months ending June 30th 2001 Innovators in image processing

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2 010 Six months ending June 30th 2001 Innovtors in imge processing

3 f BARCO, Belgin bsed industril group, ws estblished in 1934 s rdio ssembly compny. Tody it is n interntionl orgniztion with worldwide mbitions, operting in 4 key res of electronic technology: Brco Projection, BrcoView, BrcoVision nd Brco Grphics. In 2000, the entire Brco group, without BrcoNet, which ws split off from BARCO in the second hlf of 2000, delivered revenue of EUR 751 million. Approximtely 50 of this revenue is relized outside Western Europe. BARCO is selling high qulity products nd systems through network of own sles subsidiries, distributors nd gents in 97 countries worldwide. Investment of over 10 of revenue in reserch nd development keeps BARCO t the forefront of technology in number of promising niche pplictions. BARCO hs been quoted on the Brussels Stock Exchnge since 1986, nd is now quoted on Brussels/Euronext. BARCO is BEL 20 nd next 150 compny. For the first hlf of 2001, BARCO confirms current result before txes nd before mortiztion of goodwill of EUR mio. This represents 9 of turnover, which mounted to EUR mio. This comes down to decrese in profit of 19.9 compred to the first hlf of 2000, while turnover rose by 14. The min reson of the decrese in profit is the decrese in sles of Brco Grphics, due to the dely in the shipment of the new computer-to-plte mchine Mondrin, nd the hlt in orders for printstremers in the mrket of digitl presses. Moreover, since My, one of the business units of Brco Projection hs been ffected by slump in the sles of projectors for stndrd pplictions. The tx rte incresed from 30.9 in the first semester of 2000 to 32.3 in the sme period of As result the current profit fter txes decresed by 20.6 to EUR 24.2 mio. On the other hnd the current csh flow rose by 1.9 to EUR mio, which is 15.6 of turnover. At the end of June 2001, BARCO hd stff of 5,076 ssocites (including 113 people of the ETS business unit of Brco Grphics). Compred to December 31, 2000, this mens n increse of 168. Assessing the evolution of the economic climte over the second hlf of 2001 remins difficult tsk. Furthermore, the months July nd August re not representtive enough to mke forecsts for the second semester in the current unstble mrket Compny Profile Current Profit before Txes decreses by 19.9 Outlook

4 Key Figures in thousnds of euro 1st sem 1st sem totl Turnover 404, , ,111 Current profit* before txes 35,760 44,638 92,593 Current profit* fter txes 24,197 30,463 63,838 Extrordinry income ,277 Amortiztion of consolidtion goodwill 6,782 6,960 14,671 Profit before txes 28,765 36,726 76,645 Txes -11,563-13,793-27,917 Profit fter txes 17,202 22,933 48,728 Current csh flow 62,950 61, ,911 Current profit* fter txes/shre Number of ssocites 5,076 4,908 * before mortiztion of consolidtion goodwill nd exceptionl results Geogrphicl Brekdown of Turnover per Activity (in ) in W Europe Nft Asi R of W Brco Projection BrcoView BrcoVision Brco Grphics Totl

5 Compny Profile Outlook Geogrphicl Brekdown of Turnover Turnover in 000 euro nd Current EBIT p p p p p p 6 p Current Profit before Txes Key Figures Activities

6 Consolidted Income Sttement Consolidted Blnce Sheet Shreholders p p p p 15 p Comments to the Consolidted Income Sttement Comments to the Consolidted Blnce Sheet

