Financiere de Tubize : Half-year financial report 2017

Financière de Tubize Half-year financial report 30 June 2017 STATEMENT OF THE DIRECTORS INTERIM REPORT OF THE BOARD OF DIRECTORS CONDENSED INTERIM FINANCIAL STATEMENTS

• Belgian standards (with auditor's report)
• EU-IFRS standards (with auditor's report)

FINANCIERE DE TUBIZE SA/NV

ALLEE DE LA RECHERCHE 60, 1070 BRUXELLES (BELGIUM) COMPANY NUMBER : BE 0403 216 429

WWW.FINANCIERE-TUBIZE.BE

CONTACT : ANNE SOPHIE PIJCKE ([e-mail])

STATEMENT OF THE DIRECTORS

We confirm that, to the best of our knowledge:

• The condensed interim financial statements at 30 June 2017 has been prepared in accordance with the applicable financial reporting standards and gives a true and fair view of the net assets, the financial position and the results of Financière de Tubize.

• The interim board report includes a fair review of the important events and the main related party transactions that occurred during the first half-year, and of their impact on the condensed interim financial statements at 30 June 2017, as well as a description of the main risks and uncertainties for the remainder of the year.

  Brussels, 26 July 2017 The board of directors

  INTERIM REPORT OF THE BOARD OF DIRECTORS

  Ladies and Gentlemen,

  In accordance with the legal and regulatory requirements, we are honoured to report to you on the first semester of FY 2017 of Financière de Tubize (the « Company »).

• Significant events

  The following significant events took place during the first half of FY 2017:

• Dividends - Dividend received from UCB in relation to FY 2016 (€ 78.289k) and dividend paid by the

  Company in relation to FY 2016 (€ 23.165k).

• Debt - Decrease of outstanding bank borrowings from € 241,0 million at 31 December 2016 to € 189,0 million at 30 June 2017.

• Cash flow risk management - A portion of the participating interest in UCB is financed by bank borrowings (€ 189 million at 30 June 2017). The majority of these borrowings (€ 129 million) are short term floating rate drawings under a roll-over credit facility. This allows the Company to benefit from the low borrowing cost. To protect itself against future increases of interest rates, the Company has decided in March 2016 to hedge its entire floating rate debt as per October 2017 onwards. To that objective, the Company has concluded, in March 2016, two deferred start interest rate swaps which will become effective on 2 October 2017, for notional amounts of € 82 million and € 57 million respectively, which will be completely amortised by mid-May 2021. Both swaps have been designated as hedging instruments against the cash flow risk embedded in the underlying borrowings. Hedge effectiveness has been documented. Note 2.4. of the EU-IFRS statements as per 30 June 2017 provides further details about the accounting for the swaps.

• Bridge loan - In November 2016, the Company has concluded a new credit facility of € 36 million, usable during the period from 30 September 2017 through 15 May 2018 in order to cover the expected cash needs during this period, as a result of the contractual repayment of a credit line of € 100 million at 30 September 2017.

1. Evolution of the results and the financial position

2. Results (Belgian standards1)

   The profit moves from € 71,521k in the first half of 2016 to € 75,339k in the first half of 2017, an increase

   of € 3,818k or 5,34%.

   The condensed profit or loss accounts for the six months ended 30 June 2017 and 2016 look as follows:

   € 000	2017	2016
   Dividend from UCB	78,289	74,885
   Cost of borrowing	-2,412	-2,991
   Other financial expenses	-39	-2
   General expenses	-499	-371
   Profit before tax	75,339	71,521
   Income taxes	-	-
   Profit	75,339	71,521

   The dividend received from UCB in 2017 in relation to FY 2016, amounts to € 78,289k (gross dividend of

   € 1.15 per share) against € 74,885k (€ 1.10 per share) for the prior year.

   1 The accounting standards applicable in Belgium and the periodic reporting obligations incumbent upon Belgian issuers whose securities are admitted to trading on a regulated market.

   The cost of borrowing decreases from € 2,991k for the first semester 2016 to € 2,412k for the same period in 2017. This phenomenon had already been initiated in 2016, on one hand via the reduction in the average cost of debt, thanks to favourable market conditions and active management of bank debts and, on the other hand, by lower commissions of reservation on the unused portion of the credit lines following better use of these lines since 2016.

   Other financial expenses include the variation of the portion of unrealized losses (€ 36k), which corresponds to future over-hedging situations, of which the occurrence has become probable as of 30 June 2017, based on the forecasts of future cash flows which show smaller financing requirements than expected at the time the swaps were concluded.

   Overhead costs increased from € 371k in the first half of 2016 to € 499k for the same period in 2017. This change was mainly due to the increase in directors' remuneration approved by the general meeting of shareholders on 26 April 2017.

   After application, in accordance with Belgian tax law and regulation, of the system of tax credits for dividends received, the Company has no taxable basis. The objective of the tax credits for dividends received is to avoid multiple taxation of dividends received from companies. Therefore 95% of the amounts of dividends received by the beneficiary company (Financière de Tubize) is deductible from its taxable basis.

3. Financial situation (Belgian standards)

4. The condensed balance sheet as per 30 June 2017 and as per 31 December 2016 look as follows:

   € 000	30/06/2017	31/12/2016
   Participating interest in UCB	1,717,992	1,717,992
   Current investments and cash at bank and in hand	1,301	661
   Other assets	74	28
   Total assets	1,719,367	1,718,681
   Equity	1,528,109	1,452,770
   Bank borrowings	189,000	241,000
   Other liabilities	2,258	24,911
   Total equity and liabilities	1,719,367	1,718,681

   The participating interest in the capital of UCB is recorded at its acquisition value for an amount of € 1,717,992k, unchanged compared to 31 December 2016, and representing a book value per share of € 25.24, whereas the share price at 30 June 2017 was 60.23 (€ 60.91 at 31 December 2016).

   Equity moves from € 1,452,770k at 31 December 2016 to € 1,528,109k at 30 June 2017. This increase of

   € 75,339k comes from the profit of the period. The market capitalisation of Financière de Tubize amounts to € 2,615,894k at 30 June 2017 (44,548,598 shares at € 58.72) against € 2,642,623k at 31 December 2016

   (44,548,598 shares at € 59.32) .

   The outstanding bank debt amounts to € 189.0 million at 30 June 2017 against € 241.0 million at 31 December 2016.

   The dividend received from UCB (€ 78.3 million) in May 2017 has served to reduce bank debt (€ 52.0 million), to pay the dividend of Financière de Tubize (€ 23.2 millions), to pay interest and commission on bank borrowings (€ 2.0 million), to pay general expenses (€ 0.5 million) and to increase liquidity (€ 0.6 million).

   The evolution of other liabilities since 31 December 2016 is primarily explained by the payment of the dividend Financière de Tubize (€ -23.2 million).