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Compagnie d'Entreprises CFE SA

Quarterly Report Aug 30, 2016

3929_rns_2016-08-30_6a75a43d-c0b5-4e49-846b-10fcbfa4145c.pdf

Quarterly Report

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Intermediary Report

As of June 30, 2016

Intermediary report of the group CFE

Table of contents

MANAGEMENT REPORT OF THE BOARD OF DIRECTORS

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND NOTES

DEFINITIONS

Condensed consolidated statement of income Condensed consolidated statement of comprehensive income Condensed consolidated statement of financial position Condensed consolidated statement of cash flow Condensed consolidated statement of changes in equity Notes to the interim condensed consolidated financial statements for the period ended June 30, 2016 Auditor's report

Management report of board of directors

The management report should be read together with the interim condensed consolidated financial statements of the group CFE.

The Board of Directors of CFE examined and approved the H1 2016 financial statements at its meeting on August 25, 2016

1. Summary of the 1st semester

Key figures in the first half of 2016

In million € st semester 2016
1
1st semester 2015 Variation
Revenue 1,224.5 1,643.5 -25.5%
Self-financing capacity (EBITDA) 182.2 276.0 -34.0%
% of revenue 14.9% 16.8%
Operating income on activities 70.5 143.0 -50.7%
% of revenue 5.8% 8.7%
Operating income (*) (EBIT) 75.5 152.7 -50.6%
% of revenue 6.2% 9.3%
Net income share of the group 53.0 110.9 -52.2%
% of revenue 4.3% 6.7%
Net income share of the group per share (in EUR) 2.10 4.38 -52.1%

(*) including earnings from associates and joint ventures.

In million € 30 June
2016
31 December 2015 Variation
Equity share of the Group 1,416.7 1,423.3 -0.5%
Net financial debt 365.2 322.7 +13.2%
Order book 4,472.4 4,160.3 +7.5%

2. Analysis by division of the activity, results and order book

Dredging & Environment division

Key figures

In million € st semester 2016
1
st semester 2015
1
Variation
Revenue 802.1 1,171.0 -31.5%
EBITDA 185.3 276.3 -32.9%
Operating income (**) 78.3 176.5 -55.6%
Net income share of the group 54.1 120.8 -55.2%

(*) Amounts restated to take account of the recognition at fair value of the identifiable assets and liabilities of DEME following the acquisition of an additional 50% of the DEME shares on 24 December 2013.

(**) Including results of associated companies and joint ventures.

In million € 30 June 2016 31 December 2015 Variation
Order book 3,625.0 3,185.0 13.8%
Net financial debt 329.6 275.0 19.9%

Key figures according to the economic approach

The key figures shown below are presented according to the economic approach whereby the jointly controlled companies are proportionally consolidated (accounting rules applicable before 1 January 2014).

In million €
(Excluding restatements for DEME)
st semester 2016
1
st semester 2015
1
Variation
Revenue 803.1 1,218.7 -34.1%
EBITDA 195.2 302.6 -35.5%
Income from operating activities 84.7 183.8 -53.9%
Net income share of the group 54.0 119.8 -54.9%
Investments 112.6 291.9 -61.4%

Revenue

DEME realized a turnover of €803.1 million, or less than in the first half of 2015, which was marked by an exceptionally high level of activity, particularly in Egypt (widening of the Suez Canal).

The delayed start of certain major projects weighed on the fleet occupancy level.

In Singapore, the Jurong Island Westward Extension (JIWE) and Tuas Terminal Phase 1 projects are progressing according to schedule. DEME was also actively engaged in Panama (widening of the access to the Canal on the Pacific side), Africa, India and Europe.

In the North Sea, GeoSea finished the transport and installation of the monopile foundations for 54 wind turbines of the German Nordsee One wind farm ahead of schedule.

In the United Kingdom, the Galloper and Race Bank projects were started up. Those two projects will represent a substantial volume of activity in the second half of 2016.

Evolution of activity by business area (economic approach)

In % st semester 2016
1
1st semester 2015
Capital dredging 44% 55%
Maintenance dredging 14% 10%
Fallpipe and landfalls 4% 5%
Environment 13% 9%
Civil works 3% 0%
Marine works 22% 21%
Total 100% 100%

Evolution of activity by geographical area (economic approach)

En % st semester 2016
1
1st semester 2015
Europe (EU) 50% 33%
Europe (non-EU) 2% 0%
Africa 15% 40%
Americas 7% 6%
Asia-Pacific 16% 11%
Middle East 4% 6%
India and Pakistan 6% 4%
Total 100% 100%

EDITDA and operating income

DEME's EBITDA amounted to €195.2 million in the first six months of 2016, or 24.3% of the revenue. Despite the temporary decrease in activity, DEME was able to maintain a high level of profitability partly thanks to the successful completion of several projects.

Order book

The order book increased by 13.8% to a record level of €3,625 million during the first six months of 2016.

GeoSea won a contract worth €650 million for the construction of the Merkur wind farm with its 66 wind turbines of 6 MW; the financial close of this contract has been confirmed. Completion is due in March 2019. GeoSea will also be responsible for maintaining the foundations of the wind turbines for a 10-year period. Through its subsidiary DEME Concessions Wind, DEME holds a minority stake (12.5%) in the capital of the company operating the wind farm.

GeoSea also concluded an EPCI contract for the design, construction and installation of 71 monopiles for the Hohe See offshore wind farm situated approximately 90 km north of Borkum Island (Germany) in the North Sea. This contract is not yet included in the order book as at June 30, 2016.

DEME's subsidiary Tideway also won a major Design & Build contract from DONG Energy for the dredging and laying of high-voltage power cables using the new multipurpose vessel 'Living Stone' as part of the HornSea One project (1200 MW), the world's largest offshore wind farm, in the United Kingdom. This contract is not yet included in the order book as at June 30, 2016.

On May 30, the consortium Femern Link Contractors, which includes namely CFE and DEME as partners, signed conditional contracts with the Danish government for the design and construction of the world's longest road tunnel (18 km), the Fehmarnbelt link between Denmark and Germany. This project, worth an estimated €700 million for DEME/CFE, will only begin once the German authorities have delivered the necessary building permits. This contract is not yet included in the order book as at June 30, 2016.

Investments and net financial debt

The investments during the period amounted to €112.6 million. This figure primarily consists of the capitalized maintenance costs in pursuance of IAS 16 and down payments (€32 million) on the six vessels under construction : the self-propelled jack-up vessel 'Apollo', the multipurpose vessel 'Living Stone', the crane ship 'DP2 Gulliver' (in joint venture), and three trailing suction hopper dredgers ('Bonny River', 'Scheldt River' and 'Minerva'). Those vessels, worth a total of €500 million, will join DEME's fleet in 2017 and 2018.

The net financial debt amounted to €334.2 million (economic approach), an increase of €67.5 million.

Contracting division

Key figures

In million € st semester 2016
1
st semester 2015 (*)
1
Variation
Revenue 400.5 332.7 +20.4 %
Operating income (**) 7.6 -4.6 -
Net Income share of the group 4.1 0.7 +485.7%

(*) Pro forma figures according to the new definition of the segment applicable at 1st of January, 2016.

(**) Including results of associated companies and joint ventures.

Revenue

Revenue amounted to €400.5 million, or 20.4% up on the first six months of 2015.