7 Activities Brco Projection In the first hlf of 2001, Brco Projection booked its ll-time highest order volume: EUR 195 million (+24). Sles grew by 15 to EUR 168 million. EBIT dropped from EUR 27.9 mio to EUR 22.6 mio. On the one hnd this is consequence of the increse of R&D costs in preprtion of new products, nd the further expnsion of the Sles & Mrketing network, both of which begn in the second hlf of On the other hnd, the mrgins on LED wlls in the first hlf were considerbly lower thn the verge t Brco Projection. The growth in sles ws lrgely chieved in the system ctivities Control Rooms nd Simultion, s both continued to increse their turnover in the first hlf of Thnks to the high level of speciliztion nd the gret product efficiency they hve chieved t present, the mrgins remin incontestbly good. In the mrket for stndrd pplictions for compnies nd orgniztions, slowdown of projector sles ws lredy pprent in the first qurter of the yer. These sles then fell bck drsticlly in the second hlf of My nd continued to drop in June, due to the generl brke on investments resulting from the economic slck, especilly in the USA. Moreover, for less criticl pplictions such s presenttions, which require lower imge resolution, users settle for the cheper nd more compct stndrd projectors designed for broder public. The effect of the bd economic prospects hs lso mde itself felt in the mrket of rentl compnies, which hs fllen bck gretly. On top of tht, there ws sudden shift in rentl compny orders from high-brightness projectors to visuliztion wlls bsed on LED technology. BARCO is one of the leding suppliers in this technology, for instnce with ILite, recently lunched version for indoor use. Although it only strted selling LED wlls t the end of 1999, Brco Projection hs lredy pushed up to second plce worldwide, nd the gretest emphsis t this moment is on further strengthening this position. With the success of its LED wlls, BARCO hs more thn compensted for the loss of its turnover of projectors, but the mrket shift from clssic projection products to LED-bsed systems is proceeding much fster thn BARCO hd expected. Tht is why the shipment of these systems is unble to keep up with the volume of orders, nd why there is lrge outstnding order book for the coming months. Seeing tht fst deliveries re clled for, BARCO is pulling out ll the stops to increse the production of LED modules, but these mesures re temporrily cusing high initil costs nd lower mrgin. Tht explins why the mrgins on LED wlls were mrkedly lower thn the verge figure chieved by Brco Projection in the first hlf of the yer

8 A number of mesures hve lredy been tken to increse the gross mrgins on the LED modules in the next few months. A new mechnicl design nd fr-reching reorgniztion of production will led to greter efficiency. The fine-tuning of number of production methods will result in better control over the process, which should drsticlly step up the output. The trnsfer of the production of the more mechnicl prts to the plnt in Kldno, Czechi, nd the resulting lower lbor cost, will hve positive effect on the mrgin. The greter volume of orders for min components will result in better purchse prices, nd this too will contribute to higher mrgin. The totl profitbility will further be incresed by producing in greter quntities without incresing the structurl costs. In ddition to the mesures to improve the mrgin on LED wlls, new products re lso being lunched for those specific mrkets tht remin extremely well suited for the type of projectors in which BARCO hs specilized. At present, preprtions re being mde for severl new projects which re to push up both the mrket shre nd the mrgins gin. With the IntelliRoom solution, multiple informtion sources cn be combined nd presented on one or more meeting room screens, thus enbling exchnge of informtion nd decision-mking between remote prtners. This solution is lredy vilble nd hs been instlled t severl clients. Another new product, due to be lunched in the fourth qurter of 2001, is projector to which imges cn be trnsmitted vi stndrd network, nd even wireless. The projector functions themselves cn lso be controlled vi network or the Internet, nd the user cn view informtion on the sttus of ll projectors connected to the network. New solutions will lso be developed for other specilized spheres of pplictions, nd Brco Projection hs recently brought its internl structure in line with the mrkets on which it wnts to focus. This will mke it possible to follow developments in these mrket segments closely nd to chieve this speciliztion nd growth without hving to increse structurl costs. BARCO expects tht the first results of these ctions will lredy be noticeble in the fourth qurter of 2001 nd tht they will strt to hve visible effect on the mrgin t Brco Projection in the first hlf of

9 Activities BrcoView As ws expected, BrcoView sw rpid rise of its orders (+20 to EUR 97.8 million) nd turnover (+47 to EUR 85.6 million), the result of both internl growth nd the ddition of the ctivities of Texen. EBIT incresed by 29 to EUR 10.2 mio. In the first semester Texen ws slightly profitble. For Texen brek-even over the whole yer is expected. The integrtion of Texen into the orgniztion of BrcoView led to extr costs. Medicl Imging Systems nd Commnd & Control continued to do very well in the first hlf of With regrd to the second business unit, the sles of the new ISIS disply for ir trffic control re off to very promising strt

10 Activities BrcoVision The sles of BrcoVision were stisfctory in the first hlf of the yer, with n increse of sles of 8 compred to the sme period in EBIT went up 34. As nnounced erlier, the order volume fell bck strongly, especilly in the second qurter, s result of the negtive climte in the textile sector, especilly in the United Sttes nd Turkey. The totl volume of orders fell by 10. Becuse of tht, BrcoVision expects the second hlf of the yer to be rther difficult

