: Traded volumes of KBC Ancora shares on a daily basis in the past financial year

⁴ Intrinsic value per KBC Ancora share (IV) = (price of KBC Group share x number of KBC Group shares held by KBC Ancora + other assets – liabilities) / number of KBC Ancora shares in issue. Discount in relative terms = (IV – KBC Ancora share price) / IV

Table 1 summarises a number of stock market figures and compares them with the performance in previous financial years.

	Financial year 2020/2021	Financial year 2019/2020	Financial year 2018/2019
High (EUR)	39.88	47.94	47.00
Low (EUR)	24.18	23.00	36.28
Price on the balance sheet date (EUR)	35.98	30.28	39.30
Average number of shares traded per day	48,329	58,988	45,746

Table 1: Summary of stock market figures in recent financial years

Charts 4 and 5 show the trend in KBC Ancora's share price relative to that of the KBC Group share, the BEL20 Index and the Dow Jones EURO STOXX Bank Index in the year under review.

Chart 4: Trend in KBC Ancora and KBC Group share prices relative to the BEL20-Index in the last financial year

Chart 5: Trend in KBC Ancora and KBC Group share prices relative to Dow Jones EURO STOXX Bank Index in the last financial year

Key figures as at balance sheet date

Balance sheet and result

Table 2 contains a number of key figures as at the balance sheet date for the most recent financial years.

	30 June 2021	30 June 2020	30 June 2019
Number of shares in issue	78,301,314	78,301,314	78,301,314
Number of KBC Group shares in portfolio	77,516,380	77,516,380	77,516,380
Balance sheet total in EUR	3,664,326,615	3,150,309,364	3,089,488,016
Market capitalisation in EUR (based on share price on balance sheet date)	2,817,281,278	2,370,963,788	3,077,241,640
Book value of capital and reserves in EUR	3,319,758,873	2,805,736,698	2,744,888,523
Market capitalisation/book value of capital and reserves	0.85	0.85	1.12

Table 2: Basic figures as at balance sheet date

Table 3 summarises the results in recent financial years.

		Table 3: Summary of results in recent financial years
--	--	-------------------------------------------------------

Result of KBC Ancora (x EUR million)	Financial year 2020/2021	Financial year 2019/2020	Financial year 2018/2019
Income	545.9	77.6	271.4
Operating income	0.1	0.0	0.0
Recurring financial income (dividends from financial fixed assets)	34.1	77.5	271.3
Non-recurring financial income (reversal of impairments)	511.7	0.0	0.0
Expenses	16.2	16.7	17.6
Operating costs	2.4	2.2	2.5
Financial expenses	13.8	14.5	15.1
RESULTS	529.7	60.8	253.7

Cash flow table

Table 4 shows KBC Ancora's cash flows.

The cash flow from operating activities in the financial year 2020/2021 (EUR 18.0 million) was determined by the difference between the dividends received by KBC Ancora from its participating interest in KBC Group on the one hand and the operating and finance costs on the other. These funds were used primarily to distribute an interim dividend (total EUR 15.7 million). The balance (EUR 2.3 million) represents the increase in cash and cash equivalents. The movement in the financial fixed assets was determined entirely by the reversal of the impairments and thus does not constitute a cash flow.

The cash flow from operating activities in the financial year 2019/2020 (EUR 60.9 million) was determined by the difference between the dividends received by KBC Ancora from its participating interest in KBC Group on the one hand and the operating and finance costs on the other. KBC Ancora did not engage in any investing or financing activities, resulting in an increase in the cash holdings on an annualised basis of EUR 60.9 million.

The cash flow from operating activities in the financial year 2018/2019 (EUR 253.7 million) was determined by the difference between the dividends received by KBC Ancora from its participating interest in KBC Group on the one hand and the operating and finance costs on the other. These funds were used primarily to distribute an interim dividend (total EUR 241.2 million). The financial debt was also reduced by EUR 32.0 million, leading to a reduction in the cash reserves on an annualised basis of EUR 19.5 million.

Cash flow table	Financial year	Financial year	Financial year
(x EUR million)	2020/2021	2019/2020	2018/2019
Net cash flow	2.3	60.9	-19.5
Indirect method
Cash position at start of year	62.0	1.2	20.7
Operating activities	18.0	60.9	253.7
Net result	529.7	60.8	253.7
Movement in net working capital	0.0	0.0	0.0
Non-cash result
(reversal of impairments)	-511.7	0.0	0.0
Investing activities	0.0	0.0	0.0
Financial fixed assets	-511.7	0.0	0.0
Reversal of impairment of financial fixed
assets	511.7	0.0	0.0
Financing activities	-15.7	0.0	-273.2
Financial liabilities	0.0	0.0	-32.0
Distribution of interim dividend	-15.7	0.0	-241.2
Cash position at end year	64.3	62.0	1.2

Table 4: Cash flow table for the most recent financial years

Dividend

First application of adjusted dividend policy as announced in August 2019

The Board of Directors of Almancora Société de gestion, statutory director of KBC Ancora, decided in August 2019 to make a limited adjustment to the dividend policy. This adjustment means that, barring exceptional circumstances, 90% of the distributable recurring result for the financial year (i.e. after adjustment for any exceptional results and after the compulsory formation of the legal reserve) will be paid out as (interim) dividend. This is a reduction of 10% compared to the previous dividend policy,

As KBC Ancora is holding more cash within the business as a result, this enables the outstanding financial liabilities to be reduced more quickly. That makes KBC Ancora's balance sheet more resilient against shocks and, from May 2022, on the next loan maturity date (EUR 100 million out of a total of EUR 343 million), will in principle lead to an accelerated reduction in the interest charges payable.

This amended dividend policy would in principle have applied for the first time to the interim dividend which (barring exceptional circumstances) would have been made payable at the beginning of June 2020. However, in the light of the COVID-19 pandemic the Board of Directors decided not to distribute an interim dividend in respect of the financial year 2019/2020, nor to propose a final dividend.

KBC Ancora will apply the funds which were retained within the company as a result of this decision to the loans totalling EUR 100 million which mature in May 2022.

The dividend policy announced in 2019 is thus being applied for the first time in relation to the financial year 2020/2021. The Board of Directors decided to distribute an interim dividend in June 2021 amounting to EUR 0.20 per KBC Ancora share. No final dividend will be distributed in respect of the financial year 2020/2021.

The appropriation of the result is discussed in more detail in the section Result and proposed profit appropriation

Distribution of KBC Ancora shares

KBC Ancora shareholder structure

There is a statutory requirement to disclose participating interests in listed companies of (multiples of) 5%. In addition, KBC Ancora's Articles of Association stipulate a disclosure threshold of 3%. On 30 October 2020 an Extraordinary General Meeting of KBC Ancora decided to introduce a system of loyalty voting rights, in accordance with Section 7:53 of the Belgian Companies and Associations Code. Since then, paid-up shares which have been entered in the shareholders' register in the name of the same shareholder for a minimum of two years without interruption have conferred the right to two votes. The other shares confer the right to one vote. At the same meeting it was decided to remove the lowest disclosure threshold of 1% set in the Articles of Association.

On 30 October 2020 Cera announced that it had exceeded the disclosure threshold of 65% as set in the Articles of Association. This was a passive exceeding of the threshold which was the direct result of the decision by KBC Ancora to introduce a system of loyalty voting rights. At that time, Cera held 79,819,045 of the 118,657,091 voting rights (or 67.27% of the total number of voting rights).

KBC Ancora received no further notifications during the year under review from shareholders who had exceeded or fallen short of notification thresholds set by law or the Articles of Association. A complete list of the participating interest disclosures received in previous financial years can be found on the KBC Ancora website.

The road to the market

Members of the Cera cooperative who withdraw with their cooperative D-shares receive a special 'reimbursement on withdrawal', consisting primarily of 4.2 KBC Ancora shares. In other words, members receive 4.2 KBC Ancora shares for each D-share which they surrender on withdrawal from Cera. They can then choose between keeping the KBC Ancora shares or selling them on the stock market.

In principle, Cera members are permitted to withdraw voluntarily with their shares during the first half of each financial year. However, Cera's Articles of Association provide the possibility for the statutory director of Cera, Cera Société de gestion, to temporarily refuse or suspend withdrawal by members. Members were permitted to withdraw voluntarily during the first half of the financial year 2021. Cera Société de gestion did however reserve the right to limit such withdrawals to 10% of the contribution actually paid in for the shares, in order to safeguard the stability of the company. Consequently, requests for withdrawal submitted in the first half of the financial year 2021 were not executed until the end of June 2021, after expiry of the withdrawal period. Since the number of withdrawals was well below the 10% threshold, all withdrawal requests submitted were met in full. Compulsory withdrawals (e.g. as a result of death) are in all cases implemented in full.

Group structure

Chart 6 shows KBC Ancora's group structure within the KBC group. The dotted line indicates the companies that belong to the Cera/KBC Ancora group.

Chart 6: Group structure⁵

Almancora ASBL

The object of Almancora ASBL ('Association sans but lucratif') is to support the stability and continuity of KBC Group. As controlling shareholder of Almancora Société de gestion, it plays an important part in the appointment of the latter's Board of Directors.

In the same capacity, Almancora ASBL has the casting vote at the General Meeting of Shareholders of Almancora Société de gestion.

Almancora ASBL's Board of Directors comprises the representatives of Cera members serving on the Board of Directors of Almancora Société de gestion SA and the managing directors of Almancora Société de gestion.

MRBB: Maatschappij voor Roerend Bezit van de Boerenbond CVBA

⁵ AVAs: Other Permanent Shareholders

These parties together with Cera and KBC Ancora constitute the stable shareholders of KBC Group and have entered into a shareholder agreement to this end with a view to supporting the general policy of KBC Group (see KBC Ancora ).

Almancora Société de gestion SA.

KBC Ancora does not have a Board of Directors of its own but is instead managed by a statutory director,: Almancora Société de gestion SA. In this role, the duties of Almancora Société de gestion SA include setting out the policy to be pursued by KBC Ancora.

Almancora Société de gestion's Board of Directors (see Board of Directors of Almancora Société de gestion SA) is made up of at least four representatives of Cera members, at least two managing directors and at least three independent directors.

KBC Ancora SA

KBC Ancora's principal activity is the maintenance and management of its shareholding in KBC Group with a view to ensuring, in collaboration with Cera, MRBB and the Other Permanent Shareholders, the shareholder stability and continuity of KBC Group. To this end, KBC Ancora signed a shareholder agreement with these parties on 23 December 2004. Cera and KBC Ancora are viewed as a single party for the purposes of the agreement.

In December 2012, Cera and KBC Ancora contributed additional KBC Group shares which they already held to the shareholder agreement between Cera, KBC Ancora, MRBB and the Other Permanent Shareholders, so that this agreement continued to represent more than 30% of the total number of KBC Group shares, including after the capital increase effected by KBC Group in December 2012.

On 1 December 2014 Cera and KBC Ancora, together with MRBB and Other Permanent Shareholders, extended their collaboration as a syndicate in updated form with respect to KBC Group for a further term of ten years. In this connection, Cera, KBC Ancora, MRBB and the Other Permanent Shareholders contributed all their shares to the shareholder agreement.

The shareholders' agreement currently represents 167.1 million KBC Group shares, equivalent to 40.11% of the total number of KBC Group shares in issue. Cera and KBC Ancora have together committed 88.6 million KBC Group shares, or 21.27% of the total number of KBC Group shares. KBC Ancora has committed 77.5 million KBC Group shares, or 18.60% of the total, and Cera the rest.

Statutory director's report

Declaration in connection with risks

Certain risk factors could have an impact on the value of the assets held by KBC Ancora and on its ability to distribute a dividend.

KBC Ancora's assets consist almost entirely of a participating interest in KBC Group. For information on the specific risks to which KBC Group is exposed, reference is made to the annual report and press releases of KBC Group, which are available on the website www.kbc.com.

A fall in the KBC Group share price will inevitably have a negative influence on the value of KBC Ancora's assets.

The investment in KBC Group is funded from capital and reserves in combination with loans from financial institutions. At the balance sheet date, those loans amounted to EUR 343 million. These are long-term loans carrying fixed rates of interest, with repayment dates in 2022 (EUR 100 million), 2024 (EUR 143 million) and 2027 (EUR 100 million). KBC Ancora closely monitors the interest-rate and refinancing risk. During the course of the financial year 2021/2022, KBC Ancora will make the necessary preparations and take the requisite decisions in relation to the loan totalling EUR 100 million which matures in May 2022.

In principle, KBC Ancora's recurring income consists mainly of the dividend it receives from its participating interest in KBC Group.

In the event that KBC Ancora does not receive a dividend from its participating interest in KBC Group in any given financial year, KBC Ancora will itself not pay a dividend in that year. If KBC Ancora once again receives KBC Group dividend in a subsequent financial year, its carried-forward result will be taken into account when determining the profit available for distribution.

Declaration concerning effective corporate governance

KBC Ancora attaches great importance to corporate governance.

It applies the Belgian Corporate Governance Code 2020 as a reference code. It is committed to implementing the 2020 Code as fully as possible.

KBC Ancora's Corporate Governance Charter explains the principal elements of the company's policy in relation to corporate governance. It is available on the website www.kbcancora.be.

As KBC Ancora is managed by a statutory director, the provisions of the Belgian Corporate Governance Code are applied at the level of the Board of Directors of Almancora Société de gestion SA.

The Board of Directors of Almancora Société de gestion applies the principles from the Corporate Governance Code in full. It deviates from the provisions of the Code where the specific characteristics of KBC Ancora or its statutory director or specific circumstances make this necessary. In such cases the deviation is explained in accordance with the 'comply or explain' principle.

KBC Ancora's Corporate Governance Charter deviates from only a small number of the provisions of the Code.

Contrary to Provisions 2.13, 4.1 and 4.21 of the Corporate Governance Code, the Appointments Committee of Almancora Société de gestion may submit proposals directly (i.e. without the intervention of the Board of Directors) to the General Meeting of Shareholders of Almancora Société de gestion as regards the appointment of A, B and C directors. This offers the best guarantee of an independent nominations policy, in which the focus is exclusively on KBC Ancora's interests.