Most entities of the Contracting division reported an increase in revenue, particularly in the international operations, with CFE Polska and CLE in Luxembourg recording a high level of activity.

Construction activity in Belgium, which represents just over half the division's revenue, is growing primarily in Flanders, buoyed by the 'Schools of Tomorrow' programme and several major projects such as AZ Sint-Maarten hospital in Mechelen and the Exxon industrial site in Antwerp. In Brussels, work on the 'Docks' shopping centre has entered the final stages, while the 'Grands Prés' project in Mons was completed in June 2016.

In million € st semester 2016
1
1st semester 2015 (*) Variation
Construction 293.5 236.1 +24.3%
Buildings, Belgium 226.6 194.7 +16.4%
Buildings, International (**) 66.9 41.4 +61.6%
Multitechnics 76.2 66.5 +14.6%
Rail infra 30.8 30.1 +2.3%
Total Contracting 400.5 332.7 +20.4%

(*) Pro forma figures according to the new definition of the segment applicable at 1st of January, 2016.

(**) Exclusively Luxemburg, Poland and Tunisia.

Operating income

CFE Contracting reported an operating income of €7.6 million, compared to €-4.6 million at June 30, 2015.

The three segments (Construction, Multitechnics and Rail Infra) made a positive contribution to the division's operating income.

The contribution of CFE Bouw Vlaanderen and CFE Polska to the division's operating income increased considerably compared to the first six months of 2015.

The operating margin as a percentage of revenue improved significantly to nearly 2%.

Order book

In million € 30 June 2016 31 December 2015 (*) Variation
Construction 571.6 671.2 -14.8%
Buildings, Belgium 415.0 494.6 -16.1%
Buildings, International (**) 156.6 176.6 -11.3%
Multitechnics 120.5 115.8 +4.1%
Rail infra 46.7 49.3 -5.3%
Total Contracting 738.8 836.3 -11.7%

(*) Pro forma figures according to the new definition of the segment applicable at 1st of January, 2016.

(**) Exclusively Luxemburg, Poland and Tunisia.

The order book of Contracting amounted to €738.8 million, which is €97.5 million down on January 1, 2016.

Market conditions in Belgium and a greater selectivity in the intake of new contracts weighed on the order intake of CFE Bâtiment Brabant Wallonie and CFE Bouw Vlaanderen. Nevertheless, both CFE Bouw Vlaanderen and CFE Polska were able to win some major new contracts in July 2016.

Cash flow

Due to a favourable evolution of the working capital requirement, the division's net cash position stood at €98.2 million, which is €23.4 million up on year-end 2015.

Real Estate division

Key figures

In million € st semester 2016
1
st semester 2015
1
Variation
Revenue 7.6 13.4 -43.3%
Operating income (*) 0.5 2.7 -81.5%
Net income share of the group -0.8 1.4 -

(*) Including results of associated companies and joint ventures.

Evolution of real estate projects

In million € 30 June 2016 31 December 2015
Unsold units post completion 16 14
Properties under construction 32 34
Properties in development 75 71
Total 123 119

Real Estate projects

The book value of real estate projects stood at €122.8 million at June 30, 2016, which is a 3.4% increase.

In Belgium, BPI successfully continued the marketing of residential units in the projects 'Erasmus Gardens' (Anderlecht), 'Ernest' (Ixelles) and 'Oosteroever' (Ostend). In the European district of Brussels, BPI finalized the acquisition of a land plot at the beginning of July for the development of 5,400 m² residential units.

In Luxemburg, satisfactory progress was made with the construction of the real estate complex 'Kons'; completion and transfer of the project to an institutional investor is scheduled for the end of the year.

In Poland, BPI Polska acquired a new plot of land in Warsaw (residential project of 3,500 m²). The construction and marketing of phases 3 and 4 of the residential project 'Ocean Four' in Gdansk continued at a steady pace.

Net result share part of the group

In the absence of major transactions during the six-month period under review, the net income of the division amounted to €-0.8 million (compared to €+1.4 million in the first six months of 2015). This figure does not reflect the division's expected performance over the whole year.

Holding, non-transferred activities and inter division eliminations

Key figures

In million € 1st semester 2016 1st semester 2015 (*) Variation
Revenue 14.4 126.4 -88.6%
Operating income (**) -10.9 -21.9 +50.2%
Net operating income share of the group -4.3 -12.2 +64.8%

(*) Pro forma figures according to the new definition of the segment applicable at 1st of January 2016

(**) Including results of associated companies and joint ventures.

Revenue

Revenue amounted to €29.5 million for the non-transferred operations of CFE SA (€131.6 million in the first half of 2015) and €-15.1 million for interdivisional eliminations.

The substantial decrease in revenue is explained by the transfer of the marine civil engineering operations to DEME at year-end 2015 and by a sharply reduced level of activity in Africa following the completion in 2015 of several large-scale projects, more specifically in Algeria and Chad.

Operating income

The operating income (€-10.9 million) was adversely affected by the recognition of additional losses on the Brussels-South wastewater treatment plant project, of which the first of three phases was completed in July 2016.

Net result

The division's net result amounted to €-4.3 million (€-12.2 million in the first half of 2015).

The operating loss was partly offset by the capital gain realized on the disposal of CFE's stake in Locorail NV, the company responsible for maintaining and financing the Liefkenshoek rail tunnel in Antwerp.

In the first half of 2015, the net result had been favourably influenced by the sale of the road-building activity.

Order book

In million € 30 June 2016 31 December 2015 Variation
Order book 101.6 132.3 -23.2%

The main projects in progress are the Brussels-South wastewater treatment plant and the supply contract for three residential tower blocks in Lagos, Nigeria.

Receivables from Chad

The Chadian government received a proposal during the second quarter for a conditional refinancing of the outstanding receivables relating to the Grand Hotel in N'Djamena. This proposal is currently being examined by the Chadian authorities.

The exposure to this country remains unchanged at €60 million.

3. An overview of the results

Condensed consolidated statement of income

Year ended at June 30
(in thousands €)
2016 2015
Revenue 1,224,532 1,643,545
Revenue from auxiliary activities 31,227 63,755
Purchases -591,732 -871,528
Wages, salaries & social charges -291,942 -299,650
Other operating charges -189,388 -262,744
Depreciations and amortization -112,178 -130,353
Goodwill Impairment 0 0
Operating income on activities 70,519 143,025
Earnings from associates and joint ventures 4,938 9,674
Operating income 75,457 152,699
Cost gross financial debt -13,265 -13,692
Other financial expenses and income 1,428 5,078
Financial result -11,837 -8,614
Result before taxes 63,620 144,085
Income tax expense -11,373 -35,804
Net income for the period 52,247 108,281
Attributable to owner of non-controlling interest 799 2,569
Net income share of the group 53,046 110,850

Condensed consolidated statement of comprehensive income

Year ended 30 June
(in thousands €)
2016 2015
Net income for the period – Share of the group 53,046 110,850
Net income for the period 52,247 108,281
Change in fair values related to the hedging instruments -5,253 -178
Currency translation differences 4,581 1,145
Deferred taxes 1,859 60
Other elements of the comprehensive income to be reclassified to
profit or loss in subsequent period
1,187 1,027
Remeasurement on defined benefit plans 0 0
Deferred taxes 0 0
Other elements of the comprehensive income not to be reclassified to
profit or loss in subsequent period
0 0
Total elements of the comprehensive income directly accounted in
equity
1,187 1,027
Comprehensive income 53,434 109,308
- attributable to the group 54,294 111,794
- attributable to non-controlling interests -860 -2,486
Net result share of the group per share (€) (basic and diluted) 2.10 4.38
Comprehensive income per share (€) (basic and diluted) 2.14 4.42