11 Activities Brco Grphics At Brco Grphics, both orders nd turnover fell bck in the first hlf of 2001, compred to the first hlf of The order volume shrnk from EUR 81 million to EUR 78 million (-4) nd deliveries fell 13 to EUR 70 million. EBIT dropped to EUR -6.5 million. In the pckging ctivities, however, there ws 17 growth of order volume nd 4.5 turnover growth. The two min cuses of the generl drop of Brco Grphics s whole re the hlt in the orders for printstremers from mjor OEM clients in the mrket of digitl presses, nd the delys with regrd to the plnned delivery schedule of the Mondrin, the new computer-to-plte mchine. Intense efforts re being mde to mke up the rrers s of October. These efforts re minly imed t optimizing the opticl tuning, in order to offer complete gurntee tht the Mondrin lwys yields optiml results, lso in the most criticl pplictions. But menwhile, the extr dely is weighing hevily on the result of the first hlf of the yer, for which the forecst hd lredy been negtive. In the mentime the cost structure of Brco Grphics hs lredy been llevited by restructuring the Europen service cll centers lst April, thus reducing the workforce by pproximtely 40 employees. Trnsferring Brco ETS to joint venture with the Germn compny MANIA, s nnounced in June, will lso help to reduce costs nd crete new opportunities. In this wy the ETS plnt in South Windsor (CT, USA), which hs workforce of 82, will dispper from the structurl costs of Brco Grphics, together with number of softwre nd hrdwre engineers bsed in Gent, Belgium, who will be trnsferred to MANIA-BARCO GmbH. For this trnsction BARCO will receive 1.54 million shres of MANIA s result of which it will become the second lrgest shreholder with 11 of the shres. BARCO will obtin 33 of the new Joint Venture MANIA-BARCO GmbH. MANIA hs now closed the first 6 months of 2001 with decrese in turnover of 10 compred to the first hlf of 2000, nd decrese of the EBITDA of 63. This is of course the result of the negtive evolution of the economic sitution, which is seriously ffecting compnies ctive in the mrket of cpitl goods nd outsourcing services for Printed Circuit Bords. At the time of the negotitions the MANIA shre ws t EUR 15, thus promising n extrordinry profit. The sudden drop in the price of the MANIA shre to bout EUR 3 in the first dys of September however, is now estimted to crete negtive impct of bout EUR 15 mio on BARCO s extrordinry results t the closing of the del. Menwhile the bord of directors of MANIA hs set up n extensive progrm to improve the profit sitution with lsting effect. This progrm will ffect the results of the second hlf of It will only be possible to hve precise view of the sitution fter the closing of the greement, plnned for the second hlf of September

12 BARCO is currently lso looking into opportunities for vrious forms of llinces of Brco Grphics with other prtners. At present BARCO is investigting the possibilities of trnsferring the Industril Printing business unit to seprte entity. This would lso include other prtners. In contrst to the usul pplictions for the digitl printing of documents, this business unit with the.fctory ( the dot fctory ) concentrtes on industril digitl pplictions for printing on specil substrtes using inkjet technology. Applictions rnge from wll covering to vrible informtion on securities

13 Turnover in 000 euro nd Current EBIT * st hlf nd hlf st hlf Sles EBIT*() Sles EBIT*() Sles EBIT*() Brco Projection 145, , , BrcoView 58, , , BrcoVision 49, , , Brco Grphics 80, , ,678-9 Brco Subcontrcting 40, , ,540 3 Elimintion -20,918-20,646-24,386 Totl 353, , ,204 9 * Current EBIT: profit before the mortiztion of goodwill, exceptionl results, interest nd txes