In addition, contrary to Provisions 7.7 and 7.8 of the Corporate Governance Code, the members of the Day-to-Day Management Committee receive no variable remuneration for their actual and set functions within KBC Ancora, and contrary to Provision 7.6 of the Corporate Governance Code, the executive and non-executive directors receive no remuneration in the form of shares in the company. Lastly, contrary to Provision 7.9 of the Corporate Governance Code, no obligation is imposed on the members of the Day-to-Day Management Committee to hold a minimum number of shares in the company.

KBC Ancora's Corporate Governance Charter was comprehensively revised on 26 June 2020 to bring it into line with the provisions of the Belgian Companies and Associations Code, the 2020 Corporate Governance Code and the recent amendments to the Articles of Association of KBC Ancora and Almancora Société de gestion which came into effect on 1 January 2020.

Management structure

Almancora Société de gestion was appointed in KBC Ancora's Articles of Association as statutory director for the entire duration of the company. Its mandate may only be terminated under exceptional circumstances. The statutory director may however choose to resign without having to seek the endorsement of the General Meeting of Shareholders.

As statutory director, Almancora Société de gestion is authorised to do all that is necessary for or conducive to the achievement of the company's object, with the exception of powers that are reserved by law for the General Meeting of Shareholders.

Almancora Société de gestion receives no remuneration for exercising its mandate as director, but costs incurred during the exercise of that mandate are reimbursed.

Following an amendment to the Articles of Association on 25 October 2019, KBC Ancora's legal form was amended with effect from 1 January 2020 from a partnership limited by shares to a public limited liability company with a sole director. When making this change, use was made of the possibilities created by the 'renewed' legal form of a public limited liability company to include provisions in the Articles of Association which restate the essence of what made a partnership limited by shares particularly suited for anchoring purposes.

The following provisions of the Articles of Association are of particular relevance in this context:

Article 12: The Company shall be managed by a single statutory director.
Article 13: The mandate of the statutory director may only be revoked if there are legitimate grounds for doing so.
Article 29: Decisions to amend the Articles of Association, decisions to make distributions to shareholders and decisions to dismiss the statutory director may only take effect when and on the condition that the statutory director consents to them.

The statutory director has joint and several liability for the commitments of the company dating from before the conversion from a partnership limited by shares to a public limited liability company.

Board of Directors of Almancora Société de gestion SA

No changes took place in the composition of the Board of Directors in the year under review:

Table 5 shows the composition of the Board of Directors of Almancora Société de gestion and the committees set up under the Board's aegis. The number of meetings attended by each Board member is reported for the Board of Directors and its committees. The Board met twelve times in the financial year 2020/2021; the Day-to-Day Management Committee met eleven times; the Audit Committee met five times, the Appointments Committee four times and the Remuneration Committee three times.

Name	End of current term	A directors	B directors	C directors	Management Day-to-Day Committee	Audit Committee	Appointments Committee	Remuneration Committee
Franky Depickere	2022	12			11		4
Katelijn Callewaert	2024	12			11
Johan Massy	2021		12			5	4	3
Liesbet Okkerse	2024		12
Joseph Peeters	2023		12
Luc Vandecatseye	2023		12
Henri Vandermeulen	2024		12
BODA SCS (with Rita Van kerckhoven as permanent representative)	2024			12		5	4
FINTRAC SPRL (with Marc De Ceuster as permanent representative)	2023			12		5	4	3
Herman Vandaele (Chairman)	2021			12			4	3
VISIONALITY SPRL (with Christiane Steegmans as permanent representative)	2021			11		4
Composition of the Board of Directors The mandate of the statutory director, Almancora Société de gestion, may only be terminated with its agreement or by the courts, if there are legitimate grounds for doing so. For this reason, a great deal of attention has been paid to the way in which the Board of Directors of Almancora Société de gestion is constituted. Account was taken when drafting the Articles of Association of KBC Ancora's anchoring objective, the principles of effective corporate governance – more specifically recommendations from competent authorities – and the legal rules regarding conflicts of interest in listed companies.
The Board of Directors of Almancora Société de gestion consists of three types of directors, each with its own specific conditions for appointment: • A directors are those whose directorship forms part of their everyday professional activity. The individuals in question are managing directors of Almancora Société de gestion, with individual powers of representation. The two current A directors are also managing directors of Cera Société de gestion, Cera's statutory director. This creates a personal link between KBC Ancora and Cera.
• B directors are non-executive directors who are members of the consultative bodies that operate within Cera Ancora ASBL as long as the latter does not oppose their candidacy. These directors personify the institutional link between KBC Ancora and Cera, as also enshrined in the description of KBC Ancora's object as set out in its Articles of Association. • C directors are independent directors. They are appointed because of their independence vis à-vis the management of KBC Ancora, Cera and the KBC group.

Table 5: Composition of the Board of Directors of Almancora Société de gestion SA and summary of attendance

Composition of the Board of Directors

A directors are those whose directorship forms part of their everyday professional activity. The individuals in question are managing directors of Almancora Société de gestion, with individual powers of representation. The two current A directors are also managing directors of Cera Société de gestion, Cera's statutory director. This creates a personal link between KBC Ancora and Cera.
B directors are non-executive directors who are members of the consultative bodies that operate within Cera Ancora ASBL as long as the latter does not oppose their candidacy. These directors personify the institutional link between KBC Ancora and Cera, as also enshrined in the description of KBC Ancora's object as set out in its Articles of Association.
C directors are independent directors. They are appointed because of their independence vis-

Directors are appointed for a maximum term of four years.

A directorships are renewable without limit but end by operation of law at the moment that the director concerned reaches the statutory retirement age. B directorships end by operation of law in any event following the Annual General Meeting of Shareholders held in the sixteenth year of the directorship or after the General Meeting of Shareholders following the year in which the director in question has reached the age of 70 years. C directorships end by operation of law in any event following the Annual General Meeting of Shareholders held in the twelfth year of the directorship or after the General Meeting of Shareholders following the year in which the director in question has reached the age of 70 years.

Directorships may be renewed. If a directorship is renewed within the same category, the director concerned may be reappointed one or more times on expiry of each term of office, though only for immediately following terms.

In cases where the Internal Rules permit the taking up of a directorship in a different category, possibly following a cooling off period of two years, the maximum total term of the directorship is calculated taking into account the years spent as a director in both categories.

In the event that there are one or more unfilled directorships, the remaining directors of the same category are authorised to co-opt a new director from among the candidates proposed by the Appointments Committee. The mandate of a co-opted director is submitted for ratification to the next General Meeting of Shareholders.

The Board selects a chairman from among its B and C members.

There must be a minimum of three C directors. The A and C directors together constitute the majority on the Board of Directors. Persons may only be appointed as A, B or C directors by the General Meeting of Shareholders at the nomination of the Appointments Committee of Almancora Société de gestion. The C directors constitute the majority of the members of this Appointments Committee.

All C directors meet the specific independence criteria set out in Provision 3.5 of the Corporate Governance Code and the independence criteria as referred to in Section 7:87 of the Belgian Companies and Associations Code.

Since 1 January 2017, at least one third of the members of the Board of Directors must be of a different gender from the remaining members. On the balance sheet date, the Board of Directors consisted of four women and seven men, thus meeting the requirements of the law.

Powers of the Board of Directors

The Board of Directors of Almancora Société de gestion is authorised to perform all acts which are necessary for or conducive to the achievement of the company's object and, in the context of its directorship of KBC Ancora, for the achievement of KBC Ancora's object.

In exercising its directorship within KBC Ancora, Almancora Société de gestion pays particular attention to KBC Ancora's object. That object is aimed at the maintenance and management of a participating interest in KBC Group, or every company and/or group of companies which is a continuation thereof in order, together with Cera, to achieve and maintain the anchoring of KBC Group as described in the KBC Ancora Articles of Association.

The Board of Directors carries out all tasks which are assigned to it by law and/or the Articles of Association. Decisions on the company's strategy, its values and the focus of its policy take account of the consultations between KBC Ancora and Cera.

The Board of Directors exercises these powers with regard both to the management of Almancora Société de gestion itself and in relation to the management of KBC Ancora, given the capacity of Almancora Société de gestion as statutory director of KBC Ancora, all in accordance with the respective provisions of the Articles of Association. Where relevant, the Board of Directors also takes account of the cost-sharing agreement between Cera and KBC Ancora (see Expenses).

The Board of Directors is also authorised, in view of the capacity of Almancora Société de gestion as statutory director of KBC Ancora, to consult and collaborate with Cera in the light of their parallel anchoring objective.

Almancora Société de gestion is bound to implement its mandate as statutory director personally. However, as permitted by KBC Ancora's Articles of Association, the Board of Directors of Almancora Société de gestion has delegated the day-to-day management of KBC Ancora and of Almancora Société de gestion, as well as the implementation of the decisions taken by the statutory director, to two A directors who together constitute the Day-to-Day Management Committee.

Functioning of the Board of Directors

The functioning of the Board of Directors is governed by the Articles of Association, supplemented by the relevant provisions of the Belgian Companies and Associations Code. Further details are contained in the 'Guidelines for Directors of Almancora Société de gestion for the exercise of their directorship', which form part of the Internal Addendum to the KBC Ancora Corporate Governance Charter.

The Board of Directors met twelve times in the year under review. Each of these meetings was attended by virtually all members. In addition to its traditional duties (adopting the annual and interim results, proposing the appropriation of the result, monitoring the activities of the Audit Committee, Appointments Committee and Remuneration Committee, approving the budgets, etc.), the Board of Directors also addressed the following topics among others in the financial year 2020/2021:

Monitoring the strategy and results of the KBC group and the functioning of the shareholder syndicate;
Valuation of KBC Ancora's financial fixed assets;
Nomination for appointment of an A director, two B directors and a C director;
Nomination for reappointment of KPMG as the company auditor for a further period of three years and determination of the remuneration of the auditor;
Proposal to adopt the remuneration policy of KBC Ancora;
Proposal to introduce a system of loyalty voting rights in accordance with Section 7:53 of the Belgian Companies and Associations Code;
Proposal to renew the powers of the statutory director in relation to the authorised capital and to amend Article 8 of the Articles of Association;
Proposal to renew the powers of the statutory director to acquire and dispose of the company's own shares and to amend Article 9 of the Articles of Association;
Proposal to remove the disclosure threshold of 1% set in the Articles of Association;
Amendment of KBC Ancora loan and pledge agreements (reduction in interest rate applying to existing loan of EUR 100 million and pledging of an additional 10 million KBC Group shares);
Updating the internal addendum to the KBC Ancora Corporate Governance Charter;
Decision to distribute an interim dividend on 10 June 2021 of EUR 0.20 gross per KBC Ancora share and to propose to the General Meeting of KBC Ancora shareholders not to declare a final dividend for the financial year 2020/2021;
Budgets for the financial year 2021/2022.

Committees appointed within the Board of Directors

Day-to-Day Management Committee

Composition:

The Day-to-Day Management Committee is a collegial body and comprises the two A directors. The term of office of the members of the Day-to-Day Management Committee ends on expiry of their term of office as A directors on the Board of Directors.

Powers:

The Day-to-Day Management Committee prepares the meetings of the Board of Directors and forwards proposals for decisions to the Board.

The Committee exercises its powers autonomously, but always within the framework of the general strategy as adopted by the Board of Directors.

The Day-to-Day Management Committee is authorised to conduct the day-to-day management of both Almancora Société de gestion and KBC Ancora.

Functioning:

The Day-to-Day Management Committee has been charged by the Board of Directors with the dayto-day management of the company. In principle, the Day-to-Day Management Committee meets once a month. The Committee met eleven times in the year under review. In addition, there were of course ongoing informal contacts between the Managing Directors.

Audit Committee

Composition:

The Audit Committee comprises a minimum of three directors, other than A directors. More than half the members of the Audit Committee must be C directors.

C directors are independent directors, all of whom meet the independence criteria set in the Belgian Corporate Governance Code and in Section 7.87 of the Belgian Companies and Associations Code.

Marc De Ceuster (permanent representative of FINTRAC SPRL) and Christiane Steegmans (permanent representative of VISIONALITY SPRL) were designated as the Audit Committee members with specific experience in relation to accounting and audit.

Marc De Ceuster (permanent representative of FINTRAC SPRL) holds a doctorate in Applied Economics (UFSIA) and a licentiaat degree in Law (UIA). He has been a Professor of Financial Economics at Antwerp University since 2002. He served as Academic Director at Antwerp Management School and is a former member of the General Council of Antwerp Management School. He is also a former member of the Supervisory Board of Arkea Direct Bank. He also spent six years as a member of the Board of Directors of KBC Group on behalf of the Flemish Government. Christiane Steegmans (permanent representative of Visionality SPRL) obtained a Master's degree in Commercial Engineering at the Solvay Brussels School of Economics and Management at Université Libre de Bruxelles. After fulfilling finance assignments in a variety of sectors, she joined IBM Consulting as an associate partner, working on financial advisory assignments and on setting up a system of shared services. She followed this with a variety of financial and strategic roles at Delhaize Group, at both Belgian and European level. When she left Delhaize in 2015, Christiane was Senior Vice President Corporate Development Belgium. She went on to fulfil a number of consultancy roles. Since 2016 she has been a partner at Innovity, a consultancy which advises company leaders on strategy, finance and governance. Christiane Steegmans has wide experience in finance and strategy in a variety of situations and sectors.

It is evident from the foregoing that a sufficient number of the independent directors who are members of the Audit Committee meet the independence and expertise criteria as laid down in Section 3.96, §1, 9° of the Belgian Companies and Associations Code, and that the Audit Committee therefore possesses sufficient relevant expertise in relation to accounting and audit.

The Audit Committee elects a chairman from among its members, who may not also be the chairman of the Board of Directors, and appoints a secretary.

The Audit Committee is chaired by FINTRAC SPRL (represented by Marc De Ceuster).