Consolidated statement of financial position

Year ended (in thousands €) 30 June 2016 31 December 2015
Intangible assets 97,556 97,886
Goodwill 175,169 175,222
Tangible assets 1,728,040 1,727,679
Associates and joint ventures 152,908 151,377
Other non-current financial assets 106,244 129,501
Non-current derivative instruments 2,190 1,381
Other non-current assets 18,566 19,280
Deferred tax assets 109,225 103,345
Total non-current assets 2,389,898 2,405,671
Inventories 98,524 77,946
Trade receivables and other operating receivable 1,135,129 1,192,977
Other current assets 74,871 125,029
Current derivative instruments 1,330 8,514
Current financial assets 56 70
Cash and cash equivalents 454,556 491,952
Total current assets 1,764,466 1,896,488
Total assets 4,154,364 4,302,159
Issued capital 41,330 41,330
Share premium 800,008 800,008
Retained earnings 599,162 607,012
Defined benefits plans -7,448 -7,448
Hedging reserves -14,104 -10,710
Translation differences -2,273 -6,915
Equity – part of the group CFE 1,416,675 1,423,277
Non-controlling interests 9,927 11,123
Equity 1,426,602 1,434,400
Retirement benefit obligations and employee benefits 41,187 41,054
Provisions 38,694 44,854
Other non-current liabilities 6,296 17,145
Bonds 304,376 305,216
Financial debts 343,869 398,897
Non-current derivative instruments 28,941 33,359
Deferred tax liabilities 142,706 150,053
Total non-current liabilities 906,069 990,578
Current provisions 66,243 64,820
Trade & other operating payables 1,093,451 1,184,886
Income tax payable 53,809 88,215
Current financial debts 171,511 110,558
Current derivative instruments 34,077 35,146
Other current liabilities
Total current liabilities
402,602
1,821,693
393,556
1,877,181
Total equity and liabilities 4,154,364 4,302,159

Condensed consolidated cash flow statement

Year ended 30 June
(in thousands €)
2016 2015
Cash flows relating to operating activities 133,719 149,085
Cash flows relating to investing activities -114,983 -134,380
Cash flows relating to financing activities -54,794 -327,377
Net increase/decrease in cash position -36,058 -312,672

Figures per share

30 June 2016 30 June 2015
Total number of shares 25,314,482 25,314,482
Operating result after deduction of the net financial charges per share (in €) 2.51 5.69
Net result share of the group per share (in €) 2.10 4.38

4. Information on business trends

Delayed phasing of several major projects will weigh on DEME's revenue in 2016, which will be down on 2015 despite the prospect of a high level of activity in the second half of the year, particularly in offshore wind. Nevertheless, the EBITDA margin as a percentage of revenue is expected to remain above the historical average.

The Contracting division is expected to report an increase in revenue and operating income in 2016.

5. Information related to the share

At 30 June 2016, CFE's share capital was divided into 25,314,482 shares.

Each share confers one vote. There has been no issue of convertible bonds or warrants. Financial institutions with which holders of financial instruments may exercise their financial rights are: BNP Paribas Fortis, Banque Degroof and ING Belgium. Banque Degroof has been appointed as the 'Main Paying Agent'.

6. Risks and uncertainties

Risks related to the sector of activity described in the annual report 2015 are still applicable during the second half year 2016.

7. Transactions with related parties

In the first half year of 2016, there was no significant variation in the nature of transactions with related parties compared to December 31st, 2015.

8. Corporate governance

The annual general meeting renewed the director's mandate of Philippe Delusinne for a period of four years, ending after the annual general meeting of May 2020. Philippe Delusinne meets the independence criteria defined in Article 526c of the Companies Code and in the 2009 Belgian Corporate Governance Code.

The annual general meeting renewed the director's mandate of Christian Labeyrie for a period of four years, ending after the annual general meeting of May 2020. Christian Labeyrie does not meet the independence criteria defined in Article 526c of the Companies Code and in the 2009 Belgian Corporate Governance Code.

The general meeting appointed Leen Geirnaerdt as director for a period of four years, ending after the general meeting of May 2020. Leen Geirnaerdt meets the independence criteria defined in Article 526c of the Companies Code and in the 2009 Belgian Corporate Governance Code.

The general meeting renewed the auditor's mandate of Deloitte, Reviseurs d'Entreprises, SC s.f.d. SCRL, represented by Michel Denayer and Rik Neckebroeck, for a period of three years, ending after the annual general meeting of 2019.

Luc Bertrand was appointed chairman of the board of directors of CFE with effect from 5 May 2016.

Interim condensed consolidated financial statements and notes

DEFINITIONS

Capital employed Intangible assets + goodwill + property, plant and equipment + working capital requirement
Working capital requirement Inventories + trade receivables and other operating receivables + other current assets + non-current assets held
for sale - other current provisions - trade payables and other operating liabilities - tax payables - other current
liabilities
Income from operating activities Turnover + revenue from auxiliary activities + purchases + wages, salaries and social charges + other
operational charges and depreciation and goodwill depreciation
Operating income (EBIT) Income from operating activities + earnings from associates and joint venture
EBITDA Income from operating activities + amortisation and depreciation + other non-cash items

CONDENSED CONSOLIDATED STATEMENT OF INCOME

For the period from January 1st to June,30th
(In thousand Euro)
Note June 2016 June 2015
Revenue
Revenue from auxiliary activities
Purchases
Remuneration and social security payments
Other operating expenses
Depreciation and amortization
Income from operating activities
6 1,224,532
31,227
(591,732)
(291,942)
(189,388)
(112,178)
70,519
1,643,545
63,755
(871,528)
(299,650)
(262,744)
(130,353)
143,025
Earnings from associates and joint venture 4,938 9,674
Operating income 75,457 152,699
Cost of gross financial debt
Other financial expenses & income
7
7
(13,265)
1,428
(13,692)
5,078
Net financial income/expense (11,837) (8,614)
Pre-tax income 63,620 144,085
Income tax expense 9 (11,373) (35,804)
Net income for the period 52,247 108,281
Attributable to owners of non-controlling interests 8 799 2,569
Net income share of the group 53,046 110,850
Net income of the group per share (EUR) (diluted and basic) 2.10 4.38

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the period from January 1st to June,30th
(In thousand Euro)
Note June 2016 June 2015
Net income share of the group
Net income for the period
53,046
52,247
110,850
108,281
Changes in fair value related to hedging instruments
Currency translation differences
Deferred taxes
Other elements of the comprehensive income to be reclassified to profit or
loss in subsequent periods
(5,253)
4,581
1,859
1,187
(178)
1,145
60
1,027
Re-measurement on defined benefit plans
Deferred taxes
Other elements of the comprehensive income not to be reclassified to profit
or loss in subsequent periods
0
0
0
0
0
0
Other elements of the comprehensive income directly accounted in equity 1,187 1,027
Comprehensive income:
- Attributable to owners of the parent
- Attributable to owners of non-controlling interests
53,434
54,294
(860)
109,308
111,794
(2,486)
Net income attributable to owners of the parent per share (EUR) (diluted and
basic)
2.14 4.42