14 Consolidted Income Sttement in thousnds of euro st sem 2nd sem 1st sem totl I. Operting income 443, , , ,155 A. Turnover 404, , , ,111 B. Increse (+) decrese (-) in stocks of finished goods, work in process nd contrcts in progress 6,277 3,920 27,720 31,640 C. Fixed ssets own construction 27,274 24,698 24,943 49,641 D. Other operting income 6,055 9,830 5,933 15,763 II. Operting chrges (-) -409, , , ,419 A. Rw mterils, consumbles nd goods for resle 147, , , , Purchses 153, , , , Increse (-) decrese (+) in stocks -6,315-18,406-8,971-27,377 B. Services nd other goods 75,372 71,067 67, ,458 C. Remunertion, socil security costs nd pensions 136, , , ,222 D. Deprecition nd mounts written off on formtion expenses, intngible nd tngible fixed ssets 38,753 32,781 31,292 64,073 E. Increse (+) decrese (-) in mounts written off on stocks, contrcts in progress nd trde debtors 6,254 11,110 5,613 16,723 F. Provisions for libilities nd chrges 2,085-3, ,873 G. Other operting chrges 3,429 2,443 3,293 5,736 III. Operting profit 34,490 50,336 43,400 93,736 IV. Finncil income 16,401 12,940 13,771 26,711 A. Income from finncil fixed ssets B. Income from current ssets 2,645 2,305 3,503 5,808 C. Other finncil income 13,576 10,299 10,201 20,500 V. Finncil chrges (-) -21,913-23,032-19,493-42,525 A. Interest nd other debt chrges 2,830 2,559 1,801 4,360 B. Deprecition on consolidtion differences 6,782 7,711 6,960 14,671 D. Other finncil chrges 12,301 12,762 10,732 23,

15 2001 1st sem 20002nd sem 20001st sem 2000 totl VI. Profit on ordinry ctivities before income txes of the consolidted enterprises 28,978 40,244 37,678 77,922 VII. Extrordinry income F. Other extrordinry income VIII. Extrordinry chrges (-) , ,090 D. Provisions for extrordinry libilities nd chrges 62 F. Other extrordinry chrges 392 1, ,090 IX. Profit for the period before income txes of the consolidted enterprises 28,765 39,919 36,726 76,645 X. A. Trnsfer to deferred txes nd ltent txtions 1,336-1, ,564 XI. Income txes (-)(+) -12,899-12,933-13,420-26,353 A. Income txes (-) -13,783-13,126-13,689-26,815 B. Adjustment of income txes nd writebck of tx provisions XII. Profit of the consolidted enterprises 17,203 25,796 22,933 48,729 Shre of the minority interests Shre of the group 16,973 25,750 22,856 48,

16 EComments to the Consolidted Income Sttement Internl growth represents the mjor prt of the 14.4 growth in sles: only 4 is generted by the cquisition of Texen in December Internl growth ws high t BrcoView (+22) nd Projection (+15), growth ws negtive t Brco Grphics (-14). Operting profits decresed by 20.5; gross mrgins slightly decresed by chnge in product mix t Brco Projection. Slry cost nd deprecitions show higher increse thn sles, hiring nd investments were not fundmentlly decresed until lte in the second qurter, while ly-offs only occurred t Brco Grphics t the sme moment. Due to high inventory risks, deprecition of stocks remined t high level. The tx level is clculted on 32.3 of current profit. Current profit before nd fter txes decresed by 19.9 nd 20.6 respectively. Due to higher deprecitions, current csh flow incresed by 1.9. Current profit fter tx per shre is EUR 1.95 ginst EUR 2.45 in the first hlf of

17 Limited Review Report 1010 of the sttutory uditor on the semi-nnul consolidted blnce sheet of Brco NV s of June 30, 2001 nd the relted consolidted income sttement for the six-month period then ended As sttutory uditor of Brco NV, we hve performed limited review on the semi-nnul consolidted blnce sheet s of June 30, 2001 nd the relted consolidted income sttement for the six-month period then ended of Brco NV. Our review hs been performed in ccordnce with the pplicble guidelines issued by the Belgin Institute of Compny Auditors. Considering their purpose, our review procedures were substntilly less in scope thn n udit conducted in ccordnce with generlly ccepted uditing stndrds in Belgium, the objective of which is the expression of n opinion on the nnul ccounts. Bsed on our review, we re not wre of ny elements which would necessitte mteril djustments to the semi-nnul consolidted blnce sheet s of June 30, 2001 nd the consolidted income sttement for the six-month period then ended, s tken up in the Brco NV's semi-nnul report. We wnt to drw your ttention to the estimted impct of the greement between Brco NV nd the Mni Group on the sle of the Electronic Tooling Systems business. At its closing this greement my, s lredy disclosed by the compny, result in loss of EUR 15 million. Gent, September 7, 2001 Ernst & Young Bedrijfsrevisoren BCV (B160) Sttutory uditor Represented by Ludo Swolfs Prtner Mrc Vn Hoecke Prtner