Powers:

The Audit Committee supports the Board of Directors in the performance of its supervisory tasks in respect of audit in the widest sense.

The Audit Committee's tasks relate in particular to:

Financial reporting and communication;
Internal control and risk management;
Overseeing the effective functioning of the company's internal control system;
The external audit function performed by the auditor;
Additional audit duties.

Functioning:

The Audit Committee meets as often as necessary for its proper functioning, and at least four times a year.

The Audit Committee's activities are governed by the Internal Rules of the Audit Committee, which are incorporated in the Corporate Governance Charter.

The managing directors are not members of the Audit Committee, but are invited to attend meetings. This arrangement guarantees the necessary dialogue between the Board of Directors and the executive management.

The Audit Committee met five times during the year under review. Among the topics discussed in the financial year 2020/2021 were the following:

Valuation of KBC Ancora's financial fixed assets;
Draft financial statements and draft annual report of KBC Ancora for the financial year 2019/2020;
KBC Ancora remuneration report for the financial year 2019/2020;
Proposal concerning the reappointment and fixing of the remuneration of the auditor;
Annual discussion concerning the independence of the auditor;
Audit planning by the auditor;
Budgetary controls and cost-sharing agreement between Cera and KBC Ancora;
Interim figures of KBC Ancora;
Application of restriction of interest deductibility;
KBC Ancora interim dividend;
KBC Ancora's budgets for the financial year 2021/2022;
Evaluation of the effectiveness of the Audit Committee and the adequacy of the Internal Rules of the Audit Committee.

Appointments Committee

Composition:

The Appointments Committee comprises a minimum of three directors. C directors form the majority of the Committee's members.

The Appointments Committee is chaired by the chairman of the Board of Directors of Almancora Société de gestion, except where the choice of his or her successor is being discussed.

Powers:

The Appointments Committee submits proposals directly (i.e. without the intervention of the Board of Directors) to the General Meeting of Shareholders of Almancora Société de gestion as regards the appointment of A, B and C directors.

As the majority of the Appointments Committee consists of independent, non-executive directors (C directors), the direct nomination of candidate directors offers the best guarantee of an independent nominations policy, in which the focus is exclusively on KBC Ancora's interests. No directors may be appointed who have not been nominated by the Appointments Committee.

Functioning:

The Appointments Committee meets as often as necessary for its proper functioning, and at least twice a year.

The Appointments Committee's activities are governed by the Internal Rules of the Appointments Committee, which are incorporated in the Corporate Governance Charter.

The Appointments Committee met four times during the year under review. Among the matters discussed at these meetings were the following:

Nomination for reappointment of one A director, two B directors and one C director;
Evaluation of the activities of the Appointments Committee in 2019/2020;
Evaluation of the composition and size of the Board of Directors and the Committees;
Launch of procedure for appointing a new C director.

Whenever necessary or appropriate, joint meetings are organised with the Appointments Committee of Cera Société de gestion.

Remuneration Committee

Composition:

The Remuneration Committee comprises at least three directors, other than A directors, of whom the majority are C directors.

The Remuneration Committee is chaired by the chairman of the Board of Directors of Almancora Société de gestion.

Powers:

The Remuneration Committee:

Puts forward proposals regarding the remuneration policy at least every four years or whenever a material change makes this necessary (cf. Section 7:89/1 of the Belgian Companies and Associations Code) for B and C directors and for members of the Day-to-Day Management Committee (A directors);
Puts forward proposals concerning the individual remuneration of B and C directors and of members of the Day-to-Day Management Committee in line with the approved remuneration policy (cf. Section 7:89/1 of the Belgian Companies and Associations Code);
Prepares the remuneration report;
Explains the remuneration report at the General Meeting of Shareholders.

Where relevant, consultation takes place with the Remuneration Committee of Cera Société de gestion.

Functioning:

The Remuneration Committee meets as often as necessary for its proper functioning, and at least twice a year. The Remuneration Committee met three times in the year under review.

The Remuneration Committee has sufficient relevant expertise in the field of remuneration policy. Among the members of the Remuneration Committee, Herman Vandaele possesses specific experience in the field of HR management and remuneration of company directors.

The Remuneration Committee's activities are governed by the Internal Rules of the Remuneration Committee, which are incorporated in the KBC Ancora Corporate Governance Charter.

Among the matters discussed in the Remuneration Committee in the year under review were the remuneration of B and C directors, the job descriptions scheme and an evaluation of the functioning of the Remuneration Committee.

Auditor

The General Meeting of Shareholders held on 30 October 2020 reappointed KPMG Réviseurs d'entreprises SRL (KPMG) as auditor of the company for a further period of three years. KPMG Réviseurs d'entreprises appointed Kenneth Vermeire as its permanent representative.

KPMG Réviseurs d'entreprises received a fee of EUR 15,917 (excluding VAT) for the performance of its normal auditing duties in respect of the financial year 2020/2021, plus an additional fee of EUR 5,000 (excluding VAT) for activities in connection with the interim dividend.

Main features of the evaluation process for the Board of Directors, its committees and its individual members

The Board of Directors discusses and evaluates its size, composition and activities on a regular basis, and at least once every three years, as well as the functioning of the Board and its committees and the interaction between the Board of Directors and the Day-to-Day Management Committee. This evaluation is performed by the Board of Directors on the initiative of the chairman and assisted by the Appointments Committee. In addition, each committee tests and assesses its effectiveness regularly, and at least every three years, and submits a report on this to the Board of Directors. Where necessary, the committee in question proposes changes to the Board of Directors.

The contribution of each member of the Board of Directors is periodically evaluated in order to be able to adapt the composition of the Board of Directors to take account of changing circumstances. The evaluation takes into account their general role as directors as well as their specific roles as chairman or member/chairman of a committee, respectively. In the event of a reappointment, the commitment and effectiveness of the director are assessed in accordance with a predetermined and transparent procedure.

The Board of Directors acts on the basis of the results of the evaluation by further developing its strengths and addressing its weaknesses. Where appropriate this means that new members are proposed for appointment, that a proposal is made that existing members should not be reappointed or that measures are taken that are deemed conducive to the effective functioning of the Board of Directors.

B and C directors meet at least once a year in the absence of the A directors in order to evaluate their interaction with the Day-to-Day Management Committee.

Remuneration report for the financial year

Introduction

The remuneration policy of the public limited liability company KBC Ancora was approved by the General Meeting of Shareholders on 30 October 2020. The remuneration policy is intended to promote sustainable value creation for the company, taking into account the particular structure of the company and its ultimate object, which in essence is aimed at maintaining and managing its participating interest in the public limited liability company KBC Group, with a view to the continuation within the KBC group of the former banking activities of the CERA group, or of any company and/or group of companies which may succeed it, in order, together with the cooperative company Cera, to realise and maintain the anchoring of KBC Group.

In adopting the remuneration package, the following principles were characterised as crucial: internal fairness, external competitiveness, a balanced overall package, transparency and simplicity. The market conformity of the package is tested periodically using methodologies developed by external experts.

In the event of any material change, and at least every four years, the remuneration policy is submitted for approval to the General Meeting of Shareholders. There were no material changes in the remuneration policy in the year under review.

Description of the procedures for the development of the remuneration policy and for setting the remuneration of individual directors and members of the Day-to-Day Management Committee

Almancora Société de gestion receives no remuneration for performing its mandate as statutory director. It does receive reimbursement of the costs it incurs in respect of the remuneration paid to the directors and for the reimbursement of expenses paid to B and C directors.⁶

As KBC Ancora is managed by a statutory director, the legal provisions concerning remuneration policy and the relevant provisions of the Belgian Corporate Governance Code are applied transparently at the level of the Board of Directors of Almancora Société de gestion SA. The Board of Directors of Almancora Société de gestion has appointed a Remuneration Committee which formulates proposals in respect of the remuneration policy for B and C directors and for the members of the Day-to-Day Management Committee (A directors) and prepares and explains the remuneration report to the General Shareholders Meeting. The Remuneration Committee has an advisory function.

The Remuneration Committee monitors trends in legislation, the Corporate Governance Code and market practices, paying particular attention to developments in the remuneration policy at KBC Group SA, and may seek external advice where necessary. The Board of Directors may also instruct the Remuneration Committee on its own initiative or at the proposal of the Day-to-Day Management Committee to investigate possible changes to the remuneration policy and to advise the Board of Directors accordingly.

Whenever necessary or appropriate, joint meetings are organised between the Remuneration Committee of Almancora Société de gestion and the Remuneration Committee of Cera Société de gestion.

⁶ In addition to the payments to directors, which account for the majority of the total expenses incurred by Almancora Société de gestion in the performance of its mandate as director, Almancora Société de gestion's other operating costs are also charged in full to KBC Ancora (see Expenses).

Declaration concerning the remuneration policy pursued during the year under review with respect to directors and members of the Day-to-Day Management Committee

A directors:

A directors exercise their mandate within Almancora Société de gestion without remuneration. They are reimbursed for their duties as members of the Day-to-Day Management Committee of KBC Ancora (see below).

B and C directors:

As a basic principle, non-executive directors (B and C directors) of Almancora Société de gestion receive a fair level of remuneration which is proportionate to their contribution to the policy of KBC Ancora and which is based on the following principles:

The remuneration of B and C directors takes into account their responsibilities and time investment.
B and C directors receive a fixed remuneration and an attendance fee for each meeting of the Board of Directors attended. The remuneration of B directors also takes into account the remuneration they receive for their membership of the Board of Directors of Cera Société de gestion.
Given the large amount of time he/she invests in KBC Ancora, the chairman of the Board of Directors enjoys a deviating remuneration regime. He or she receives a higher fixed remuneration, but no attendance fees.
B and C directors who are members of the Audit Committee also receive an attendance fee for each meeting of the Committee they attend. The chairman of the Audit Committee receives a fixed remuneration.
The members of the Appointments Committee and the Remuneration Committee do not receive attendance fees, but merely reimbursement of travel expenses incurred.
Finally, B and C directors are entitled to reimbursement of expenses incurred in exercising their function as directors.

Where relevant, consultation takes place with the Remuneration Committee of Cera Société de gestion.

B and C directors receive no remuneration in the form of shares in the company. Since KBC Ancora is a single-asset holding company, the company's result is very largely determined by the results of KBC Group. The ultimate object of KBC Ancora, namely the anchoring of KBC Group, is moreover predicated on a very broad long-term vision. In view of this, the statutory director is of the opinion that reimbursing B and C directors partly in the form of shares in the company offers insufficient added value. For this reason, the director has chosen to deviate from Provision 7.6 of the Corporate Governance Code, which recommends that part of the remuneration of non-executive directors should be awarded in the form of shares in the company.

The members of the Day-to-Day Management Committee of KBC Ancora:

The Day-to-Day Management Committee, a collegial body comprising the a directors of the statutory director, is charged with the day-to-day management of KBC Ancora.

Their remuneration package is fixed contractually by Cera. With the exception of any variable remuneration of the chairman of the Day-to-Day Management Committee (which is paid in full by Cera), 20% of their total reimbursement is charged on to KBC Ancora in the context of the costsharing agreement between Cera and KBC Ancora (see Expenses). Where relevant, consultation takes place with the Remuneration Committee of Cera Société de gestion.

All decisions concerning the remuneration of members of the Day-to-Day Management Committee of KBC Ancora require the consent of both the management body of Cera and the Board of Directors of the statutory director of KBC Ancora, where the costs of that remuneration are born in part by KBC Ancora.

The remuneration of the members of the Day-to-Day Management Committee, 20% of which is paid by KBC Ancora, consists of a fixed remuneration, the use of a company car or travel allowance and a competitive insurance package, which among other things includes a supplementary retirement or survivor's pension, disability insurance, hospitalisation insurance and emergency assistance insurance.

The amount of the fixed remuneration is determined on the basis of the individual responsibilities and powers of the A directors, taking into account the remuneration paid for comparable functions in the marketplace.

Franky Depickere's employment contract is of indefinite duration and commenced on 1 September 2006. It provides for severance pay amounting to 24 months' fixed remuneration. The employment contract agreed with Katelijn Callewaert took effect on 3 August 2016 and provides for a severance package equivalent to 12 months' fixed remuneration. The company is bound to contribute to the observance of this contractual undertaking if the situation should arise.

Any variable remuneration of the members of the Day-to-Day Management Committee within Cera is not passed on via the cost-sharing agreement. The members of the Day-to-Day Management Committee also receive no variable remuneration from KBC Ancora. The ultimate object of KBC Ancora, namely the anchoring of KBC Group, is predicated on a very broad long-term vision. In the light of this, it is not entirely appropriate to formulate performance criteria, the assessment of which will inevitably be based on a relatively short-term perspective. Moreover, variable remuneration which is based solely on individual performance criteria pertaining to one member of the Day-to-Day Management Committee within KBC Ancora will inevitably be limited in scope compared with the fixed remuneration. Bearing in mind the modest share taken by KBC Ancora in the fixed remuneration (20%), the benefits of this limited variable remuneration are not sufficient to justify the administrative complexity it involves, because it would bring the personal financial interests of the members of the Day-to-Day Management Committee and the interests of KBC Ancora into line to only a limited extent. For this reason, KBC Ancora has opted to deviate from Provisions 7.7 and 7.8 of the Corporate Governance Code, which recommend that an appropriate portion of the remuneration package of the executive management be linked to the performance of the company and to the performance of the individuals concerned.

Members of the Day-to-Day Management Committee receive no remuneration in the form of shares in the company. Since KBC Ancora is a single-asset holding company, the company's result is very largely determined by the results of KBC Group. The ultimate object of KBC Ancora, namely the anchoring of KBC Group, is moreover predicated on a very broad long-term vision. In view of this, KBC Ancora is of the opinion that imposing an obligation on the members of the Day-to-Day Management Committee to hold shares in the company offers insufficient added value For this reason, KBC Ancora has chosen to deviate from Provision 7.9 of the Corporate Governance Code, which recommends setting a minimum threshold for the number of shares in the company that must be held by the members of the executive management.