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

For the period ended to
(In thousand Euro)
Note June 2016 December 2015
Intangible assets 97,556 97,886
Goodwill 175,169 175,222
Property, plant and equipment 10 1,728,040 1,727,679
Investments in associates and joint ventures 11 152,908 151,377
Other non-current financial assets 106,244 129,501
Derivative instruments – Non-current assets 2,190 1,381
Other non-current assets 18,566 19,280
Deferred tax assets 109,225 103,345
Total non-current assets 2,389,898 2,405,671
Inventories 12 98,524 77,946
Trade and other operating receivables 13 1,135,129 1,192,977
Other current assets 74,871 125,029
Derivative instruments – Current assets 1,330 8,514
Current financial assets 56 70
Cash and cash equivalents 17 454,556 491,952
Total current assets 1,764,466 1,896,488
Total assets 4,154,364 4,302,159
Share capital 41,330 41,330
Share premium 800,008 800,008
Retained earnings 599,162 607,012
Defined benefits pension plans (7,448) (7,448)
Hedging reserves (14,104) (10,710)
Currency translation differences (2,273) (6,915)
Equity attributable to owners of the parent 1,416,675 1,423,277
Non-controlling interests 8 9,927 11,123
Equity 1,426,602 1,434,400
Retirement benefit obligations and employee benefits 41,187 41,054
Provisions 14 38,694 44,854
Other non-current liabilities 6,296 17,145
Bonds 17 304,376 305,216
Financial liabilities 17 343,869 398,897
Derivative instruments – Non-current liabilities 28,941 33,359
Deferred tax liabilities 142,706 150,053
Total non-current liabilities 906,069 990,578
Current provisions 14 66,243 64,820
Trade & other operating payables 1,093,451 1,184,886
Income tax payable 53,809 88,215
Current financial liabilities 17 171,511 110,558
Derivative instruments – Current liabilities 34,077 35,146
Other current liabilities 402,602 393,556
Total current liabilities 1,821,693 1,877,181
Total equity and liabilities 4,154,364 4,302,159

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW

For the period from January 1st to June 30th
(In thousand Euro)
Note June 2016 June 2015
Operating activities
Net income share of the group
Depreciation and amortization of intangible assets, property, plant & equipment
and investment property
53,046
112,178
110,850
130,353
Net provision expense (83) 11,294
Impairment on current and non-current assets (380) (8,654)
Unrealized foreign exchange (gains)/losses
Interest income & income from financial assets
8,834
(15,447)
5,532
(15,289)
Interest expense 18,513 18,533
Change in fair value of derivative instruments (2,994) (3,144)
Income/(losses) from sales of property, plant & equipment (723) (13,052)
Tax expense 11,373 35,804
Income attributable to non-controlling interests
Earnings from associates and joint venture
(799)
(4,938)
(2,569)
(9,674)
Cash flow from operating activities before changes in working capital 178,580 259,984
Decrease/(increase) in trade receivables and other current and non-current
receivables
134,638 (133,960)
Decrease/(increase) in inventories (6,751) 2,891
Increase/(decrease) in trade payables and other current and non-current payables (138,349) 39,051
Cash flow from operating activities 168,118 167,966
Interest paid (18,513) (18,532)
Interest received 6,647 3,509
Income tax paid/received (22,533) (3,858)
Net cash flow from operating activities 133,719 149,085
Investing activities
Sales of non-current assets 1,876 21,868
Purchases of non-current assets (109,296) (133,049)
Change in percentage held in associates 5 0 (23,414)
Capital increase in investments in associates
Sale of subsidiaries
5 (6,300)
0
(11,735)
19,860
Loans granted (1,263) (7,910)
Cash flow from investing activities (114,983) (134,380)
Financing activities
Borrowings 64,885 64,897
Reimbursements of borrowings (58,924) (341,645)
Dividends paid (60,755) (50,629)
Cash flow from financing activities (54,794) (327,377)
Net Increase/(Decrease) in cash position (36,058) (312,672)
Cash and cash equivalents at start of the year 491,952 703,501
Exchange rate effects (1,338) 3,044
Cash and cash equivalents at end of period 454,556 393,873

Purchases and sales of subsidiaries net of cash acquired do not include entities that are not a business combination (segment real estate and concessions-PPP). They are not considered as investment operations and are directly reflected in cash flows from operating activities.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended June 30, 2016

(thousand Euro) Share Capital Share premium Retained earnings Defined benefits
pension plans
Hedging reserves Currency Translation
differences
Equity attributable to
owners of the parent
Non-controlling
interests
Total
----------------- --------------- --------------- ------------------- ----------------------------------- ------------------ ------------------------------------- ------------------------------------------------ ------------------------------ -------
December 2015 41,330 800,008 607,012 (7,448) (10,710) (6,915) 1,423,277 11,123 1,434,400
Comprehensive
income for the
period
53,046 (3,394) 4,642 54,294 (860) 53,434
Dividends paid to
shareholders
Dividends from
non-controlling
interests
Other movements
(60,755)
(141)
(60,755)
(141)
(819)
483
(60,755)
(819)
342
June 2016 41,330 800,008 599,162 (7,448) (14,104) (2,273) 1,416,675 9,927 1,426,602

For the year ended June 30, 2015

(thousand Euro) Share Capital Share premium Retained earnings Defined benefits
pension plans
Hedging reserves Currency Translation
differences
Equity attributable to
owners of the parent
Non-controlling
interests
Total
----------------- --------------- --------------- ------------------- ----------------------------------- ------------------ ------------------------------------- ------------------------------------------------ ------------------------------ -------
December 2014 41,330 800,008 488,890 (8,350) (6,127) (2,124) 1,313,627 7,238 1,320,865
Comprehensive
income for the
period
110,850 (117) 1,061 111,794 (2,486) 109,308
Dividends paid to
shareholders
Dividends from
non-controlling
interests
Other movements
(50,629)
(5,292)
(50,629)
(5,292)
(2,203)
5,292
(50,629)
(2,203)
0
June 2015 41,330 800,008 543,819 (8,350) (6,244) (1,063) 1,369,500 7,841 1,377,341

CAPITAL AND RESERVES

The share capital on June 30, 2016 is represented by 25,314,482 ordinary shares. These shares are without any nominal value. The shareholders of ordinary shares have the right to receive dividends and the right of one vote per share at the General Shareholders' Meeting.

On February 24, 2016 the Board of Directors proposed a dividend of 60,755 thousand Euro, corresponding to 2.40 Euro gross per share. The proposal has been approved by the General Shareholders Meeting on May 4, 2016. The dividend has been paid.

The basic income per share is the same as the diluted income per share due to the absence of potential dilutive ordinary shares in circulation.