18 Consolidted Blnce Sheet in thousnds of euro Assets / / /06 FIXED ASSETS 304, , ,721 II. Intngible fixed ssets 50,558 46,954 44,547 III. Consolidtion differences 124, , ,116 IV. Tngible fixed ssets 122, , ,945 A. Lnd nd buildings 61,372 61,053 60,560 B. Plnt, mchinery nd equipment 31,357 29,249 29,518 C. Office furniture nd vehicles 16,034 14,375 13,528 D. Lesing nd other similr rights E. Other tngible fixed ssets 3,669 2,491 2,214 F. Assets under construction nd dvnce pyments 9,448 5,311 4,594 V. Finncil fixed ssets 6,740 7,128 6,113 B. Other enterprises 6,740 7,128 6, Shres 3,889 3,877 3, Amounts receivble nd csh gurntees 2,851 3,251 2,231 CURRENT ASSETS 580, , ,878 VI. Amounts receivble fter one yer 1, ,753 A. Trde debtors B. Other mounts receivble VII. Stocks nd contrcts in progress 196, , ,070 A. Stocks 189, , , Rw mterils 87,466 78,033 59, Work in process 52,510 44,438 42, Finished goods 49,647 42,766 35, Prepyments 7 1, B. Contrcts in progress 7,244 2,756 2,852 VIII. Amounts receivble within one yer 266, , ,946 A. Trde debtors 232, , ,528 B. Other mounts receivble 33,944 49,181 27,416 IX. Investments 56,076 65, ,592 X. Csh t bnk nd in hnd 47,662 65,632 37,037 XI. Deferred chrges nd ccrued income 11,651 8,393 9,480 TOTAL ASSETS 884, , ,

19 Libilities EQUITY 471, , ,257 I. Cpitl 53,065 53,063 53,059 A. Issued cpitl 53,065 53,063 53,059 II. Shre premium ccount 120, , ,404 IV. Reserves 284, , ,343 VI. Trnsltion differences 10,275 7,265 7,025 VII. Investment grnts 2,796 2,491 3,427 MINORITY INTERESTS VIII. Minority interests PROVISIONS, DEFERRED TAXES AND LATENT TAXATIONS 51,979 50,164 48,657 IX. A. Provisions for libilities nd chrges 42,237 39,642 39, Pensions nd similr obligtions 3,530 4,223 3, Mjor repir nd mintennce 2,546 2,935 3, Other libilities nd chrges 36,161 32,484 32,698 B. Deferred txes nd ltent txtions 9,742 10,522 9,420 CREDITORS 360, , ,412 X. Amounts pyble fter one yer 19,342 18,451 20,314 A. Finncil debts 17,659 15,728 17, Subordinted lons Bonds 12,607 12,340 12, Long term leses nd similr obligtions Credit institutions 4,699 2,889 4, Other lons D. Other mounts pyble 1,683 2,723 2,583 XI. Amounts pyble within one yer 300, , ,983 A. Current portion of mounts pyble fter one yer 8,069 11,956 1,987 B. Finncil debts 85,202 84,748 56, Credit institutions 85,202 84,748 56,088 C. Trde debts 89, ,052 70, Suppliers 88, ,324 70, Bills of exchnge pyble 1, D. Advnces received on contrcts in progress 30,141 26,857 22,597 E. Txes, remunertion nd socil security 71,777 73,149 66, Txes 29,017 33,748 29, Remunertion nd socil security 42,760 39,401 36,744 F. Other mounts pyble 15,680 42,754 40,895 XII. Accrued chrges nd deferred income 40,345 35,832 23, / / /06 TOTAL LIABILITIES 884, , ,

20 Comments to the Consolidted Blnce Sheet Since June 30, 2000, net equity incresed by 4.9 to EUR 471 mln. Net equity represents 53 of the totl ssets. Consolidtion goodwill decresed by 7 due to continued mortiztion, while no dditionl cquisitions occurred in the first hlf of Working cpitl, especilly inventory incresed more thn sles: this is due to n unforeseen chnge in demnd mix t Brco Projection nd dely in the introduction of Mondrin. This higher inventory represents n dditionl risk eshreholders The totl number of shres rose from 12,410,479 on June 30, 2000 to 12,412,031 on June 30, 2001, through the exercise of options by the BARCO ssocites. The GIMV group owns of the BARCO shres