Relative weight of the different remuneration components

During the year under review, the fixed portion of the remuneration and the pension contributions were the most important components.

Features of the performance bonuses in the form of shares, options or other rights to acquire shares Not applicable.

Information on the remuneration policy for the next two financial years

The Remuneration Committee periodically evaluates the remuneration policy, and at the present time has no intention of materially amending the principles on which that policy is based.

Remuneration of individual non-executive directors of Almancora Société de gestion SA

Table 6: Remuneration of non-executive directors of Almancora Société de gestion

	Board of Directors fixed	Board of Directors attendance fee	Audit Committee fixed	Audit Committee attendance	Total
				fee
Johan Massy	5,758	5,752	-	2,522	14,032
Liesbet Okkerse	3,840	5,036	-	-	8,876
Joseph Peeters	1,926	2,172	-	-	4,098
Luc Vandecatseye	3,840	5,752	-	-	9,592
Henri Vandermeulen	3,840	5,752	-	-	9,592
BODA SCS (with Rita Van kerckhoven as permanent representative)	7,790	8,640	-	2,522	18,952
FINTRAC SPRL (with Marc De Ceuster as permanent representative)	9,426	10,454	9,293	-	29,173
Herman Vandaele	35,388	-	-	-	35,388
Visionality SPRL (with Christiane Steegmans as permanent representative)	9,426	8,712	-	2,614	20,752
Total	81,234	52,270	9,293	7,658	150,455

Remuneration paid to individual members of the Day-to-Day Management Committee

The Day-to-Day Management Committee is a collegial body and comprises two members. The company is therefore not led by a CEO in the sense of a sole operational and responsible representative of the enterprise. Nonetheless, there is a material difference in the amounts of remuneration received by the two Managing Directors. On the one hand this difference reflects the difference in employment percentage (100% for Franky Depickere and 20% for Katelijn Callewaert), and on the other the additional responsibilities held by Franky Depickere (including as permanent representative of Almancora Société de gestion and Cera Société de gestion, Chairman of the Day-to-Day Management Committees of KBC Ancora and Cera, Chairman of the Risk and Compliance Committee of KBC Group, KBC Bank and KBC Insurance, and numerous other mandates within the KBC group). The figures shown in table 7 are the amounts actually charged by Cera to KBC Ancora.

	fixed	pension**	other***
Franky Depickere*	134,329	27,078	3,260
Katelijn Callewaert*	14,235	-	37

Table 7: Remuneration of Day-to-Day Management Committee of KBC Ancora (in EUR)

* Mandate exercised on the basis of a self-employment contract.

** The pension contributions take the form of fixed contributions to fund a supplementary retirement or survivor's pension. *** Other remuneration comprises the use of a company car or travel allowance, hospitalisation insurance and emergency assistance insurance package.

Ratio of highest remuneration of the members of the Day to Day Management Committee to lowest remuneration of employees

Not applicable since KBC Ancora has no employees.

Shares, share options and other rights to acquire KBC Ancora shares granted, exercised or lapsed during the year under review, on an individual basis

No shares, share options or other rights to acquire KBC Ancora shares were granted or exercised during or before the year under review.

Annual change in the remuneration of KBC Ancora in the last five financial years

Table 8: Trend in remuneration of B and C directors and of members of the Day to Day Management
Committee of KBC Ancora (in EUR)

	2020/2021	2019/2020	2018/2019	2017/2018	2016/2017
Franky Depickere	164,667	163,599	160,818	156,983	145,767
Katelijn Callewaert (since 03.08.2016)	14,272	14,481	12,837	11,915	12,771
Total remuneration paid to B and C directors	150,455	148,473	137,793	131,400	121,586

As KBC Ancora has no employees, it is not possible to present a summary of the annual change in the average remuneration of employees.

The total amount of remuneration is in line with the remuneration policy as approved by the Ordinary General Meeting of Shareholders. In view of the limited operational activity of the company, it is not considered helpful to link the remuneration to the long-term trend in its performance. That long-term performance has to be judged in the light of the ultimate object of the company and its statutory director, which in essence is focused on realising and maintaining the anchoring of KBC Group, together with the Cera cooperative. Since the long-term performance of the company is not linked to its financial performance, it does not regard a comparison between the trend in annual remuneration and the trend in the (financial) performance of the company to be a useful exercise.

Miscellaneous information

Information as referred to in Article 14, paragraph 4 of the Law of 2 May 2007 concerning the disclosure of major shareholdings in issuers whose shares have been admitted for trading on a regulated market

Shareholder structure as at 30 June 2021

On 30 October 2020 an Extraordinary General Meeting of KBC Ancora decided to introduce a system of loyalty voting rights, in accordance with Section 7:53 of the Belgian Companies and Associations Code. Since then, paid-up shares which have been entered in the shareholders' register in the name of the same shareholder for a minimum of two years without interruption have conferred the right to two votes. The other shares confer the right to one vote.

At the same meeting it was decided to remove the lowest disclosure threshold of 1% set in the Articles of Association.

On 30 October 2020 Cera announced that it had exceeded the disclosure threshold of 65% as set in the Articles of Association. This was a passive exceeding of the threshold which was the direct result of the decision by KBC Ancora to introduce a system of loyalty voting rights system. At that time, Cera held 79,819,045 of the 118,657,091 voting rights (or 67.27% of the total number of voting rights).

KBC Ancora received no further notifications during the year under review from shareholders who had exceeded or fallen short of notification thresholds set by law or the Articles of Association.

Table 9 summarises the shareholder structure of KBC Ancora based on all notifications received up to and including 30 June 2021.

A complete list of the participating interest disclosures received in previous financial years can be found on the KBC Ancora website.

Informant	Date	Total number at time of notification	Number of votes	Voting rights
Cera SC	30 October 2020	118,657,091	79,819,045	67.27%

Table 9: Shareholder structure of KBC Ancora (situation up to 30 June 2021)

Information as referred to in Article 34 of the Royal Decree of 14 November 2007 concerning the obligations of issuers of financial instruments that are admitted for trading on a regulated market

On 30 June 2021 the capital of KBC Ancora was represented by 78,301,314 shares without nominal value, each representing an equal portion of the capital.

On 25 August 2021 Cera reported (pursuant to Article 74 §8 of the law of 1 April 2007 on public takeover bids) that as at 30 June 2021 it (still) held more than 30% of the shares with voting rights in KBC Ancora. Specifically, Cera reported that it held 39,584,935 KBC Ancora shares, or 50.55%, of the total securities conferring a voting right.

KBC Ancora is managed by a statutory director appointed pursuant to the Articles of Association. At the Extraordinary General Meeting of Shareholders held on 12 January 2001, Almancora Société de gestion was appointed as statutory director for the duration of the company. The mandate of the statutory director may only be terminated with its agreement or by the courts, if there are legitimate grounds for doing so. Decisions to amend the Articles of Association, decisions to make distributions to shareholders and decisions to dismiss the statutory director⁷ may only take effect when and on the condition that the statutory director consents to them.

Holders of securities in which special control rights are vested None.

Limitations to the exercise of the voting right imposed by the law or the Articles of Association There are no limitations on the exercise of the voting right.

Each paid-up share which has been entered in the shareholders' register in the name of the same shareholder for a minimum of two years without interruption confers the right to two votes. Each other share confers the right to one vote.

As statutory director, Almancora Société de gestion does have a right of veto over decisions to amend the Articles of Association, decisions to make distributions to shareholders and decisions to dismiss the statutory director.

Rules governing the appointment and replacement of members of the management body and amendment of the Articles of Association

When the company was established in 2001, Almancora Société de gestion was appointed as the statutory director by the Articles of Association for an indefinite period. Its mandate may only be terminated on 'legitimate grounds'.

The attendance and majority requirements as set by the law apply for amendments of the Articles of Association. Pursuant to Article 29 of the Articles of Association, a resolution to amend the Articles of Association takes effect only when and if the statutory director agrees to it.

Powers of the statutory director in relation to the issue and repurchase of shares

Within the limits and on the conditions as set out in Article 8 of the Articles of Association, Almancora Société de gestion may decide to increase the authorised capital of KBC Ancora without seeking the prior authorisation of the General Meeting of Shareholders.

Almancora Société de gestion is also authorised to acquire or dispose of shares in the company within the limits and on the conditions as set out in Article 9 of the Articles of Association.

Internal control and risk management

Since KBC Ancora is a single-asset holding company whose assets consist almost entirely of a substantial participating interest in KBC Group, the operational activities of KBC Ancora are fairly limited. KBC Ancora employs no staff. The operational activities are in the hands of joint staff of Cera and KBC Ancora (with costs being charged by Cera to KBC Ancora via the cost-sharing agreement; see Expenses).

The budgets are prepared by the Day-to-Day Management Committee and are explained and discussed in the Audit Committee before being submitted for approval to the Board of Directors. The Day-to-Day Management Committee periodically monitors the budgets and submits a report on them to the Audit Committee and the Board of Directors.

The system of internal control and risk management is characterised by the following elements:

• Sufficient information is made available to the Audit Committee to enable the cost of debt as well as the direct operating costs of KBC Ancora to be discussed and monitored in depth;

⁷ The statutory attendance and majority requirements as set out in Section 153 ff. of the Belgian Companies and Associations Code also apply.

The other operating costs are shared costs of KBC Ancora and Cera, which are borne by Cera and which to the extent that they relate to KBC Ancora are subsequently charged on to KBC Ancora. The Audit Committee of Almancora Société de gestion is closely involved in the following aspects of the discussion and monitoring of the budgets relating to the shared costs:
Organisation of an annual joint meeting of the Audit Committees of Cera Société de gestion and Almancora Société de gestion to discuss the budgets and cost-sharing agreement between Cera and KBC Ancora;
Discussion of the audit cycle during this joint annual meeting;
The provision of transparent and regular information to the Audit Committee of Almancora Société de gestion concerning the operational activities and controls in place at Cera, in so far as these are relevant for the cost-sharing agreement between Cera and KBC Ancora;
Taking cognisance and discussion of the annual audit report by the auditor and of the specific activities of the auditor.

During the year under review, the Audit Committee of Almancora Société de gestion evaluated the adequacy of the present system of internal control and risk management. Based on this evaluation, the Audit Committee judged that there is currently no need to put in place additional control measures or to initiate an internal audit function.

Code of conduct in respect of conflicts of interest

In addition to the legal provisions concerning potential conflicts of interest with a director or key shareholder (Section 7:96 in conjunction with Sections 7:102 and 7:103 and Section 7:97 of the Belgian Companies and Associations Code), the Board of Directors of Almancora Société de gestion has drawn up rules governing potential conflicts of interest between directors/members of the Day-to-Day Management Committee of Almancora Société de gestion and KBC Ancora. These rules are incorporated in the KBC Ancora Corporate Governance Charter.

No incidents occurred in the year under review for which the rules on conflicts of interest with the statutory director or the rules on conflicts of interest with a major shareholder needed to be applied. There were also no conflicts of interest between directors/members of the Day-to-Day Management Committee of Almancora Société de gestion and KBC Ancora.

Code of conduct to prevent market abuse

The Board of Directors of Almancora Société de gestion has drawn up a code of conduct intended to prevent market abuse. The principles of the code of conduct have been incorporated in the KBC Ancora Corporate Governance Charter.

The code of conduct to prevent market abuse provides among other things for the drawing up of a list of insiders, the setting of annual blackout periods, the reporting of trades by directors and employees involved to the Compliance Officer and the reporting of trades by management to the Belgian Financial Services and Markets Authority (FSMA).

Annual notification pursuant to Article 74, §8 of the law of 1 April 2007 on public takeover bids

The majority of the shares are held by Cera SC. On 25 August 2021 Cera reported (pursuant to Article 74 §8 of the law of 1 April 2007 on public takeover bids) that as at 30 June 2021 it (still) held more than 30% of the shares with voting rights in KBC Ancora. Specifically, Cera reported that it held 39,584,935 KBC Ancora shares, or 50.55%, of the total securities conferring a voting right.

This notification was made with a view to retaining the exemption from the obligation to issue a bid for the entire body of securities with voting rights of KBC Ancora SA.

Guidelines for the exercise of directorships

The 'Guidelines for directors of Almancora Société de gestion for the exercise of their directorship mandates' form part of the 'Internal Addendum to the KBC Ancora Corporate Governance Charter'. They were most recently updated on 21 December 2007.

The Audit Committee oversees compliance with the 'Guidelines for directors of Almancora Société de gestion for the exercise of their directorship mandates'.

Openness in investor communication

In fulfilling its duty to inform, KBC Ancora focuses on natural communication opportunities at which it not only provides accurate information but also strives to convey that information in a clear, straightforward manner.

KBC Ancora publishes its periodic financial reports, annual reports and all other information that it is required to make public as a listed company on its website www.kbcancora.be.

This information is disseminated using the usual European media and the KBC Ancora website. In addition, every interested party has the opportunity to subscribe to the KBC Ancora electronic mailing list free of charge via the website.

Since KBC Ancora's principal asset is a substantial participating interest in KBC Group, specific information – which frequently relates to the underlying group results – can also be found in the KBC Group annual report and website and those of its subsidiaries.

Declaration concerning results and other information

Balance sheet as at 30 June 2021

KBC Ancora's balance sheet total stood at EUR 3,664.3 million on 30 June 2021, an increase of EUR 514.0 million due chiefly to the reversal of remaining impairments that had been applied to the participating interest in KBC Group.

Assets

Financial fixed assets

KBC Ancora's assets consist almost entirely of financial fixed assets, and more specifically of a substantial participating interest in KBC Group.

The number of KBC Group shares held by KBC Ancora remained unchanged in the year under review.

At the balance sheet date, KBC Ancora held 77,516,380 KBC Group shares, and had a participating interest of 18.60% in KBC Group. This qualifies as a participating interest within the meaning of Section 1:22 of the Belgian Companies and Associations Code and is treated as a financial fixed asset for accounting purposes.