It is calculated as follows :

NET RESULT PER SHARE
(In thousand Euro) 2016 2015
Net income attributable to shareholders 53,046 110,850
Comprehensive income attributable to owners of the parent 54,294 111,794
Number of ordinary shares at closing date 25,314,482 25,314,482
Basic (diluted) income by share in Euro 2.10 4.38
Comprehensive income attributable to owners of parent by share in Euro 2.14 4.42

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE EXERCISE ENDED AT JUNE 30, 2016

1. GENERAL POLICIES

  • 2. CONSOLIDATION METHODS
  • 2.1. SCOPE OF CONSOLIDATION
  • 2.2. INTRAGROUP TRANSACTIONS
  • 2.3. TRANSLATION OF THE FINANCIAL STATEMENTS OF FOREIGN COMPANIES AND ESTABLISHMENT.
  • 2.4. FOREIGN CURRENCIES TRANSACTIONS
  • 3. RULES AND EVALUATION METHODS
  • 3.1. RECOURSE TO ESTIMATES

4. SEGMENT REPORTING

4.1 CONDENSED CONSOLIDATED STATEMENT OF INCOME HIGHLIGHTS – COMPARATIVE PRO FORMA INFORMATION AT JUNE 30, 2015

4.2 CONDENSED CONSOLIDATED STATEMENT OF INCOME HIGHLIGHTS – COMPARATIVE PUBLISHED INFORMATION AND PRO FORMA INFORMATION AT JUNE 30, 2015

  • 4.3 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
  • 4.4. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
  • 4.5. OTHER INFORMATION
  • 4.6. GEOGRAPHICAL SECTOR

5. ACQUISITIONS AND DISPOSALS OF SUBSIDIARIES

  • 6. REVENUE FROM AUXILIARY ACTIVITIES
  • 7. NET FINANCIAL INCOME/EXPENSE
  • 8. NON-CONTROLLING INTERESTS
  • 9. INCOME TAX
  • 10. PROPERTY, PLANT & EQUIPMENT
  • 11. INVESTMENTS IN ASSOCIATES AND JOINT VENTURE
  • 12. INVENTORIES
  • 13. TRADE AND OTHER RECEIVABLES
  • 14. PROVISIONS OTHER THAN THOSE RELATING TO RETIREMENT BENEFIT OBLIGATIONS AND NON- CURRENT EMPLOYEE BENEFITS
  • 15. CONTINGENT ASSETS AND LIABILITIES

16. FINANCIAL INSTRUMENTS

17. NET FINANCIAL DEBT

  • 17.1. THE NET FINANCIAL DEBT
  • 17.2. DEBT MATURITY SCHEDULE
  • 17.3. CREDIT FACILITIES AND LONG TERM BANK LOANS

17.4. FINANCIAL COVENANTS

  • 18. FINANCIAL RISK MANAGEMENT
  • 18.1. INTEREST RATE RISK
  • 18.2. LONG TERM FINANCIAL DEBTS BY CURRENCY
  • 18.3. BOOK VALUE AND FAIR VALUE BY ACCOUNTING CATEGORY

19. OTHER COMMITMENTS GIVEN

20. OTHER COMMITMENTS RECEIVED

  • 21. LITIGATION
  • 22. RELATED PARTIES
  • 23. SUBSEQUENT EVENTS
  • 24. IMPACT OF FOREIGN CURRENCIES
  • 25. RESEARCH AND DEVELOPMENT
  • 26. SEASONAL NATURE OF THE BUSINESS
  • 27. STATUTORY AUDITORS REPORT

Preamble

The Board of Directors authorized the issue of the interim condensed consolidated financial statements on August 25, 2016.

MAIN TRANSACTIONS FOR THE FIRST SIX MONTHS OF 2016 AND THE FIRST SIX MONTHS OF 2015 WITH EFFECT ON THE SCOPE OF THE GROUP CFE

TRANSACTIONS FOR THE FIRST SIX MONTHS OF 2016

1. Dredging and environment segment

During the first half year 2016, DEME acquired :

  • A 100% stake in the newly created companies GeoSea Infra Solutions GMBH, DEME Concessions Wind BV and DEME Concessions Merkur BV which are fully consolidated;
  • A 49.94% stake in the newly created company Blue Open NV which is integrated under the equity method;
  • A 37.45% stake in the newly created company Top Wallonie SA which is integrated under the equity method;
  • A 25.47% stake in the newly created company Blue Gate Antwerp Development BV which is integrated under the equity method;
  • A 17.5% stake in the newly created company Kriegers Flak APS which is integrated under the equity method;
  • A 12.48% stake in the newly created company La Vélorie which is integrated under the equity method;

Moreover, the companies Geka Bouw BV and CFE Nederland BV, which are 100% held by DEME Group have been merged and renamed "Dimco BV".

2. Contracting segment

On June 29, 2016 CFE Group, through its subsidiary CFE Contracting, increased its stake in Groep Terryn NV from 77.5% to 100%. Groep Terryn remains fully integrated.

3. Real estate segment

On April 7, 2016 CFE Group, through its subsidiary BPI, acquired a 100% stake in BPI Barska sp z.o.o. which is fully integrated.

On May 20, 2016 CFE Group, through its subsidiary BPI, increased its stake in Foncière Sterpenich from 50% to 100%. This entity is now fully integrated.

On June 30, 2016 the company Sogesmaint Luxembourg, 100% held by Sogesmaint SA was sold.

The companies C.I.W. and P.R.N.E., 100% held by BPI Luxembourg were dissolved.

The company Immomax, a 47% subsidiary of BPI, bought 100% of the shares in Immomax II where 47% were bought from CFE Polska and 53% from a third party. Immomax II remains integrated under the equity method.

4. Holding and non-transferred activities

On June 29, 2016 CFE SA sold its 25% stake in Locorail NV.

TRANSACTIONS FOR THE FIRST SIX MONTHS OF 2015

5. Dredging and environment segment

During the first half year 2015, DEME acquired :

  • A 100% stake in the newly created companies DEME Cyprus Ltd which is fully consolidated;
  • A 25% stake in the company Merkur Offshore GmbH which is integrated under the equity method;
  • Since May 13, 2015 an additional 50% stake in the company HGO InfraSea Solutions GmbH & Co increasing its stake from 50% to 100%. HGO InfraSea Solutions GmbH & Co is now fully consolidated.

6. Contracting segment

On March 2, 2015 the subsidiary IFCC SA was renamed CFE Contracting SA. In the near future, this company will become the leading company of the Contracting Division.

Construction:

On February 10, 2015 the company BPC Design & Engineering ("BDE") was created. This company is owned by CFE Bâtiment Brabant Wallonie – CFE BBW SA (99%) and CFE Bouw Vlaanderen NV (1%). CFE group has a 100% stake in both companies. BDE is fully consolidated.

On April 16, 2015 CFE Contracting SA, subsidiary of CFE group, acquired a 100% stake in the newly created company CFE Infra NV. This company is fully consolidated.

On June 30, 2015 CFE acquired a 50% stake of the non-controlling interests of the group Terryn at December 2014. The stake of CFE group increases therefore from 55.04% to 77.51%.

Multitechnics:

On June 12, 2015 VMA NV, a 100% subsidiary of CFE group, acquired 100% of the newly created company VMA Midlands Limited. This company is fully consolidated.

Rail:

On February 25, 2015 the sale of the road activity in Aannemingen Van Wellen NV was finalised and the stake (100%) is fully transferred to Aswebo, subsidiary of Group Willemen.

On March 25, 2015 the company "Société de Gestion de Chantiers" (SOGECH SA), subsidiary of CFE group at 100% is dissolved.

