Hal Trust : Report on the first half year 2021

HAL Trust

Report on the first half year 2021

Table of Contents

Interim report of the Executive Board of HAL Holding N.V.	3
Condensed Interim Consolidated Financial Statements HAL Trust	5
Interim Consolidated Statement of Financial Position	6
Interim Consolidated Statement of Income	7
Interim Consolidated Statement of Comprehensive Income	8
Interim Consolidated Statement of Changes in Equity	9
Interim Consolidated Statement of Cash Flows	10
Basis of preparation	11
Notes to the Condensed Interim Consolidated Financial Statements	15
List of Principal subsidiaries and minority interests	31
Supplemental information	32
Statement by the Executive Board	41

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Interim report of the Executive Board of HAL Holding N.V.

First half year net income of € 599 million (2020: € 89 million). Net asset value increases by € 873 million.

Net income of HAL Holding N.V. for the first six months of 2021 amounted to € 599 million (€ 7.01 per share) compared to € 89 million (€ 1.05 per share) for the same period last year, an increase of € 510 million.

The increase in results is due to higher results of GrandVision (effect € 212 million) and the companies included in the unquoted segment (effect € 136 million). The increase in value of the liquid portfolio had a positive effect of € 121 million on the results compared to last year. The sale of the ownership interest in GrandVision occurred on July 1, 2021, and will be accounted for in the second half year.

The net asset value based on the market value of the ownership interests in quoted companies and the liquid portfolio and on the book value of the unquoted companies, increased by € 873 million during the first six months of 2021. This increase is primarily due to the higher stock market value of GrandVision and Boskalis, partly offset by the lower stock market value of Vopak. After taking into account the cash portion of the 2020 dividend (€ 200 million), the net asset value amounted to

• 13,464 million (€ 155.33 per share) on June 30, 2021, compared to € 12,791 million (€ 149.93 per share) on December 31, 2020.
  During the period from June 30, 2021, through August 20, 2021, the value of the ownership interests in quoted companies and the liquid portfolio decreased by approximately € 25 million (€ 0.29 per share).
  The information in this report has not been audited nor reviewed by an external auditor.

Optical retail

On July 31, 2019, HAL announced it had signed a block- trade agreement to sell its 76.72% ownership interest in the issued share capital of GrandVision N.V. to EssilorLuxottica at a price of € 28.00 per share. This price was to be increased by 1.5% to € 28.42 if closing would not occur before July 30, 2020. On July 1, 2021, this transaction was completed at the agreed price of € 28.42 per share. The total consideration for HAL's ownership interest amounted to € 5.5 billion (of which € 0.5 billion will be held in escrow for a maximum period of two years), resulting in a net capital gain of approximately

• 3.5 billion. As part of the transaction, HAL acquired the Chilean optical retail chain Rotter y Krauss. Rotter y Krauss operates 97 stores and has annual revenues of approximately € 50 million.
  HAL was invested in Optical retail since 1996. The investment returned a net € 7.5 billion in cash and provided an annual internal rate of return of 21%.

Quoted minority interests

At the end of June, the stock market value of HAL's interests in quoted minority interests (Koninklijke Vopak

N.V., Koninklijke Boskalis Westminster N.V., Safilo Group S.p.A. and SBM Offshore N.V.) amounted to € 4.6 billion compared to € 4.7 billion at the end of 2020. The net income from quoted minority interests amounted to

• 99 million (2020: € 28 million). This increase is primarily the result of higher earnings from Boskalis, Safilo and SBM Offshore. The 2020 results of Boskalis included extraordinary charges of € 148 million (HAL share € 65 million). The earnings from Vopak were lower primarily due to impairments of € 70 million (HAL share
• 34 million) versus exceptional gains in 2020 of € 31 million (HAL share € 15 million).

Unquoted companies

Revenues from the unquoted subsidiaries for the first half year amounted to € 2,335 million (2020: € 1,476 million), representing an increase of 58.2%. This increase is primarily due to the acquisition of Van Wijnen in August 2020. Excluding the effect of acquisitions, divestitures and changes in currency exchange rates, revenues from the unquoted companies increased by 11.9%, primarily due to higher revenues of Timber and Building Supplies Holland and Broadview Holding. Revenues for the second quarter of 2020 of a number of subsidiaries such as Broadview Holding, Atlas Professionals, Koninklijke Ahrend and Sports Timing Holding were significantly impacted by the consequences of the outbreak of COVID-19. In 2021, the revenues of these companies improved. However, the evolution of the COVID-19 pandemic and the potential effects on business performance remain difficult to predict.

The operating income of the unquoted companies (income before interest, exceptional and non-recurring items, taxes and amortization of intangible assets but including amortization of software) for the first half year amounted to € 216 million (2020: € 80 million) representing an increase of € 136 million. Excluding the effect of acquisitions, divestitures and changes in currency exchange rates operating income increased by € 91 million, primarily due to higher operating income of Timber and Building Supplies Holland and Broadview Holding.