Accounting valuation of the KBC Group shares

General

KBC Ancora is subject to Belgian accounting rules.

As regards the KBC Group shares, which constitute a financial fixed asset for KBC Ancora, this means that an impairment must be applied in the event of a lasting reduction or depreciation in value, justified by the status, profitability or outlook of the company in which those shares are held (in this case, KBC Group).

These impairments are reversed to the extent that they are higher at the end of the financial year than the amount that is required pursuant to a current assessment of the previously applied impairments.

Application of impairments with effect from 31 March 2009

In the spring of 2009, the Board of Directors of the statutory director formed the opinion that there had been a lasting reduction or depreciation in the value of the KBC Group shares in portfolio, and that the book value of these shares should be written down. In early 2009 the decision was taken to write down the average book value (at that time) from EUR 46.44 to EUR 31.50 per KBC Group share, an amount that corresponded with the (audited) equity value per KBC Group share as at 31 December 2008 (according to the IFRS rules applying for KBC Group).

Partial reversal of impairments on 30 June 2017

The Board of Directors was of the opinion that the positive developments at the level of KBC Group warranted a reappraisal of the impairments applied in the past. For reasons of consistency, it was decided to apply the same criterion as when the impairments were applied, namely the (underlying) IFRS equity value per KBC Group share. At 30 June 2017, this value amounted to EUR 39.84 per KBC Group share.

The weighted average initial book value of the 77.5 million KBC Group shares held in portfolio by KBC Ancora was EUR 46.44 per share. Since 31 March 2009 the net asset value of these KBC Group shares has stood at EUR 31.50.

As the equity value per KBC Group share stood at EUR 39.84 on 30 June 2017, it was decided on 31 August 2017 that the impairments previously applied to the KBC Group shares should be partially reversed on 30 June 2017, resulting in a net book value after this partial reversal of EUR 39.84 per share as at the balance sheet date.

This generated a non-recurring result of EUR 646.5 million in the financial year 2016/2017.

Reversal of remaining impairments after evaluation on 30 June 2021

On 30 June 2021, the IFRS equity value amounted to EUR 51.8 per KBC Group share and the KBC Group share was listing at a price of EUR 64.30.

Given that both the IFRS equity value of the KBC Group share and the stock market price of the KBC Group share have for some considerable time been well above the historical book value (EUR 46.44 per share), the Board of Directors was of the opinion that as at 30 June 2021 there was no longer any reason to maintain the remaining impairments on the KBC Group shares.

The remaining impairments were therefore fully reversed, for a total amount of EUR 511.7 million. This led to an increase in the book value of the KBC Group shares held by KBC Ancora in portfolio from EUR 39.94 to EUR 46.44 per KBC Group share (the historical book value of the shares).

The trend in equity per KBC Group share and the stock market price of the KBC Group share since 2009 are presented in the following charts.

Chart 7: Trend in equity per KBC Group share (quarterly)

Current assets

KBC Ancora held current assets of EUR 64.3 million on the balance sheet date, consisting almost entirely of cash at bank and in hand. These increased by EUR 2.3 million from the balance sheet date in the previous financial year. This gives KBC Ancora a substantial liquidity buffer which can be addressed to meet future financial obligations.

As regards the liquidity position of KBC Ancora, it should be noted that KBC Ancora's recurring income consists principally of dividend it receives from its participating interest in KBC Group. In the event that KBC Ancora does not receive a dividend from its participating interest in KBC Group in any given financial year, KBC Ancora will itself not pay a dividend in that year. If KBC Ancora once again receives KBC Group dividend in a subsequent financial year, its carried-forward result will be taken into account when determining the profit available for distribution.

In its press release of 5 August 2021, KBC Group reaffirmed its intention to distribute an additional gross dividend in the fourth quarter of 2021 of EUR 2.00 per share in respect of the financial year 2020. KBC Group has also stated its intention to distribute an interim dividend of EUR 1.00 per share in November 2021 followed in May 2022 by a final dividend, the amount of which has yet to be determined, in respect of the financial year 2021.

Liabilities

Capital and reserves amounted to EUR 3,319.8 million, an increase of EUR 514 million, or 18.3%, compared with the previous financial year, due chiefly to the non-recurring result described above stemming from the reversal of (remaining) impairments.

The issued capital amounts to EUR 2,021.9 million. The legal reserve amounted to EUR 101.7 million at year-end, an increase of EUR 26.5 million.

The other unavailable reserves amounted to EUR 1,136.3 million, an increase of EUR 486.1 million compared with the previous financial year. These unavailable reserves are made up as follows, at all times with the intention of neutralising the impact of a non-recurring result in any given financial year on KBC Ancora's ability to pay a dividend:

In the financial year 2013/2014 , impairments totalling EUR 35.955 million were reversed, following the sale of 4.7 million KBC Group shares in November 2013. The impact of this non-recurring result on KBC Ancora's ability to pay dividends was neutralised by adding a total of EUR 35.955 million to unavailable reserves in the financial years 2013/2014 and 2014/2015.
Impairments applied to the KBC shares in portfolio totalling EUR 646.5 million were reversed in the financial year 2016/2017. The impact of this non-recurring result on KBC Ancora's ability to pay dividends was neutralised by adding 95% of this result (EUR 614.2 million) to the unavailable reserves and the remaining 5% (EUR 32.3 million) to the legal reserve.
Impairments applied to the KBC shares in portfolio totalling EUR 511.7 million have been reversed in the year under review. The impact of this non-recurring result on KBC Ancora's ability to pay a dividend was neutralised by adding 95% of the total (EUR 486.1 million) to the unavailable reserves. The remaining 5% (EUR 25.6 million) is accounted for by the increase in the legal reserve.

The available reserves amounted to EUR 59.6 million. These reserves were formed for the first time in the financial year 2019/2020 using the portion of the result for the financial year (EUR 57.8 million) which, due to the decision not to distribute a dividend in respect of the financial year 2019/2020, was not paid out in the form of dividend. An amount of EUR 1.8 million was added to these reserves in the year under review, corresponding to 10% of the recurring result available for distribution after formation of the legal reserve. This is the portion of the recurring result, after formation of the legal reserve, which will not be distributed in the form of dividend.

The result to be carried forward to the next financial year thus totals EUR 0.4 million.

Amounts owed to credit institutions stood at EUR 343 million, unchanged from the balance sheet date in the previous financial year. These financial liabilities concern long-term loans at fixed rates of interest, and are scheduled to be repaid in full on the respective maturity dates (bullet loans).

The maturity dates are as follows:

May 2022 (EUR 100 million);
May 2024 (EUR 143 million);
May 2027 (EUR 100 million);

In 2020 KBC Ancora reduced the interest charges payable on the loan of EUR 100 million which matures in May 2027, by EUR 0.6 million on an annualised basis. Over the total term of this loan, the reduction in interest charges will amount to EUR 4.2 million. A further 10 million KBC Group shares were pledged as part of this exercise. Collateral was provided in the form of a pledge on KBC Group shares. In total, KBC Ancora has pledged 35.7 million KBC Group shares. The pledge relates to long-term liabilities totalling EUR 343 million.

Other amounts falling due within one year amounted to EUR 0.2 million.

Accrued expense and deferred income (EUR 1.3 million) relates to interest charges recognised on a pro rata basis. These charges were lower than a year earlier due to the reduction in interest charges payable on the loan maturing in 2027, as described above.

Profit and loss account for the financial year 2020/2021

KBC Ancora recorded a profit for the financial year 2020/2021 of EUR 529.7 million, equivalent to EUR 6.76 per share. The recurring result for the financial year 2020/2021 amounted to EUR 18.0 million.

Income

KBC Ancora generated income of EUR 545.9 million in the year under review. Table 10 summarises the movements in the various income categories within KBC Ancora in recent financial years.

Table 10: Trend in KBC Ancora income

(x EUR million)	Financial year 2020/2021	Financial year 2019/2020	Financial year 2018/2019
Income from financial fixed assets	34.1	77.5	271.3
Other income	0.1	0.0	0.0
Non-recurring income	511.7	0.0	0.0
Total	545.9	77.6	271.4

Income from financial fixed assets

KBC Group distributed a total dividend of EUR 0.44 per share in respect of the financial year 2020. Following the recommendation by the European Central Bank (ECB) in the light of the COVID-19 crisis, KBC Group did not distribute an interim dividend in November 2020 and paid only a limited dividend of EUR 0.44 per share in May 2021. KBC Ancora consequently received dividend income totalling EUR 34.1 million.

KBC Ancora received dividends totalling EUR 77.5 million from its participating interest in KBC Group in the previous financial year; this was the interim dividend that was paid in November 2019. This was followed by the decision at the end of March 2020, in line with the ECB recommendations, to withdraw the proposal to distribute a final dividend of EUR 2.50 per share and not to propose a final dividend in respect of the financial year 2019.

Other income

Other income amounted to EUR 0.05 million.

Non-recurring income

As described earlier under Assets, KBC Ancora received non-recurring income of EUR 511.7 million in the year under review due to the full reversal of the remaining impairments on its participating interest in KBC Group.

Expenses

KBC Ancora's total costs in the year under review amounted to EUR 16.2 million (EUR 0.21 per share), EUR 0.5 million less than in the previous financial year.

Table 11 summarises the movements in the various cost categories in recent financial years.

(x EUR million)	Financial year 2020/2021	Financial year 2019/2020	Financial year 2018/2019
Costs of cost-sharing agreement	1.8	1.7	1.7
Cost of debt	13.8	14.5	15.1
Other operating costs	0.5	0.5	0.8
Total	16.2	16.7	17.6

Table 11: Trend in KBC Ancora costs

Costs within the cost-sharing agreement with Cera

KBC Ancora entered into a cost-sharing agreement with Cera in 2001 in order to enhance the costefficiency of both parties' operations. A budget is drawn up annually, setting out the different costs within the cost-sharing agreement. KBC Ancora reimburses Cera for a quarter of these budgeted costs every quarter on a pro rata basis. Settlement then occurs at the end of each calendar year based on the actual costs.

The costs in connection with the cost-sharing agreement amounted to EUR 1.8 million in the year under review, EUR 0.1 million more than in the previous financial year.

Table 12 summarises the various cost categories within the cost-sharing agreement with Cera and the cost allocation percentage as this has been applied since 1 January 2018.

Cost-sharing agreement	Cost allocation percentage	Amount (x EUR million)
Administration/management/advice	20%	0.52
Communications	20%	0.12
Financial Unit	50%	0.46
Membership and capital administration	5%	0.07
Support	15%	0.66
Total		1.84

Table 12: Costs within the cost-sharing agreement with Cera

Cost of debt

The cost of debt is determined almost entirely by the interest payable on the long-term loans taken out with credit institutions. Cost of debt amounted to EUR 13.8 million. The interest rate applying for the existing bullet loan of EUR 100 million, which matures in May 2027, was reduced with effect from the end of May 2020. As a result of this change, the interest charges payable by KBC Ancora in the current financial year have reduced by EUR 0.65 million.

Other operating costs

Other operating costs amounted to EUR 0.5 million, in line with the previous financial year. These costs related among other things to listing fees and costs associated with the directorship of the company.

Income tax expense

KBC Ancora has no corporation tax liability in respect of the year under review.

Result and proposed profit appropriation

After addition of the result carried forward from the previous financial year (EUR 0.8 million), the result available for appropriation amounted to EUR 530.4 million; this figure included a nonrecurring result of EUR 511.7 million. The following appropriation of profit will be proposed to the General Meeting of Shareholders to be held on 29 October 2021:

addition of EUR 26.5 million (5% of the profit for the financial year) to the legal reserve;
addition of EUR 486.1 million to the unavailable reserves. This amount represents 95% of the non-recurring result deriving from the reversal of impairments. The remaining 5% of the reversal of impairments (EUR 25.6 million) is accounted for by the increase in the legal reserve;
addition of EUR 1.8 million to the available reserves; This amount represents 10% of the recurring result after formation of the legal reserve (5% of the total);.
distribution of a dividend of EUR 15.7 million (EUR 0.20 per share), which was paid to shareholders as an interim dividend on 10 June 2021; This amount represents 90% of the recurring result available for distribution, after formation of the legal reserve;
carry-forward of the balance of EUR 0.4 million, or EUR 0.005 per share, to the next financial year.

This means that the (slightly modified) dividend policy (as announced in August 2019) was applied for the first time. Accordingly, barring exceptional circumstances, 90% of the recurring result for the financial year available for distribution (i.e. after adjustment for any exceptional results and after the compulsory formation of the legal reserve) will be paid out as (interim) dividend. This is a reduction of 10% compared to the previous dividend policy, and will enable the outstanding financial debt to be reduced more quickly, That makes KBC Ancora's balance sheet more resilient against shocks and, from May 2022, following the next loan maturity date (EUR 100 million out of a total of EUR 343 million), will in principle lead to an accelerated reduction in the interest charges payable.

The original intention had been to apply this amended dividend policy for the first time to the interim dividend which (barring exceptional circumstances) would have been made payable at the beginning of June 2020. However, in the light of the COVID-19 pandemic the Board of Directors decided not to distribute an interim dividend in respect of the financial year 2019/2020, nor to propose a final dividend. KBC Ancora will apply the funds which were retained within the company as a result of this decision to the loans totalling EUR 100 million which mature in May 2022.

Additional information

No material events occurred after the balance sheet date.

No activities were carried out in the area of research and development.

The company has no branch offices.

KBC Ancora's principal asset is a participating interest in KBC Group. The value of KBC Ancora's assets, as well as its cash position and its results, are dependent on developments relating to the KBC group.

No consolidated financial statements for KBC Ancora

KBC Ancora has only one equity holding in another company, namely its participating interest in KBC Group. KBC Ancora has no control over that company, either in law or in practice. Consequently, KBC Ancora is not obliged to produce consolidated financial statements.

KBC Ancora shareholders who are interested can however find additional useful information in KBC Group's consolidated annual report, which may be found on the KBC Group website (www.kbc.com). The annual report may also be requested from: KBC Group SA, Investor Relations, Havenlaan 2 SEE, 1080 Brussels, or by e-mail from [email protected].

