Picanol : Interim report HY22

INTERIM REPORT

Regulated information1

Ieper, August 25, 2022 - 8:00 am CET

PICANOL GROUP

INTERIM REPORT

FOR THE 6 MONTH PERIOD

ENDED JUNE 30, 20222

1. The enclosed information constitutes regulated information as defined in the Royal Decree of November 14, 2007, regarding the duties of issuers of financial instruments which have been admitted for trading on a regulated market.
2. Note that Picanol Group published, in addition to this interim report, also a press release on the HY22 results. This press release can be consulted on our websitewww.picanolgroup.com.

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INDEX
1. MANAGEMENT REPORT.....................................................................................................................	3
1.1.	KEY EVENTS .....................................................................................................................................	3
1.2.	GROUP KEY FIGURES .......................................................................................................................	5
1.3. OPERATING SEGMENTS PERFORMANCE REVIEW ...........................................................................	6

2. STATEMENT ON THE TRUE AND FAIR VIEW OF THE CONDENSED CONSOLIDATED FINANCIAL

INFORMATION AND THE FAIR OVERVIEW OF THE MANAGEMENT REPORT.................................................	8
3.	CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION AT JUNE 30, 2022........................	9
	3.1.	CONDENSED CONSOLIDATED INCOME STATEMENT.......................................................................	9
	3.2.	CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME ....................................	9
	3.3.	CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION ...........................................	10
	3.4.	CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY............................................	11
	3.5.	CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS........................................................	12
	3.6.	NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL INFORMATION ....................................	13

4. INDEPENDENT AUDITORS' REPORT ON THE REVIEW OF THE CONDENSED CONSOLIDATED

FINANCIAL INFORMATION AS PER JUNE 30, 2022......................................................................................	31
5.	FINANCIAL GLOSSARY......................................................................................................................	32
6.	ALTERNATIVE PERFORMANCE MEASURES .......................................................................................	33

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1. MANAGEMENT REPORT

• 1.1.KEY EVENTS

• Picanol launched the OmniPlus-i TC Connect weaving machine into the Machines & Technologies segment in early 2022. This model, which was specifically made for weaving tire cord, has been upgraded with the latest airjet technology and equipped with the features of the new generation Connect weaving machines.
• PsiControl's new production plant in Rasnov (Romania) was commissioned in the first half of 2022 (Machines & Technologies segment).
• Work started in June 2022 on the new headquarters of the Machines & Technologies segment in Ieper (Belgium). The opening of the new office is planned for 2024.
• In February 2022, Tessenderlo Group announced its takeover of the production unit and related activities of Pipelife France. The plant, which is situated in Gaillon (Eure, France), specializes in the production of pipes for gas, water, and cable protection. The acquisition is expected to be completed by the end of September, after which the company will be integrated into the DYKA Group business unit (Industrial Solutions segment). The transaction will not materially affect the group's results.
• The second quarter of 2022 saw the completion of the acquisition of the assets of B.V. Fleuren Tankopslag, which is a tank storage and transshipment company for liquid products, located in the Port of Cuijk (the Netherlands). The activities of Fleuren Tankopslag were integrated into the Tessenderlo Kerley International business unit (Agro segment). This transaction will have no material impact on the group's results.
• Construction work on Tessenderlo Kerley International's new Thio-Sul® plant in Geleen (the Netherlands) is scheduled to start in the fourth quarter of 2022. The plant is expected to be operational from the first quarter of 2024.
• Tessenderlo Kerley, Inc. will start the construction of a new plant in Defiance (Ohio, USA) in the third quarter of 2022. This plant will produce the leading liquid and sulfur-based fertilizers Thio-Sul®, KTS®, and K-Row 23®, as well as sulfate chemicals for industrial markets (Agro and Industrial Solutions segments). The plant is scheduled to be operational in the first half of 2024.
• The group also announced in March that Violleau will build a new production line for organic fertilizers in Vénérolles (Aisne, France). The production line will be operational from the second quarter of 2023, and it will be built on the site of the Akiolis plant in Vénérolles. From January 2022, Violleau has been included in the group's Agro segment.
• In early March 2022, Tessenderlo Group submitted another permit application to the Flemish Region for the construction of a new 900 MW combined cycle gas turbine (CCGT) power plant in Tessenderlo (Belgium). This entails an investment of approximately 500 million EUR. Tessenderlo Group expects the Flemish minister's decision on the permit by September 24, 2022, at the latest. However, the new gas plant will only be built when Tessenderlo Group can present a financially profitable project.
• In February 2022, Tessenderlo Group bought back 35.0 million EUR of its outstanding 2022 bonds at a price of 102.875%. This buyback resulted in a cash-out of 36.0 million EUR and the remaining amount of outstanding 2022 bonds, amounted to 130.5 million EUR and was repaid at maturity in July 2022.
• In February 2022, Tessenderlo Group also concluded two term loan facilities of 30.0 million EUR each, with terms of 7 years (started in April 2022) and 5 years (starting in August 2022). These two loans, with quarterly capital repayments, have fixed interest rates of 1.17% and 0.94% and are without financial covenants. Both transactions will further reduce the group's liquidity risk and interest costs.
• The current conflict in Eastern Europe and the subsequent economic and financial sanctions imposed are negatively affecting the supply and purchase prices of raw materials as well as energy prices. This applies in particular to MOP (muriate of potash), the main raw material for SOP fertilizers (sulfate of potash) produced at Tessenderlo Kerley Ham (Belgium). Tessenderlo Group previously purchased MOP mainly in Russia and Belarus, as well as, to a lesser extent, from some other countries. Due to the high MOP inventory position at the start of the year, as well as a revision of the sourcing mix, the supply difficulties had only a limited impact on Tessenderlo Group's profitability during the first six months of 2022. A limited impact is also expected for the second half of 2022, despite the reduced availability. In the first half of 2022 however (as well as the second half year of 2021), the exceptionally strong increase in raw material prices had a material negative impact on the results of the Machines & Technologies segment. The increase in energy prices had a negative impact on all activities, although this could be somewhat limited by our previously concluded forward purchase contracts, as well as by the increase in our sales prices.