7. Real estate segment

Given that BPI will become the leading company of the Real Estate Division, during the first semester of 2015, the stakes in the group real estate companies and the real estate assets owned by CFE Immo, branch of CFE SA are progressively transferred to BPI SA. For this purpose, the share capital of BPI was increased on June 25, 2015.

On March 31, 2015 through its subsidiaries BPI and Espace Midi, CFE group sold its stake in the company South City Hotel (20%). This company was integrated under the equity method.

On May 22, 2015 BPI, subsidiary of CFE group, acquired a 31.2% stake in the company Goodways BVBA with the purpose to develop a real estate project in Anderlecht. This entity is integrated under the equity method.

On June 25, 2015 BPI, subsidiary of CFE group, acquired 50% of the newly created companies in Luxemburg M1 SA and M7 SA. These companies are integrated under the equity method.

8. PPP Concessions

During the first six month of 2015, the stake of PPP Branch in Bizerte Cap 3000 SA was diluted from 25% to 20.01%.

ACCOUNTING PRINCIPLES AND EVALUATION METHOD

1. GENERAL POLICIES

IFRS AS ADOPTED BY THE EUROPEAN UNION

The retained accounting principles are the same that the principles used for the yearly consolidated financial statement at December 31, 2015.

STANDARDS AND INTERPRETATIONS APPLICABLE FOR THE ANNUAL PERIOD BEGINNING ON JANUARY 1 ST , 2016

  • Improvements to IFRS (2010-2012) (applicable to yearly periods after February 1st, 2015)
  • Improvements to IFRS (2012-2014) (applicable to periods after January 1st, 2016)
  • Amendments to IFRS 11 Joint arrangements Accounting for acquisition of interests in joint operations (applicable to yearly periods after January 1st, 2016)
  • Amendments to IAS 1 Presentation of Financial Statements Disclosure initiative (applicable to yearly periods after January 1st, 2016)
  • Amendments to IAS 16 and IAS 38 Tangible and intangible assets Clarification of acceptable methods of depreciation and amortisation (applicable to yearly periods after January 1st, 2016)
  • Amendments to IAS 19 Employee benefits Employees contributions (applicable to yearly periods after February 1st, 2015)
  • Amendments to IAS 27 Separate financial statements Equity method (applicable to yearly periods after January 1st, 2016)

STANDARDS AND INTERPRETATIONS PUBLISHED, BUT NOT YET APPLICABLE FOR THE ANNUAL PERIOD BEGINNING ON JANUARY 1 ST , 2016

The Company decided not to anticipate the application standards and interpretations here below that are not mandatory on June 30, 2016:

  • IFRS 9 Financial Instruments and subsequent amendments (applicable for annual periods beginning on or after January 1st, 2018, but not yet endorsed in the EU)
  • IFRS 14 Regulatory Deferral Accounts (applicable for annual periods beginning on or after January 1st, 2016 but not yet endorsed in the EU)
  • IFRS 15 Revenue from Contracts with Customers (applicable for annual periods beginning on or after January 1st, 2018 but not yet endorsed in the EU)
  • IFRS 16 Leases (applicable for annual periods beginning on or after January 1st, 2019 but not yet endorsed in the EU)
  • Amendments to IFRS 2 Classification and Measurement of Share-based Payment Transactions (applicable for annual periods beginning on or after January 1st, 2018 but not yet endorsed in the EU)
  • Amendments to IFRS 10, IFRS 12 and IAS 28 Investment Entities: Applying the Consolidation Exception (applicable for annual periods beginning on or after January 1st, 2016 but not yet endorsed in the EU)
  • Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (the effective date has been deferred indefinitely, and therefore the endorsement in the EU has been postponed)
  • Amendments to IAS 7 Statement of Cash Flows Disclosure Initiative (applicable for annual periods beginning on or after January 1st, 2017 but not yet endorsed in the EU)
  • Amendments to IAS 12 Income Taxes Recognition of Deferred Tax Assets for Unrealised Losses (applicable for annual periods beginning on or after January 1st, 2017 but not yet endorsed in the EU)

The potential impacts of these standards and interpretations on the group's consolidated financial statements are being determined. The group does not expect any material changes resulting from the application of the standards and interpretations except for IFRS 9, IFRS 15 and IFRS 16.

2. CONSOLIDATION METHODS

2.1. SCOPE OF CONSOLIDATION

Companies in which the Group holds, whether directly or indirectly, the majority of voting rights enabling control to be exercised, are fully consolidated. Companies over which the Group exercises a joint control with others shareholders are integrated under equity method. This mainly concerns Rent-A-Port and some companies in the segments Dredging and environment and real estate. Companies over which the Group exercises a significant influence are integrated under equity method. This mainly concerns Coentunnel Company BV, PPP Schulen Eupen SA, Van Maerlant Property I & II SPRL, Van Maerlant Residential SA and C-Power NV, Rentel NV and Otary NV in DEME Group.

Evolution of the consolidation scope

Number of entities June 2016 December 2015
Full consolidation
Equity method
177
124
177
108
Total 301 285

2.2. INTRAGROUP TRANSACTIONS

Reciprocal operations and transactions relating to assets and liabilities and income and expenses between companies that are consolidated are eliminated in the consolidated financial statements. This is done:

  • for the full amount if the transaction is between two controlled subsidiaries;
  • applying the percentage owned of a company accounted for under the equity method with respect to internal profits or losses between a fully consolidated company and a company accounted for under the equity method.

2.3. TRANSLATION OF THE FINANCIAL STATEMENTS OF FOREIGN COMPANIES AND ESTABLISHMENT.

In main cases, the functional currency of companies and establishments correspond to the currency of the related country.

Financial statements of foreign companies whereas the functional currency is different from the consolidated accounts reporting currency of the group are translated at the closing rate for the balance sheet elements, and at the average rate of the period for the results elements. Exchange differences are recorded in "translation differences" in the consolidated reserves.

Goodwill related to foreign companies is considered to be included in the acquired assets and liabilities and are therefore translated at the closing rate.

2.4. FOREIGN CURRENCIES TRANSACTIONS

Foreign currencies transactions are converted into Euro using the conversion rate at the date of the operation. At closing period, the financial assets and monetary liabilities denominated in foreign currencies are converted into Euro at the exchange closing rate of the period. The exchange losses and gains coming from these operations are recognized in the section "exchange result" and are presented in other financial revenues and other financial expenses in the income statement.

The exchange gains and losses on loans denominated in foreign currencies or on exchange derivative instruments used for hedging investments in foreign subsidiaries are recorded under translation differences in equity.

3. RULES AND EVALUATION METHODS

3.1. RECOURSE TO ESTIMATES

The preparation of financial statements under IFRS requires estimates to be used and assumptions to be made that affect the amounts shown in those financial statements, particularly with regards the following items:

  • the period over which non-current assets are depreciated or amortized;
  • the measurement of provisions and pension obligations;
  • the measurement of income or losses on construction contracts using the percentage of completion method;
  • estimates used in impairment tests;
  • the measurement of financial instruments at fair value;
  • the assessment of control;
  • the qualification of a company acquisition as a business combination or as an acquisition of assets; and
  • the qualification, when a partnership enters into force, of the Joint Arrangement into a joint venture or a joint operation.

These estimates assume the operation is a going concern and are made on the basis of the information available at the time. Estimates may be revised if the circumstances on which they were based alter or if new information becomes available. Actual results may be different from these estimates.