Financial year 2020 and available information for 2021 on KBC Group

Past financial year of KBC Group

KBC Group's most recent financial year (2020) was discussed in the financial press release on the financial year 2020 and in its most recent annual report. The main financial highlights are set out below.

The net result for the financial year 2020 amounted to EUR 1,440 million, compared with a net profit of EUR 2,489 million in 2019.

Net interest income

Net interest income came to EUR 4,467 million in 2020, down 3% on its year earlier level. Factors such as the negative impact of interest-rate cuts by the Czech central bank, the depreciation of the Czech koruna and the Hungarian forint against the euro and lower reinvestment yields could not be fully compensated for by the positive effect of a larger loan and bond portfolio, higher margins on new production of home loans than those on the outstanding portfolios in Belgium, the Czech Republic and Slovakia, the effect of TLTRO III, ECB deposit tiering, the impact of changes in the scope of consolidation and a positive one-off effect.

Loans and advances to customers (excluding reverse repos) went up by 3% in 2020 to EUR 160 billion. Adjusted for the impact of the changes in the scope of consolidation, the figure was still 3%, with a 3% increase at the Belgium Business Unit, 1% at the Czech Republic Business Unit and 8% at the International Markets Business Unit (with growth in all countries). The volume of loans granted with payment deferral under the various coronavirus-related moratoriums amounted to EUR 13.4 billion (according to the EBA definition and still on the balance sheet at year-end 2020). The moratorium had already expired by the end of December 2020 for roughly EUR 8.7 billion of that amount (with 96% of payments resumed), leaving EUR 4.7 billion outstanding at year-end 2020 under the various coronavirus-related moratoriums.

In addition to this, EUR 0.8 billion was granted in loans that fall under the various coronavirusrelated government guarantee schemes in KBC Group's home markets.

The total deposit volume (deposits from customers and debt securities, excluding repos) stood at EUR 215 billion, an increase of 7% on the year-earlier figure. Adjusted for the impact of the changes in the scope of consolidation, the figure was 6%, with 4% growth at the Belgium Business Unit, 9% at the Czech Republic Business Unit and 16% at the International Markets Business Unit (with growth in all countries apart from Ireland).

The net interest margin for the banking activities came to 1.84% compared to 1.95% in 2019. It amounted to 1.63% in Belgium, 2.31% in the Czech Republic and 2.60% at the International Markets Business Unit.

Net fee and commission income

Net fee and commission income came to EUR 1,609 million in 2020, down 7% on the year-earlier figure. This was primarily attributable to a decline in fees for asset management services (lower management and entry fees for investment funds and unit-linked life insurance products), a reduction in fees for banking services (including for payments, which were down due to the lockdowns, and for loans, the effect of which was only partly offset by higher securities fees) and the depreciation of the Czech koruna and Hungarian forint against the euro.

At the end of 2020, total assets under management came to approximately EUR 212 billion, down 2% on the year-earlier figure, which was almost entirely attributable to a limited net outflow. Most of these assets at year-end 2020 were managed at the Belgium Business Unit (EUR 194 billion) and the Czech Republic Business Unit (EUR 11 billion).

Insurance premiums and technical charges

The technical insurance result (earned premiums less technical charges plus the ceded reinsurance result) amounted to EUR 855 million.

Non-life insurance contributed EUR 847 million to this result, up 15% on the year-earlier figure, due to growth in premium income (+3%), a slightly higher reinsurance result and lower technical charges (-6%, partly attributable to lower claims during lockdown periods and despite an increase in the ageing reserves). The combined ratio at group level amounted to an excellent 85% compared to 90% the previous year.

Life insurance accounted for EUR 8 million of the technical insurance result, compared to the yearearlier figure of EUR -9 million. However, in compliance with IFRS, certain types of life insurance (i.e. unit-linked products) have been excluded from the figures for premiums and technical charges in the life insurance business. If the premium income from such products is included, premium income from the life insurance business totalled around EUR 2 billion, roughly 8% more than in 2019. The increase occurred primarily in Belgium among unit-linked life insurance products. For the group as a whole, products offering guaranteed rates accounted for 51% of premium income from the life insurance business in 2020, and unit-linked products for 49%.

Other income

Other income came to an aggregate EUR 264 million, as opposed to EUR 551 million in 2019. The 2020 figure includes EUR 33 million in trading and fair value income. The initial impact of the pandemic on this result item was extremely negative, due to the sharp fall of the equity markets, wider credit spreads and lower long-term interest rates (EUR -385 million in the first quarter). While some of this was made up again in the three subsequent quarters, the trading and fair value income result for the financial year as a whole was still EUR 149 million lower than in 2019. This decline is primarily attributable to the fall in the value of derivatives used for asset/liability management purposes and a lower result from shares at the insurance business, which more than cancelled out the increase in the contribution from dealing room results and the positive effect of various fair value adjustments.

Other income also included EUR 53 million in received dividends (lower than the previous year as many companies adjusted their dividend policy in response to the coronavirus crisis), EUR 2 million in the net realised result from debt instruments at fair value through other comprehensive income and EUR 176 million in other net income. The latter is EUR 106 million lower than the previous year, which benefited from the one-off EUR 82 million impact of the revaluation of the existing 55% stake in ČMSS when the remaining 45% interest was purchased.

Operating expenses

Expenses amounted to EUR 4,156 million in 2020, a fall of 3% on the year-earlier figure. Adjusted for bank taxes (EUR 503 million, up 2% on the previous year) operating costs fell by 4%. The decrease reflected a number of factors such as lower staff expenses (including lower provisions for variable remuneration and a fall in the average number of FTEs), several direct effects of the coronavirus crisis (lower expenses for facility services, marketing, events, travel and professional fees), reduced software expenses (owing to the changed rules for software depreciation) and the fall in value of the Czech koruna and Hungarian forint against the euro. These items more than offset the negative impact of wage drift, higher ICT costs and the changes in the scope of consolidation, among other things.

As a result, the cost/income ratio of the banking activities came to 60.0%, compared to 57.9% in 2019. The ratio was 57.2% for the Belgium Business Unit, 53.3% for the Czech Republic Business Unit and 65.9% for the International Markets Business Unit. If a number of non-operating and exceptional items are excluded, the cost/income ratio came to 59.1%, compared to 58.3% in 2019.

Impairment

There was a net increase in loan loss impairment charges totalling EUR 1,074 million in 2020, compared to just EUR 203 million in 2019. This increase related chiefly to the fallout of the coronavirus crisis, for which the group set aside EUR 783 million in collective impairment. The figure in question was calculated as the sum of EUR 672 million obtained through an expert-based calculation ('management overlay' on the basis of certain stress assumptions depending on country, segment, sector and probability-weighted macroeconomic scenarios) and EUR 111 million via the ECL models in response to updated macroeconomic variables.

The net increase in 2020 comprised EUR 654 million for Belgium, EUR 210 million for the Czech Republic, EUR 42 million for Slovakia, EUR 59 million for Hungary, EUR 27 million for Bulgaria and EUR 90 million for Ireland, as well as a small net reversal for the Group Centre (EUR 7 million).

As a result, the overall credit cost ratio amounted to 60 basis points in 2020, compared to 12 basis points in 2019. Disregarding the collective coronavirus-related impairment charges, the figure in 2020 would have been 16 basis points.

The proportion of (stage 3) impaired loans in the loan portfolio was 3.3% at year-end 2020, compared to 3.5% for 2019. This breaks down into 2.3% in Belgium, 2.3% in the Czech Republic and 6.9% at International Markets. For the group as a whole, the proportion of impaired loans more than 90 days past due came to 1.8%, compared to the year-earlier figure of 1.9%.

Other impairment charges came to a combined EUR 108 million in 2020, and substantially reflected software depreciation and the accounting treatment of the various payment moratoria schemes related to the coronavirus crisis in the group's core countries In 2019, other impairment charges came to just EUR 14 million.

Income tax expense

Income tax expense came to EUR 407 million in 2020, compared to a year-earlier figure of EUR 627 million. The reduction chiefly reflected the lower result before tax. Besides paying income tax, KBC Group also pays special bank taxes. These amounted to EUR 503 million compared to EUR 491 million in 2019 and are included under 'Operating expenses'.

Total assets

At the end of 2020, the group's consolidated total assets came to EUR 321 billion, up 10% year-onyear. Risk-weighted assets (Basel III, fully loaded) increased by 3% to EUR 102 billion.

Equity

On 31 December 2020, the group's total equity came to EUR 21.5 billion. This figure included EUR 20.0 billion in parent shareholders' equity and EUR 1.5 billion in additional tier-1 instruments. Total equity rose by EUR 1.3 billion in 2020, with the most important components in this respect being the inclusion of the annual profit (EUR +1.4 billion), an increase in the revaluation reserves for debt instruments (EUR +0.1 billion), translation differences (EUR -0.2 billion, due largely to the depreciation in the reporting period of the Czech koruna and the Hungarian forint) and various smaller items.

On 31 December 2020, the group's common equity ratio (Basel III, under the Danish compromise method) stood at 18.1% (transitional: this includes the impact of temporary regulatory relaxation) or 17.6% (fully loaded), compared to 17.1% in 2019. The leverage ratio came to 6.4% (fully loaded). The group's liquidity position also remained excellent, as reflected in an LCR ratio of 147% and an NSFR ratio of 146%.

The profit figures and key ratios in Table 13 give an impression of the KBC Group result in the financial year 2020 and a comparison with the financial year 2019.

	2020	2019
Net group profit
(x EUR million)	1,440	2,489
Belgium	1,001	1,344
Czech Republic	375	789
International Markets
(Slovakia, Hungary, Bulgaria, Ireland)	199	379
Group Centre	-135	-23
Shareholders' equity per share (in EUR)	48.1	45.0
Net earnings per share (in EUR)	3.34	5.85
Dividend per share (in EUR)	0.44	1.00
Return on equity	8%	14%
Cost/income ratio, banking activities	60%	58%
Credit cost ratio, banking activities	0.60%	0.12%
Combined ratio, non-life insurance	85%	90%
Common equity ratio of the group (CET1; Basel III, Danish compromise method), fully loaded:	17.6%	17.1%
Leverage ratio (Basel III, Danish compromise method), fully loaded	6.4%	6.8%
Liquidity coverage ratio (LCR)	147%	138%
Net stable funding ratio (NSFR)	146%	136%

			Table 13: Profit figures and key ratios of KBC Group for the financial years 2020 and 2019
--	--	--	--------------------------------------------------------------------------------------------	--

First half of KBC Group's financial year 2021

KBC Group published its results for the first half of 2021 on 5 August 2021. The financial highlights are presented below.

The net result for the first half of 2021 amounted to EUR 1,350 million, compared to EUR 205 million in the first half of 2020. The reference period in 2020 was marked by high collective loan loss impairment charges related to the coronavirus crisis (EUR 789 million, compared with a net release of EUR 155 million in the first half of 2021). Increases were also recorded in net fee and commission income, technical insurance income and trading and fair value income. Net interest income, dividend income and other net income fell. Expenses showed a year-on-year increase.

Highlights (compared to the first half of 2020):

Lower net interest income (down 5% to EUR 2,162 million), due in part to the negative impact of past rate cuts in the Czech Republic and the negative effects of lower reinvestment yields. These items were partly offset by the positive impact of TLTRO III and ECB tiering, a larger loan portfolio (see below), the OTP Banka Slovensko 'impact' (included in the group result as of 2021), more extensive charging of negative interest rates on certain current accounts held by corporate entities and SMEs and a higher netted positive impact of ALM FX swaps. On an organic basis (excluding changes in scope and forex effects), the volume of deposits and debt certificates increased by 14% and customer lending volumes by 3%. The net interest margin in the first half of 2021 came to 1.79%, down 10 basis points year-on-year.
Increase in the contribution to profit made by the technical insurance result (up 8% to EUR 461 million). The non-life insurance technical result was up 5% on the figure for the year-earlier period, on account of higher premium income and a better ceded reinsurance result, which more than offset the increased level of technical charges. The year-to-date non-life combined ratio amounted to 82%, compared to 85% for full-year 2020. Life insurance sales (EUR 965 million) were down slightly (by 2%), with decreased sales in both unit-linked and guaranteed-interest products.
Higher net fee and commission income (up 9% to EUR 890 million), attributable primarily to an increase in fees for asset management services (management fees) and, to a lesser extent, higher fees for certain banking services. At the end of June 2021, total assets under management amounted to EUR 228 billion, up 13% on the level recorded a year earlier (12% price increase, 1% net inflows).
Much higher trading & fair value income (up from EUR -132 million to EUR 156 million). The figure for the reference period included the extremely negative performance in the first quarter (EUR -385 million), as the outbreak of the coronavirus crisis in that quarter initially caused stock markets to tumble, credit spreads to widen and long-term interest rates to fall.
Lower level of all other income items combined (down 13% to EUR 117 million) due to lower dividend income and net other income.
Higher operating expenses (up 2% to EUR 2,293 million). Excluding bank taxes, operating expenses were also up 2%, due to items such as the exceptional Covid-related bonus awarded to staff, the consolidation of OTP Banka Slovensko, the lower accruals for variable remuneration in the reference period and wage inflation, partly offset by lower costs related to ICT, facilities and professional fees and lower depreciation expenses. Note that, excluding the OTP Banka Slovensko impact, the exceptional Covid-related bonus, forex effects and bank taxes, costs remained stable compared to the reference period. The year-to-date cost/income ratio came to 61%, or an adjusted 54% when bank taxes are evenly spread throughout the year and certain non-operating items excluded (compared to 57% for full-year 2020). When bank taxes are fully excluded, the cost-income ratio for the six-month period under review fell to 49%.
Significant decrease in loan loss impairment (net reversal of EUR 206 million, as opposed to a net charge of EUR 966 million in the reference period). Note that the reference period included EUR 789 million in collective impairment charges for the coronavirus crisis, compared to a net release of EUR 155 million in the current period. As a result, the credit cost ratio for the whole group improved to -0.22%, compared to 0.60% for full-year 2020 (a negative figure implies a positive impact on the result).