Liquid portfolio and net debt

The corporate liquid portfolio at the end of June, 2021, amounted to € 837 million (December 31, 2020: € 869 million). As of June 30, 2021, the corporate liquid portfolio consisted for 78% of cash balances and fixed income instruments amounting to € 657 million (December 31, 2020: € 748 million) and for 22% of equities for an amount of € 180 million (December 31, 2020: € 121 million). In July, 2021, the corporate liquid portfolio increased by € 5 billion as a result of the proceeds from the sale of HALʼs interest in GrandVision (excluding an amount of € 0.5 billion held in escrow). These funds are invested in investment-grade fixed- income instruments and bank deposits with an average maturity of less than two years. The corporate liquid

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portfolio provided a total return of 7.1% during the first half of 2021 compared to a negative return of 4.9 % for the same period last year. The consolidated net cash (excluding the net debt of Koninklijke Vopak, Safilo Group and GrandVision ) as of June 30, 2021, as per the pro forma interim consolidated balance sheet in the supplemental information (defined as bank debt less cash and cash equivalents and marketable securities) amounted to € 487 million (December 31, 2020: net cash of € 513 million).

Acquisitions and divestitures unquoted companies and real estate

On January 4, 2021, HAL completed the acquisitions of 60% of the shares in GreenV B.V. ('Stolze') and 24% of the shares in PD Greenhouse Beheer B.V. ('Prins Group'). Stolze is active, worldwide, in providing technical systems for horticultural greenhouses. Sales over 2020 were € 100 million and the company employs approximately 120 FTE. Prins Group is active, worldwide, in building and producing greenhouses and integrated greenhouse projects. Sales over 2020 were € 50 million and the company employs approximately 45 FTE.

On February 12, 2021, HAL completed the acquisition, together with management, of 100% of the shares in BVG International B.V. ('Top Employers Institute'). Top Employers Institute is globally active in certification and benchmarking of human resources policies. Sales over 2020 were € 24 million and the company employs approximately 125 FTE.

On June 15, 2021, HAL signed an agreement to sell the Ethos Apartments complex in Kent, a suburb of Seattle. The sale consists of two tranches. The sale of the first tranche (288 apartments) was completed in August 2021. The sale of the second tranche consisting of 204 apartments, which are still under construction, will be completed before the end of December 2022. The total pre-tax capital gain is estimated at US$ 30 million of which US$ 20 million will be recognized in 2021.

On June 29, 2021, HAL signed an agreement to acquire 64% of the shares in CaseGi Holding GmbH ('Pro Gamers Group') based on a total enterprise valuation of

• 820 million (cash-and-debt-free). The company is active in several countries in the online retail and distribution of computer gaming equipment and accessories, both with own and third-party brands. Pro Gamers Group owns web shops in, amongst others, Germany, Finland, the United Kingdom and Australia. Sales over the financial year ending April 30, 2021, were € 627 million. The company is based in Berlin, Germany, and has approximately 700 employees. The completion of the transaction is subject to conditions customary for transactions of this nature, including approval by the relevant competition authorities.

Risks

In the 2020 annual report, the Company included a description of risks associated with its strategy and its implementation such as, but not limited to: market value risk, interest rate risk, currency risk, credit risk, liquidity risk, concentration risk, acquisition risk, financial reporting risk and other risks. The descriptions of these risks are deemed to be incorporated in this report by reference. We expect that the above risk factors will continue to exist for the second half of 2021. In the Company's view, the nature of these risk factors has not materially changed in the first half of 2021. However, due to the sale of HALʼs interest in GrandVision in July, 2021, and the subsequent increase in the corporate liquid portfolio (see above), the liquidity risk has significantly decreased since June 30, 2021. Also, the concentration risk with respect to the optical retail activities has ceased to exist. However, due to the increased size of the corporate liquid portfolio, the interest rate risk and the credit risk have increased. These risks are managed by maintaining an average duration for the fixed-income portfolio of less than two years and investing in portfolios that have an average S&P rating of at least A.

We also refer to the statement on page 41 of this report.

The Supervisory Board intends to grant Mr. M.F. Groot, Mr. A.A. van 't Hof and Mr. J.N. van Wiechen, members of the Executive Board, a one-time allotment of respectively 25,000, 20,000 and 20,000 shares HAL Trust. These shares will be restricted for a ten-year period.

Prospects

The net income for 2021 will be significantly higher than the net income for 2020, due to the capital gain realized on the sale of the ownership interest in GrandVision of approximately € 3.5 billion.

The Executive Board of HAL Holding N.V.

August 26, 2021
Financial calendar
Interim statement	November 24, 2021
Publication of preliminary net asset
value	January 27, 2022
Publication of 2021 annual results	March 30, 2022
Shareholders' meeting HAL Trust
and interim statement	May 18, 2022

This press release contains inside information relating to HAL Trust within the meaning of Article 7(1) of the EU Market Abuse Regulation and regulated information within the meaning of the Dutch Financial Markets Supervision Act.

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Condensed Interim Consolidated Financial Statements HAL Trust

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