4. SEGMENT REPORTING

Segment reporting is presented in respect of the group's operating segments. Segment profits, losses, assets and liabilities include items that can be attributed directly to a segment or allocated on a reasonable basis.

During the second semester 2015, the activities Multitechnics, Rail-infra and Building Belgium, Luxemburg, Poland and Tunisia were transferred under CFE Contracting SA, a 100% subsidiary of CFE SA and head of the segment. This internal reorganization goes with a change of scope within the segment Contracting as from January 1st , 2016. This segment only includes the activities performed by CFE Contracting SA and its subsidiaries.

CFE Group is made of four operating segments, which are :

- Dredging & Environment

The Dredging & Environment division – through DEME – operates in dredging (investment dredging and maintenance dredging), the treatment of polluted earth, installation of off-shore wind turbines and sludge, and marine civil engineering.

- Contracting

The construction activities reported in the Contracting Segment include :

  • buildings (offices, industrial buildings, housing, renovation and refurbishment work) in Belgium, Luxemburg, Poland and Tunisia;
  • electricity projects in the service sector (offices, hospitals, car parks etc.) in Belgium and Luxemburg;
  • installation of overhead contact lines and rail signalling in Belgium.

- Real Estate

The Real Estate segment develops real estate projects in Belgium, Luxemburg and Poland.

- Holding and non-transferred activities

Besides the usual holding activities, this segment includes:

  • the participations in Rent-A-Port, Rent-A-Port Energy and in three Design Build Finance and Maintenance contracts in Benelux.
  • the contracting activities non-transferred to CFE Contracting SA and DEME including a number of civil engineering projects in Belgium and building projects in Africa (except Tunisia) and in central Europe (except Poland).

4.1 CONDENSED CONSOLIDATED STATEMENT OF INCOME HIGHLIGHTS – COMPARATIVE PRO FORMA INFORMATION AT JUNE 30, 2015

At June 30 Revenue Income from operating activities Operating income (EBIT) Financial income
2016 2015 Pro
forma (*)
2016 %Turnover 2015 Pro
forma (*)
%Turnover 2016 %Turnover 2015 Pro
forma
(*)
%Turnover 2016 2015 Pro
forma (*)
Dredgind and
environment
802,069 1,171,037 79,361 9.89% 168,689 14.41% 81,402 10.15% 180,269 15.39% (20,790) (23,018)
Correction DEME (2,638) (3,273) (3,127) (3,762) 3,515 5,510
Contracting 400,490 332,706 7,609 1.90% (4,631) (1.39%) 7,609 1.90% (4,631) (1.39%) (331) (225)
Real Estate 7,592 13,382 (390) (5.14%) 1,051 7.85% 518 6.82% 2,720 20.33% (1,290) (1,137)
Holding & non
transferred activities
29,514 131,630 (13,548) (18,687) (11,070) (21,773) 7,059 10,256
Eliminations between
segments
(15,133) (5,210) 125 (124) 125 (124)
Total consolidated 1,224,532 1,643,545 70,519 5.76% 143,025 8.70% 75,457 6.16% 152,699 9.29% (11,837) (8,614)
At June 30 Taxes Net income of the group Non-cash items EBITDA
2016 2015 Pro
forma (*)
2016 %Turnover 2015 Pro forma (*) %Turnover 2016 2015 Pro
forma (*)
2016 %Turnover 2015 Pro forma (*) %Turnover
Dredgind and environment (7,051) (37,556) 54,009 6.73% 119,828 10.23% 105,944 107,600 185,305 23.10% 276,289 23.59%
Correction DEME (335) (704) 53 1,044 2,638 3,273
Contracting (3,597) 3,059 4,068 1.02% 746 0.22% 5,028 21,108 12,637 3.16% 16,477 4.95%
Real Estate (33) (143) (805) (10.60%) 1,439 10.75% 1,429 (314) 1,039 13.69% 737 5.51%
Holding & non-transferred
activities
(324) (495) (4,371) (12,117) (3,324) 1,326 (16,872) (17,361)
Eliminations between segments (33) 35 92 (90) 125 (124)
Total consolidated (11,373) (35,804) 53,046 4.33% 110,850 6.74% 111,715 132,993 182,234 14.88% 276,018 16.79%

(*) Amounts adjusted in accordance with the internal organisation as of January 1st, 2016 as described here above.

4.2 CONDENSED CONSOLIDATED STATEMENT OF INCOME HIGHLIGHTS – COMPARATIVE PUBLISHED INFORMATION AND PRO FORMA INFORMATION AT JUNE 30, 2015

At June 30 Revenue Income from operating activities Operating income (EBIT) Financial income
2015 Pro
forma (*)
2015 2015 Pro
forma (*)
%Turnover 2015 %Turnover 2015 Pro
forma (*)
%Turnover 2015 %Turnover 2015
Pro
forma
(*)
2015
Dredging and
environment
1,171,037 1,171,037 168,689 14.41% 168,689 14.41% 180,269 15.39% 180,269 15.39% (23,018) (23,018)
Correction DEME (3,273) (3,273) (3,762) (3,762) 5,510 5,510
Contracting 332,706 463,668 (4,631) (1.39%) (19,775) (4.26%) (4,631) (1.39%) (23,254) (5.02%) (225) (669)
Real estate 13,382 13,382 1,051 7.85% 1,051 7.85% 2,720 20.33% 2,720 20.33% (1,137) (1,137)
PPP-Concessions n.a. 668 n.a. (2,058) n.a. (1,665) n.a. 3,532
Holding & non
transferred activities
131,630 n.a. (18,687) n.a. (21,773) n.a. 10,256 n.a.
Holding n.a. 0 n.a. (1,485) n.a. (1,485) n.a. 7,168
Eliminations between
segments
(5,210) (5,210) (124) (124) (124) (124)
Total consolidated 1,643,545 1,643,545 143,025 8.70% 143,025 8.70% 152,699 9.29% 152,699 9.29% (8,614) (8,614)
At June 30 Taxes Net income of the group Non-cash items EBITDA
2015 Pro
forma (*)
2015 2015 Pro
forma (*)
%Turnover 2015 %Turnover 2015 Pro
forma (*)
2015 2015 Pro
forma (*)
%Turnover 2015 %Turnover
Dredging and environment (37,556) (37,556) 119,828 10.23% 119,828 10.23% 107,600 107,600 276,289 23.59% 276,289 23.59%
Correction DEME (704) (704) 1,044 1,044 3,273 3,273
Contracting 3,059 2,613 746 0.22% (18,871) (4.07%) 21,108 18,666 16,477 4.95% (1,109) (0.24%)
Real estate (143) (143) 1,439 10.75% 1,439 10.75% (314) (314) 737 5.51% 737 5.51%
PPP-Concessions n.a. 0 n.a. 1,866 n.a. 3,407 n.a. 1,349
Holding & non-transferred
activities
(495) n.a. (12,117) n.a. 1,326 n.a. (17,361) n.a.
Holding n.a. (49) n.a. 5,634 n.a. 361 n.a. (1,124)
Eliminations between
segments
35 35 (90) (90) (124) (124)
Total consolidated (35,804) (35,804) 110,850 6.74% 110,850 6.74% 132,993 132,993 276,018 16.79% 276,018 16.79%

(*) Amounts adjusted in accordance with the internal organisation as of January 1st, 2016 as described here above.