Table 14 compares the trend in profits in the various KBC Group Business Units in the first half of 2021 with the same period in 2020.

	1H2021	1H2020
Net group profit (x EUR million)	1,350	205
Belgium	908	119
Czech Republic	291	165
International Markets	228	-11
Group Centre	-76	-68
Equity per share (in EUR)	51.8	44.9
Net earnings per share (in EUR)	3.18	0.43
Return on equity	14%	2%
Cost/income ratio, banking activities	61%	66%
Credit cost ratio, banking activities	-0.22%	0.64%
Combined ratio, non-life insurance	82%	83%
Common equity ratio according to Basel III (CET1; Basel III, Danish compromise method), fully loaded)	17.5%	16.6%
Leverage ratio (Basel III, Danish compromise method), fully loaded	5.5%	6.0%
Liquidity coverage ratio (LCR)	166%	136%
Net stable funding ratio (NSFR)	152%	142%

Table 14: KBC Group profits in the first half of the financial years 2021 and 2020

Outlook for the financial year 2021/2022

Loans maturing in 2022

Income

KBC Ancora's income consists of the dividend it receives from its participating interest in KBC Group. Forecasts of KBC Group's future dividend rely heavily on factors such as the projection of KBC Group's future earnings.

KBC Group published its interim results on 5 August 2021, showing a net result of EUR 1,350 million in the first six months of 2021, compared with EUR 210 million in the same period a year earlier. The interim result is discussed in more detail in the previous section of this report.

KBC Group has reaffirmed its intention to distribute an additional gross dividend in the fourth quarter of 2021 of EUR 2.00 per share in respect of the financial year 2020. KBC Group has also stated its intention, in line with its dividend policy, to distribute an interim dividend of EUR 1.00 per share in November 2021 followed in May 2022 by a final dividend, the amount of which has yet to be determined, in respect of the financial year 2021. Barring exceptional or unforeseen circumstances, KBC Group's dividend policy is to aim for a dividend payout ratio (including the coupon on the outstanding Additional Tier-1 instruments) of at least 50% of the consolidated profit. In normal circumstances, an interim dividend of EUR 1.00 per share will be distributed in November each year, followed by a final dividend after the Annual General Meeting of Shareholders.

Expenses

Costs within the cost-sharing agreement with Cera are expected to amount to approximately EUR 1.9 million. Total interest charges for the financial year 2021/2022 are estimated at approximately EUR 13.2 million.

Other operating costs are expected to be around EUR 1.3 million. It is likely that that KBC Ancora will have no corporation tax liability in the financial year 2021/2022.

Result

Based on all the anticipated income and expenditure as described above, KBC Ancora will close the financial year 2021/2022 with a positive result for appropriation.

Financial report

Balance sheet

Balance sheet after appropriation of result

ASSETS (in EUR)	Notes	30 June 2021	30 June 2020
Fixed assets		3,599,978,772	3,088,252,579
Financial fixed assets	6.4.2/ 6.5.1	3,599,978,772	3,088,252,579
Companies with which there is a	6.15	3,599,978,772	3,088,252,579
participatory relationship
Participating interests		3,599,978,772	3,088,252,579

Current assets		64,347,843	62,056,784
Receivables due within one year		5,203	4,344
Trade receivables		5,203	4,344
Cash at bank and in hand		64,337,110	62,046,911
Accrued income and deferred	6.6	5,530	5,530
expense
TOTAL ASSETS		3,664,326,615	3,150,309,364

LABILITIES (in EUR)	Notes	30 June 2021	30 June 2020
Equity		3,319,758,873	2,805,736,698
Contribution	6.7.1	2,021,871,293	2,021,871,293
Capital		2,021,871,293	2,021,871,293
Issued capital		2,021,871,293	2,021,871,293
Reserves		1,297,504,512	783,097,914
Unavailable reserves		1,237,916,153	725,292,148
Legal reserve		101,658,991	75,174,869
Other		1,136,257,162	650,117,279
Distributable reserves		59,588,359	57,805,767
Profit (loss) carried forward		383,068	767,491

Creditors		344,567,742	344,572,665
Amounts falling due after more than	6.9	243,000,000	343,000,000
one year
Financial liabilities		243,000,000	343,000,000
Credit institutions		243,000,000	343,000,000
Amounts falling due within one year	6.9	100,243,673	198,429
Liabilities over more than one
year falling due within the year		100,000,000	0
Trade creditors		167,898	160,784
Suppliers		167,898	160,784
Other creditors		75,775	37,645
Accrued expense and deferred	6.9	1,324,069	1,374,236
income
TOTAL LIABILITIES		3,664,326,615	3,150,309,364

Profit and loss account

(in EUR)	Notes	30 June 2021	30 June 2020
Operating income		54,413	44,847
Other operating income		54,413	44,847
Operating costs		2,386,178	2,242,687
Services and sundry goods		2,384,781	2,241,115
Other operating costs	6.10	1,397	1,573
Operating profit (Operating loss)		-2,332,765	-2,197,840

Financial income		545,833,401	77,516,380
Recurring financial income		34,107,207	77,516,380
Income from financial fixed assets		34,107,207	77,516,380
Non-recurring financial income	6.12	511,726,193	0
Financial expenses		13,818,198	14,470,365
Recurring financial expenses		13,818,198	14,470,365
Cost of debt		13,818,198	14,470,240
Other financial expenses		125	125

Profit for the year before tax	6.13	529,682,437	60,848,175
Profit for the year		529,682,437	60,848,175
Profit (loss) to be appropriated for		529,682,437	60,848,175
the year

Treatment of results
Profit (loss) to be appropriated		530,449,928	61,615,667
Profit (loss) to be appropriated for		529,682,437	60,848,175
the year
Profit (loss) brought forward from		767,491	767,491
previous financial year
Addition to capital and reserves		514,406,598	60,848,175
Addition to legal reserve		26,484,122	3,042,409
Addition to other reserves		487,922,476	57,805,767
Profit (loss) to be carried forward		383,068	767,491
Profit to be distributed		15,660,263	0
Contributed capital remuneration		15,660,263	0

Notes

STATEMENT OF ASSETS

COMPANIES WITH WHICH THERE IS A PARTICIPATORY RELATIONSHIP – PARTICIPATING INTERESTS AND SHARES (6.4.2)

Acquisition value at end of previous financial year
Acquisition value at end of financial year	3,599,978,772
	3,599,978,772
Impairment charges at end of previous financial year
	511,726,193
Reversals
	511,726,193
Impairment charges at end of financial year	0
NET BOOK VALUE AT END OF FINANCIAL YEAR
	3.599.978.772

NOTES ON THE PARTICIPATING INTERESTS (6.5.1) PARTICIPATING INTERESTS AND OWNERSHIP RIGHTS IN OTHER COMPANIES AMOUNTING TO AT LEAST 10% OF THE CAPITAL

	Ownership rights held by				available financial statements	Data drawn from most recently
Name, address		Directly		Subsidiar	statements as	Equity	Net result
and company number	Form	ies		Financial at	(+) OR (-)
		Number	%	%		(in EUR)
KBC Groep NV (consolidated) Havenlaan 2 1080 Brussels 8 Belgium BE 0403.227.515	Ordinary shares	77,516,380	18.60	0.00	31.12.2020	20,029,811,319	1,440,182,027

STATEMENT OF CAPITAL AND SHAREHOLDER STRUCTURE (6.7.1)

STATEMENT OF CAPITAL

Capital

Issued capital at end of previous financial year

Issued capital at end of financial year

2,021,871,293

	Amount	Number of shares
Capital composition
Types of shares
Ordinary shares	2,021,871,293	78,301,314
Registered		41,539,764
Dematerialised shares		36,761,550

SHAREHOLDER STRUCTURE OF THE COMPANY AT YEAR-END ACCORDING TO NOTIFICATIONS RECEIVED BY THE COMPANY

Cera SC: 67.27%

Transparency report dated 2 November 2020 regarding shareholder structure as at 30 October 2020 79,891,045 voting rights out of the total of 118,657,091 voting rights at that time.

STATEMENT OF LIABILITIES, ACCRUED EXPENSE AND DEFERRED INCOME (6.9)

SPECIFICATION OF LIABILITIES WITH AN ORIGINAL TERM OF MORE THAN ONE YEAR, BY REMAINING TERM

	Financial year
Liabilities over more than one year falling due within the year
Financial liabilities	100,000,000
Credit institutions	100,000,000
Total liabilities over more than one year falling due within the year	100,000,000

Liabilities with a remaining term of between one and five years
Financial liabilities	143,000,000
Credit institutions	143,000,000
Total liabilities with a remaining term of between one and five years	143,000,000

Liabilities with a remaining term of more than five years
Financial liabilities	100,000,000
Credit institutions	100,000,000
Total liabilities with a remaining term of more than five years	100,000,000

SECURED LIABILITIES

Liabilities secured on collateral pledged or irrevocably committed on assets of the company8
Financial liabilities Credit institutions	343,000,000 343,000,000
Total liabilities secured on collateral pledged or irrevocably committed on assets of the company	343,000,000

ACCRUED EXPENSE AND DEFERRED INCOME

Analysis of item 492/3 of the Liabilities, if a substantial amount falls into that category
	Financial year
Attributable interest	1,324,069

OPERATING RESULTS (6.10)

OPERATING COSTS

Other operating costs	Financial year	Previous financial
		year
Other	1,397	1,573

INCOME AND EXPENDITURE OF AN EXCEPTIONAL MAGNITUDE OR NATURE (6.12)

	Financial year
NON-RECURRING INCOME	511,726,193
Non-recurring financial income	511,726,193
Reversal of impairments of financial fixed assets	511,726,193

TAXES (6.13)

TAX ON THE RESULT

Main causes of the differences between the profit before tax, as per the financial statements, and the estimated taxable profit

	Financial year
Definitive taxed income and dividend received	-34,107,207
Reversal of impairments of financial fixed assets	-511,726,193

⁸ Collateral was provided in the form of a pledge on KBC Group shares. In total, KBC Ancora pledged 35.7 million KBC Group shares. The pledge relates to long-term liabilities totalling EUR 343 million.

VALUE ADDED TAX AND TAXES IN RESPECT OF THIRD PARTIES

	Financial year	Previous financial year
Value added tax charged
By the company	1,395	1,478
Amounts withheld in respect of third parties in the form of
Withholding tax	2,056,689	0

OFF-BALANCE SHEET RIGHTS AND COMMITMENTS

COLLATERAL

Collateral pledged by the company on its own assets or irrevocably committed as security for liabilities and commitments of the company

	Financial year
Pledge on other assets – Book value of encumbered assets
	1,657,679,694

The collateral provided consists of a pledge by KBC Ancora on 35.7 million KBC Group shares. The pledge relates to long-term liabilities totalling EUR 343 million.

NATURE AND CORPORATE OBJECTIVE OF OFF-BALANCE SHEET SCHEMES

Provided the risks or benefits stemming from such a scheme are of any significance, and to the extent that publication of such risks or benefits is necessary for an assessment of the financial position of the company: KBC Ancora is a member of a VAT group

RELATIONSHIPS WITH ASSOCIATED COMPANIES AND COMPANIES WITH WHICH THERE IS A PARTICIPATORY RELATIONSHIP (6.15)

COMPANIES WITH WHICH THERE IS A PARTICIPATORY RELATIONSHIP

	Financial year	Previous
		financial year
Financial fixed assets	3,599,978,772	3,088,252,579
Participating interests	3,599,978,772	3,088,252,579

FINANCIAL RELATIONSHIPS WITH

THE AUDITOR(S) AND THE PERSONS WITH WHOM HE/THEY IS/ARE ASSOCIATED

	Financial year
Remuneration of the auditor(s)	15,917
Remuneration for exceptional activities or special assignments performed by the
auditor(s) within the company
Other audit activities	5,000

VALUATION PRINCIPLES (6.19)

The valuation principles are established in accordance with the provisions of the Royal Decree of 29 April 2019 implementing the Belgian Companies and Associations Code (which superseded the Royal Decree of 30 January 2001 implementing the Belgian Companies Code).

The financial year runs from 1 July to 30 June inclusive.

Financial fixed assets consist of ownership rights (shares) held in other companies with a view to creating lasting and specific ties with those companies, so as to enable the company to influence their orientation and policy.

Financial fixed assets are stated at acquisition value, applying the weighted average prices method. Additional acquisition costs are charged directly to the results.

Financial fixed assets may be revalued in the event that their value, determined in accordance with their utility to the company, comes to exceed their book value in a clear and lasting manner.

Impairments may be applied in the event of a lasting decrease in value or depreciation, justified by the circumstances, profitability or prospects of the company in which the shares are held. If the position, profitability and outlook of the company (to be assessed by the Board of Directors) justifies this, impairments will be reversed. In the event that the Board of Directors deems the application/reversal of impairments to be appropriate, it will in principle apply the IFRS equity value per KBC Group share as a reference point.

Amounts receivable and creditors are stated at nominal value.

Impairments are applied if uncertainty exists as to the payment of all or part of an amount receivable on the due date.

Cash at bank and in hand is stated at nominal value.

Capital and reserves are stated at nominal value.

Other asset or liability components are stated at acquisition value.

OTHER INFORMATION TO BE INCLUDED IN THE NOTES (6.20)

KBC Ancora's principal asset is a participating interest in KBC Group. The value of KBC Ancora's assets, as well as its cash position and its results, are dependent on developments in the KBC group.

Auditor's report

Auditor's report on the financial year

"Statutory auditor's report to the general meeting of KBC Ancora NV/SA on the annual accounts as of and for the year ended 30 June 2021

FREE TRANSLATION OF UNQUALIFIED STATUTORY AUDITOR'S REPORT ORIGINALLY PREPARED IN DUTCH

In the context of the statutory audit of the annual accounts of KBC Ancora NV/SA ("the Company"), we provide you with our statutory auditor's report. This includes our report on the annual accounts for the year ended 30 June 2021, as well as other legal and regulatory requirements. Our report is one and indivisible.

