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AGFA: New CEO Launches Huge Investment Plan, Targets CTP, Software and China

Press release from the issuing company

Mortsel (België), 27-06-2001 - In a press conference today Ludo Verhoeven, CEO and Chairman of the Board of Management of Agfa-Gevaert N.V., launched the ambitious investment and efficiency plan of the company for the following years. Agfa reiterates so its basic strategy: realising profitable growth, driven by the 'new digital solutions'. To this end Agfa will carry out an ambitious investment plan. First of all we will continue to invest in our own R&D to ensure organic growth. Furthermore, Agfa will invest in the necessary acquisitions, mainly in the field of 'new digital solution', to enable the growth in these promising sector for the future. Agfa will finance this strategic plan with own resources, which will be released through a radical efficiency plan. With this plan, Agfa aims at a substantial increase in the annual cash flow and a drastic reduction in working capital. Moreover, the plan will also give a boost to the competitive position of the company. The different business groups of Agfa will each in their field give shape to this strategy: Investment through efficiency increase Agfa will have to make major investments for this ambitious growth strategy. This will have to happen under its own steam, using its own resources, by increasing the free cash flow and releasing a proportion of the working capital. To this end, Agfa develops an overall operational program to increase efficiency. In the preparatory phase, on which we have now embarked, a critical look will be taken at all aspects of the company to free the embedded values. The conclusions of this analysis will be revealed in September. Targets and outlook As far as the financial targets of the company are concerned, Agfa maintains the figures put forward at the IPO, in other words sales in 2003 of 1.6 billion Euro for 'new digital solutions', and return on sales of 12% for the Group. For 2001 as a whole, Agfa expects approximately 3 per cent fall in sales compared with 2000. However, we reiterate our prediction of a 10% rise in net profits. This target is achievable, partly by means of extraordinary income. * Strategy of the business groups Consumer Imaging There is a widely held view that film in Consumer Imaging has little future, due to the growing popularity of digital photography. However, the demise of this market is occurring more slowly than expected a few years ago. Yet we cannot deny that film will suffer in the long term from the introduction of digital photography. On the other hand, there remains a high demand with the consumer for high quality prints at a low cost. Agfa can respond optimally to this with its lab equipment, i.e. the high-speed printers and minilabs. And so we will reinforce our market leadership in this field. Growth in this market will also have a favourable impact on sales of consumables (paper and chemicals). In the film business, we can now see the positive results of our efforts in cost-reduction. We will continue these efforts systematically. Graphic Systems Agfa wants to further expand its leading market position in the graphic pre-press industry by growing in the promising segments of newspaper and packaging printing, as by obtaining a firm footing in the promising Chinese market. Furthermore, Agfa will realise cost-leadership in the present pre-press activities of Computer-to-Film en Computer-to-Plate. An initial investment programme of 40 million Euro has already been realised, a second wave of investment of approximately 30 million Euro will be implemented by the end of next year. Finally, Agfa wants to develop a long-term investment strategy in order to grow in the young Enterprise software market. Precisely because Agfa can manage the pre-press processes of printing firms like nobody else, the company is best placed to integrate these with other business processes (such as automation of print order processing, resources management, invoicing, etc.) Industrial Imaging Agfa is looking for partners to market its technological knowhow. A good example is Orgacon, a conductive flexible foil, which can be applied in the most varied fields. The foils is e.g. used in displays of mobile phone, electroluminiscence lamps, advertising hoardings,...Orgacon is marketed in cooperation with Bekaert. Non-Destructive Testing For some considerable time now, Agfa has been market leader in industrial radiography for non-destructive testing (NDT) of the quality and safety of all sorts of materials. Today, approximately 80 % of all passenger aircraft are safety-tested using Agfa-systems. Agfa aims to become market leader as 'global solution provider' for the main other NDT-technologies: ultrasound systems, real-time image processing, radiographic equipment and eddy current technology. To this end important acquisitions were realised in the past years. So in 1999, we acquired RADView (market leader in digital radiography) followed by Krautkramer in 2000 Krautkramer (market leader in ultrasound technology). Recently letters of intent were signed concerning the acquisition of Pantak in the United States and Seifert in Europe (market leader in real-time applications in the US and Europe respectively). NDT operates very independently as division within Agfa, while building on Agfa's financial and organisational structure. NDT is a kind of pilot project that should inspire in the development of Agfa's efficiency plan. Medical Imaging Agfa's most profitable business group has set itself the objective of becoming a 'leading hospital imaging & informatics provider'. It aims to achieve this by expanding in 2 directions. On the one hand, by expanding not only in radiology, but also in other fields of diagnoses, such as cardiology, pathology, ophthalmology, oncology, etc. On the other hand, Agfa will focus on the market for hospital information systems, whereby the integration of these systems with the medical diagnostic image is central. This is a market with a potential of 9 billion Euro. Building on Agfa's leading medical digital networks, IMPAX, the first steps in this direction were already made through the acquisition of the companies Quadrat and Talk Technologies. About Agfa The Agfa Group headquartered in Mortsel, Belgium ranks among the world's leading imaging companies. Agfa develops, produces and markets analog and digital systems, primarily for the graphics industry, medical imaging, non-destructive testing, micrographics, motion picture film and consumer imaging and photography markets. Agfa employs about 22,000 people in 40 countries, and has 120 agents throughout the world. Together, they achieved a turnover of 5,260 million Euro in 2000. Product and company information can be found on Agfa's home page on the World Wide Web at: www.agfa.com

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