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After the balance date:

• On July 8, 2022, Tessenderlo Group (Tessenderlo Group nv, Euronext: TESB) and Picanol Group announced their intention to simplify and increase the transparency of the group structure of both companies, with a view to combining them into a single industrial group, with a single stock exchange listing and a single Board of Directors. The proposed transaction envisages the reference shareholders, Luc Tack and Patrick Steverlynck, contributing the Picanol Group shares that they hold, in the context of a voluntary public exchange offer by Tessenderlo Group. The other Picanol Group shareholders (free float: 10.66%) will also be offered the option of becoming direct shareholders of Tessenderlo Group, at the same exchange ratio of 1 Picanol Group share for 2.43 Tessenderlo Group shares. It is the intention of both parties that this integration will be effective as of January 1, 2023.
• Tessenderlo Group has access to committed bilateral agreements with 4 credit institutions for a total amount of 142.5 million EUR (of which a part can be called in USD) until 2024. These agreements were increased in July 2022 to an amount of 250.0 million EUR and the period was extended to July 2027. These facilities contain no financial covenants and ensure maximum flexibility for the various, planned activities. As of June 30, 2022, none of these credit lines had been used.
• In August 2022, Tessenderlo Kerley, Inc. (subsidiary of Tessenderlo Group) acquired the product line Lannate® from Corteva Agriscience. Tessenderlo Kerley's NovaSource® business unit (Agro segment) will add the Lannate® product line to its existing, diversified portfolio of niche crop protection products to agriculture customers worldwide. This crop protection product is used to manage specific difficult to control pests in specific crops such as sweet corn, onions and garlic. The transaction will have no material impact on the results of Tessenderlo Group.

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1.2.GROUP KEY FIGURES

(million EUR)		HY22		HY21		% change
Revenue		1,707.3		1,354.3		26%
Adjusted EBITDA3		266.0		236.0		13%
Adjusted EBIT4		170.5		140.9		21%
EBIT		180.2		143.0		26%
Profit/(loss) for the period		123.9		117.3		6%
Minority interest		72.7		41.8		74%
Profit/(loss) for the period attributable to the equity holders of the		51.2		75.4		-32%
company
Total comprehensive income attributable to the equity holders of the		79.5		87.7		-9%
company
Capital expenditure		67.8		48.1		41%
Cash flow from operating activities		103.7		187.0		-45%
Net financial debt		14.5		81.7		-82%

(million EUR)	HY22	HY21	% change
Revenue	1,707.3	1,354.3	26%
Machines & Technologies	367.7	333.3	10%
Agro	546.0	373.5	46%
Bio-valorization	376.8	297.4	27%
Industrial Solutions	380.3	314.9	21%
T-Power	36.5	35.2	4%
Adjusted EBITDA	266.0	236.0	13%
Machines & Technologies	18.4	51.3	-64%
Agro	121.6	75.2	62%
Bio-valorization	50.2	41.8	20%
Industrial Solutions	48.2	42.1	14%
T-Power	27.5	25.6	7%
Adjusted EBIT	170.5	140.9	21%
Machines & Technologies	11.6	45.1	-74%
Agro	86.9	41.2	111%
Bio-valorization	32.5	23.5	38%
Industrial Solutions	31.0	24.3	28%
T-Power	8.6	6.7	28%
EBIT adjusting items	9.7	2.1	361%
EBIT	180.2	143.0	26%

REVENUE

HY22 revenue increased by +26% compared to the same period last year. Machines & Technologies revenue increased by +10%. The revenue of Agro increased by +46%, Bio-valorization revenue increased by +27%, the revenue of Industrial Solutions increased by +21%, and the revenue of T-Power increased by 4%. This revenue increase could be mainly realized thanks to higher sales prices, implemented to offset the increase of raw material, energy and transportation costs in most segments.

ADJUSTED EBITDA

The HY22 Adjusted EBITDA amounts to 266.0 million EUR compared to 236.0 million EUR one year earlier (+13%). The Adjusted EBITDA of segment Machines & Technologies decreased by 64% due to the negative impact of rising component prices. The other 4 segments all contributed to this increase (Agro +62%, Bio- valorization +20%, Industrial Solutions +14%, T-Power +7 %).

1. Adjusted EBITDA equals adjusted EBIT plus depreciation and amortization.
2. Adjusted EBIT is considered by the group to be a relevant performance measure in order to compare results over the period 2021-2022 as it excludes EBIT adjusting items.

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