We were appointed as statutory auditor by the general meeting of 30 October 2020, in accordance with the proposal of the governing body issued on the recommendation of the audit committee. Our mandate will expire on the date of the general meeting deliberating on the annual accounts for the year ended 30 June 2023. We have performed the statutory audit of the annual accounts of KBC Ancora NV/SA for 22 consecutive financial years.

Report on the annual accounts

Unqualified opinion

We have audited the annual accounts of the Company as of and for the year ended 30 June 2021, prepared in accordance with the financial reporting framework applicable in Belgium. These annual accounts comprise the balance sheet as at 30 June 2021, the income statement for the year then ended and notes. The balance sheet total amounts to EUR 3.664.326.614,99 and the income statement shows a profit for the year of EUR 529.682.436,91.

In our opinion, the annual accounts give a true and fair view of the Company's equity and financial position as at 30 June 2021 and of its financial performance for the year then ended in accordance with the financial reporting framework applicable in Belgium.

Basis for our unqualified opinion

We conducted our audit in accordance with International Standards on Auditing ("ISAs") as adopted in Belgium. In addition, we have applied the ISAs as issued by the IAASB and applicable for the current accounting year while these have not been adopted in Belgium yet. Our responsibilities under those standards are further described in the "Statutory auditors' responsibility for the audit of the annual accounts" section of our report. We have complied with the ethical requirements that are relevant to our audit of the annual accounts in Belgium, including the independence requirements.

We have obtained from the governing body 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 matter

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the annual accounts of the current period. These matters were addressed in the context of our audit of the annual accounts as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Valuation of the investment in KBC Group.

We refer to notes VOL cap 6.5.1 and VOL cap 6.19 of the annual accounts.

— Description

The Company has an 18,6% shareholding in KBC Group. The book value of the participation amounts to EUR 3,6 billion on 30 June 2021, comprises 98,24% of the total assets and has been subject to a reversal of past impairments amounting to EUR 511.726.193,20 in the current financial year.

For the valuation of the shares in KBC Group, the governing body considers that the IFRS equity value of the KBC Group share provides a good reference point in case it considers an impairment or a reversal of impairments to be appropriate.

The valuation of the investment in KBC Group is a key matter for our audit because of:

The size of the investment in relation to the balance sheet total and the equity value, and
The Company's required assessment process regarding the permanent character of impairments, which is subjective to a certain extent as it is influenced by the long-term performance of KBC Group, the industry in which KBC Group operates and the uncertainties KBC Group and its industry are confronted with.

— Our audit procedures

We have evaluated the assessment process of the governing body and discussed with management, the audit committee and the governing body, in particular the decision to reverse the remaining part of past impairments relating to this participation in the current financial year.

We verified the accuracy of the valuation and the key parameters used by management and reconciled them with underlying documents, in particular the IFRS equity value of KBC Group, the ownership percentage and other (financial) information.

We verified whether the governing body has provided appropriate and sufficient disclosures in the annual accounts and the Report of the Statutory director and the other information included in the Annual report (annual report).

Governing body's responsibilities for the preparation of the annual accounts

The governing body is responsible for the preparation of these annual accounts that give a true and fair view in accordance with the financial reporting framework applicable in Belgium, and for such internal control as board of directors determines, is necessary to enable the preparation of annual accounts that are free from material misstatement, whether due to fraud or error.

In preparing the annual accounts, the governing body is responsible for assessing the Company'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 governing body either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Statutory auditor's responsibilities for the audit of the annual accounts

Our objectives are to obtain reasonable assurance as to whether the annual accounts 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 annual accounts.

When performing our audit we comply with the legal, regulatory and professional requirements applicable to audits of the annual accounts in Belgium. The scope of the statutory audit of the annual accounts does not extend to providing assurance on the future viability of the Company nor on the efficiency or effectivity of how the governing body has conducted or will conduct the business of the Company. Our responsibilities regarding the going concern basis of accounting applied by the governing body are described below.

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 annual accounts, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
Obtain an understanding of internal 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 Company's internal control;
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the governing body;
Conclude on the appropriateness of the governing body's 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 Company'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 annual accounts or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Company to cease to continue as a going concern;
Evaluate the overall presentation, structure and content of the annual accounts, including the disclosures, and whether the annual accounts represent the underlying transactions and events in a manner that achieves fair presentation.

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 annual accounts of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter.

Other legal and regulatory requirements

Responsibilities of the governing body

The governing body is responsible for the preparation and the content of the Report of the Statutory director and the other information included in the Annual report (annual report), for maintaining the Company's accounting records in compliance with the applicable legal and regulatory requirements, as well as for the Company's compliance with the Companies' and Associations' Code and the Company's articles of association.

Statutory auditor's responsibilities

In the context of our engagement 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 Report of the Statutory director and the other information included in the Annual report (annual report), certain documents to be filed in accordance with legal and regulatory requirements and compliance with certain requirements of the Companies' and Associations' Code and with the Company's articles of association, and to report on these matters.

Aspects concerning the Report of the Statutory director and the other information included in the Annual report (annual report)

Based on specific work performed on the Report of the Statutory director and the other information included in the Annual report (annual report), we are of the opinion that the Report of the Statutory director and the other information included in the Annual report (annual report) is consistent with the annual accounts for the same period and has been prepared in accordance with articles 3:5 and 3:6 of the Companies' and Associations' Code.

In the context of our audit of the annual accounts, we are also responsible for considering, in particular based on the knowledge gained throughout the audit, whether the Report of the Statutory director and the other information included in the Annual report (annual report):

the letter from the Chairman and the Managing Directors, and
the shareholder information.

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.

Information about the independence

Our audit firm and our network have not performed any engagement which is incompatible with the statutory audit of the annual accounts and our audit firm remained independent of the Company during the term of our mandate.
The fees for the additional engagements which are compatible with the statutory audit of the annual accounts referred to in article 3:65 of the Companies' and Associations' Code were correctly stated and disclosed in the notes to the annual accounts.

Other aspects

Without prejudice to formal aspects of minor importance, the accounting records were maintained in accordance with the legal and regulatory requirements applicable in Belgium.
The appropriation of results proposed to the general meeting complies with the legal provisions and the provisions of the articles of association.
We do not have to inform you of any transactions undertaken or decisions taken in breach of the Company's articles of association or the Companies' and Associations' Code.
This report is consistent with our additional report to the audit committee on the basis of article 11 of Regulation (EU) No 537/2014.
In the context of article 7:213 of the Companies' and Associations' Code, an interim dividend was distributed during the financial year, for which we have prepared the attached report, in accordance with the legal requirements.

Zaventem, 26 August 2021

KPMG Bedrijfsrevisoren - Réviseurs d'Entreprises Statutory auditor represented by

Kenneth Vermeire Bedrijfsrevisor / Réviseur d'Entreprises"

Auditor's report on the interim dividend

"Report to the governing body of the company KBC Ancora NV on the assessment of the statement of assets and liabilities in connection with the benefit of an interim dividend

FREE TRANSLATION OF THE REPORT ORIGINALLY PREPARED IN DUTCH

Pursuant to article 7:213 of the Companies and Associations Code and in accordance with the articles of association of the company KBC Ancora NV ("the Company"), we hereby submit to the governing body, in our capacity as statutory auditor, a review report on the statement of assets and liabilities closed on May 6, 2021.

We have performed the review of the attached statement of assets and liabilities as of May 6, 2021 of the Company prepared in accordance with the financial reporting framework applicable in Belgium.

Responsibility of the governing body for the preparation of the statement of assets and liabilities

The governing body is responsible for preparing this statement of assets and liabilities as of May 6, 2021 in accordance with the financial reporting framework applicable in Belgium according to the principles of article 3:1 §1, first paragraph of the Companies and Associations Code, as well as for complying with the conditions required by article 7:213, second paragraph of the Companies and Associations Code.

Responsibility of the statutory auditor

Our responsibility is to express a conclusion on the statement of assets and liabilities based on the assessment we have performed.

We conducted our review in accordance with ISRE 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity." Such a review consists of making inquiries, primarily of financial and accounting officers, as well as performing numerical analysis and other review procedures. The scope of a review is significantly less than that of an audit conducted in accordance with International Standards on Auditing. For this reason, the review does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit.

Accordingly, we do not express an audit opinion on this statement of assets and liabilities.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying statement of assets and liabilities of the Company, closed as of May 6, 2021 with a balance sheet total of EUR 3.180.161.438,72 and with a profit for the current period of EUR 20.530.496,93, is not prepared, in all material respects, in accordance with the financial reporting framework applicable in Belgium.

Restrictions on the use of our report

This report was prepared solely pursuant to article 7:213 of the Companies and Associations Code in connection with the distribution of an interim dividend and may not be used for any other purpose.

Zaventem, 27 May 2021

KPMG Bedrijfsrevisoren - Réviseurs d'Entreprises Statutory auditor represented by

Kenneth Vermeire Bedrijfsrevisor / Réviseur d'Entreprises"

Other information

KBC Ancora NV

Registered office Muntstraat 1 3000 Leuven Belgium Website: www.kbcancora.be E-mail: [email protected] Tel.: +32 (0)16 27 96 72

Editorial team

Jan Bergmans Luc De Bolle Franky Depickere Kristof Van Gestel

Coordination of figures

Ann Thoelen and Els Lefèvre

Printing and finishing

INNIGROUP nv, Heule

Layout

Raf Berckmans

Final editing

Greet Leynen

Published by

KBC Ancora SA, Hilde Talloen, Muntstraat 1, 3000 Leuven, Belgium Company number RLP Leuven VAT BE 0464.965.639 LEI 549300I4XZ0RR3ZOSZ55

KBC Ancora's annual report is available at no cost in Dutch, French and English from the company's registered office or its website www.kbcancora.be. Conformity between the translations and the original annual report has been checked by KBC Ancora, which assumes responsibility in this regard. In the event of discrepancies or differences of interpretation, the Dutch version alone shall be legally binding.

PRESS RELEASES IN THE FINANCIAL YEAR 2020/2021

02.07.2020 Transparency notification by DWS Investment
24.07.2020 Transparency notification by DWS Investment
28.08.2020 KBC Ancora closes financial year 2019/2020 with a profit of EUR 60,8 million
29.08.2020 Convocation of the Ordinary and Extraordinary General Meeting of Shareholders and publication of the Annual Report
16.10.2020 KBC Ancora reduces interest charges by EUR 0.6 million on an annual basis
30.10.2020 Decisions of the General Meeting of Shareholders Announcement of the total number of voting rights
02.11.2020 Transparency notification by Cera
04.01.2021 Announcement of the total number of voting rights as at 31 December 2020
29.01.2021 Interim financial report 2020/2021
01.02.2021 Announcement of the total number of voting rights as at 31 January 2021
01.04.2021 Announcement of the total number of voting rights as at 31 March 2021
03.05.2021 Announcement of the total number of voting rights as at 30 April 2021
28.05.2021 KBC Ancora distributes an interim dividend of EUR 0.20 per share
01.07.2021 Announcement of the total number of voting rights as at 30 June 2021

FINANCIAL CALENDAR 2021/2022

28.09.2021 Annual Report 2020/2021 available and convocation to Annual General Meeting
29.10.2021 Annual General Meeting of Shareholders
28.01.2022 Interim financial report 2021/2022
26.08.2022 Annual press release for the financial year 2021/2022

KBC Ancora Registered office: Muntstraat 1 ● 3000 Leuven Tel. 016 27 96 72 [email protected] www.kbcancora.be

AI assistant

KBC Ancora SA — Annual Report 2021

3969_10-k_2021-09-28_fcded967-7504-46d0-a4e3-66e1572d7731.pdf

ANNUAL REPORT 2020/2021

KBC ANCORA BACKGROUND

1998

2001

2005

2007

2012

2013

2014

2019

2020

KBC Ancora

TABLE OF CONTENTS

LIST OF CHARTS

LIST OF TABLES

BOARD OF DIRECTORS OF ALMANCORA SOCIÉTÉ DE GESTION SA

Letter from the Chairman of the Board of Directors and the Managing Directors

KBC Ancora's results for the financial year

Balance sheet

Assets

Creditors

Extraordinary General Meeting held in October 2020

Outlook

Declaration by the responsible individuals

Investor information

Share price, discount and traded volumes

Key figures as at balance sheet date

Balance sheet and result

Cash flow table

Table 4 shows KBC Ancora's cash flows.

Table 4: Cash flow table for the most recent financial years

Dividend

First application of adjusted dividend policy as announced in August 2019

Distribution of KBC Ancora shares

KBC Ancora shareholder structure

The road to the market

Group structure

Chart 6: Group structure5

Almancora ASBL

Almancora Société de gestion SA.

KBC Ancora SA

Statutory director's report

Declaration in connection with risks

Declaration concerning effective corporate governance

Management structure

Board of Directors of Almancora Société de gestion SA

Table 5: Composition of the Board of Directors of Almancora Société de gestion SA and summary of attendance

Composition of the Board of Directors

Powers of the Board of Directors

Functioning of the Board of Directors

Committees appointed within the Board of Directors

Day-to-Day Management Committee

Composition:

Powers:

Functioning:

Audit Committee

Composition:

Powers:

Functioning:

Appointments Committee

Composition:

Powers:

Functioning:

Remuneration Committee

Composition:

Powers:

Functioning:

Auditor

Main features of the evaluation process for the Board of Directors, its committees and its individual members

Remuneration report for the financial year

Introduction

Description of the procedures for the development of the remuneration policy and for setting the remuneration of individual directors and members of the Day-to-Day Management Committee

Declaration concerning the remuneration policy pursued during the year under review with respect to directors and members of the Day-to-Day Management Committee

A directors:

B and C directors:

The members of the Day-to-Day Management Committee of KBC Ancora:

Relative weight of the different remuneration components

KBC Ancora SA Annual Report 2021

Chart 6: Group structure⁵