4.3 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At June 30th, 2016 Dredging and
environment
Contracting Real Estate Holding & non
transferred
Eliminations
between
Total
consolidated
(thousand euro) activities segments
ASSETS
Goodwill 155,960 19,209 0 0 0 175,169
Property, plant and equipment 1,694,615 31,715 227 1,483 0 1,728,040
Non-current loans to consolidated
group companies
0 0 0 40,000 (40,000) 0
Other non-current financial assets 64,666 176 33,466 7,936 0 106,244
Other non-current assets 305,074 6,527 54,481 1,261,617 (1,247,254) 380,445
Inventories 28,606 20,640 49,857 1,022 (1,601) 98,524
Cash and cash equivalents 369,730 49,085 3,446 32,295 0 454,556
Internal cash position - cash pooling
- assets
0 59,526 0 55,714 (115,240) 0
Other current assets 740,161 302,952 32,970 178,952 (43,649) 1,211,386
Total assets 3,358,812 489,830 174,447 1,579,019 (1,447,744) 4,154,364
EQUITY AND LIABILITIES
Equity 1,373,665 61,204 20,932 1,218,686 (1,247,885) 1,426,602
Non-current borrowings from
consolidated group companies
0 0 40,000 0 (40,000) 0
Bonds 204,418 0 0 99,958 0 304,376
Non-current financial liabilities 324,602 9,269 (1) 9,999 0 343,869
Other non-current liabilities 203,272 9,877 21,573 23,977 (875) 257,824
Current financial liabilities 170,331 1,170 0 10 0 171,511
Internal cash position - cash pooling
- liabilities
0 0 65,858 49,429 (115,287) 0
Other current liabilities 1,082,524 408,310 26,085 176,960 (43,697) 1,650,182
Total equity and liabilities 3,358,812 489,830 174,447 1,579,019 (1,447,744) 4,154,364
At December 31st, 2015 - Pro Forma (*)
(thousand euro)
Dredging and
Contracting Real Estate
environment
Transferred
activities
Holding & Non Eliminations
between
segments
Total
consolidated
ASSETS
Goodwill 155,959 19,210 53 0 0 175,222
Property, plant and equipment 1,693,799 31,573 207 2,100 0 1,727,679
Non-current loans to consolidated
group companies
0 875 0 40,000 (40,875) 0
Other non-current financial assets 58,058 176 43,986 27,281 0 129,501
Other non-current assets 299,100 7,284 52,430 1,260,637 (1,246,182) 373,269
Inventories 11,259 23,268 44,965 55 (1,601) 77,946
Cash and cash equivalents 378,405 37,116 4,473 71,958 0 491,952
Internal cash position - cash pooling -
assets
0 49,798 0 49,751 (99,549) 0
Other current assets 837,265 290,309 16,580 236,663 (54,227) 1,326,590
Total assets 3,433,845 459,609 162,694 1,688,445 (1,442,434) 4,302,159
EQUITY AND LIABILITIES
Equity 1,381,998 58,899 21,769 1,219,422 (1,247,688) 1,434,400
Non-current borrowings from
consolidated group companies
0 0 40,875 0 (40,875) 0
Bonds 205,257 0 0 99,959 0 305,216
Non-current financial liabilities 339,249 9,653 (5) 50,000 0 398,897
Other non-current liabilities 225,416 9,073 18,179 33,797 0 286,465
Current financial liabilities 108,901 1,644 4,732 13 (4,732) 110,558
Internal cash position - cash pooling -
liabilities
0 777 48,974 45,113 (94,864) 0
Other current liabilities 1,173,024 379,563 28,170 240,141 (54,275) 1,766,623
Total equity and liabilities 3,433,845 459,609 162,694 1,688,445 (1,442,434) 4,302,159

(*) Amounts adjusted in accordance with the internal organisation as of January 1st, 2016 as described here above.

4.4. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

At June 30th, 2016
(In thousand Euro)
Dredging &
environ
ment
Contracting Real Estate Holding, non
transferred activities
and eliminations
Total
consolidated
Cash flow from operating activities
before changes in working capital
182,205 (2,170) 1,087 (2,542) 178,580
Cash flow from operating activities 117,762 17,603 1,427 (3,073) 133,719
Cash flow from investing activities (112,493) (3,448) 1,497 (539) (114,983)
Cash flow from financing activities (13,183) (5,790) (3,908) (31,913) (54,794)
Net increase/(decrease) of cash (7,914) 8,365 (984) (35,525) (36,058)
At June 30th, 2015
(In thousand Euro)
Dredging &
environ
ment
Contracting Real Estate PPP
Concessions
Holding and
eliminations
Total
consolidated
Cash flow from operating activities
before changes in working capital
259,913 (1,407) 738 2,230 (1,490) 259,984
Cash flow from operating activities 179,414 (2,761) (253) (7,194) (20,121) 149,085
Cash flow from investing activities (149,401) (4,120) (375) (2,646) 22,162 (134,380)
Cash flow from financing activities (286,190) (8,664) 2,479 9,169 (44,171) (327,377)
Net increase/(decrease) of cash (256,177) (15,545) 1,851 (671) (42,130) (312,672)

Cash flows from financing activities include cash pooling loans and borrowing with other segments. A positive amount means a use of liquidities in the cash pooling. This section is also influenced by external financing, especially and primarily in the segments Real Estate, Holding, and Dredging and environment. The dredging and environment segment is not part of the cash pooling of the group CFE.

4.5. OTHER INFORMATION

At June 30th, 2016
(In thousand Euro)
Dredging &
environment
Contracting Real
Estate
Holding & non
transferred
activities
Total
consolidated
Amortizations
Investments
(108,582)
108,904
(3,824)
4,006
(57)
161
285
16
(112,178)
113,087
At June 30th, 2015 Dredging &
environment
Contracting Real
Estate
Holding & non
transferred
Total
consolidated
(In thousand Euro) activities
Amortizations
Investments
(110,869)
179,786
(17,173)
4,757
(27)
75
(2,284)
1,176
(130,353)
185,794

The investments include the acquisitions done for the purpose of the group investments and the acquisitions done by the segments Real Estate and PPP-concessions for their operational activities. Acquisitions through business combinations are not disclosed in those amounts.

REVENUE BREAKDOWN GENERATED BY THE DREDGING DIVISION

(In thousand Euro) June 2016 June 2015
Capital dredging 356,584 638,863
Environmental contracting 103,791 101,875
Fall pipe and landfalls 32,804 56,755
Maintenance dredging 112,260 125,844
Marine works 173,272 247,700
Civil works 23,358 0
Total 802,069 1,171,037

REVENUE BREAKDOWN GENERATED BY THE CONTRACTING DIVISION (*)

(In thousand Euro) June 2016 June 2015
Construction
Multitechnics
Railway
293,468
76,246
30,776
236,070
66,526
30,110
Total 400,490 332,706

(*) Amounts adjusted in accordance with the internal organisation as of January 1st, 2016 as described here above.

4.6. GEOGRAPHICAL SECTOR

REVENUE OF CFE GROUP AT JUNE 30
(In thousand Euro) June 2016 June 2015
Belgium 464,304 476,660
Other Europe 344,382 346,642
Middle East 34,215 40,163
Asia 170,216 108,755
Oceania 10,471 81,172
Africa 141,399 527,528
Americas 59,545 62,625
Total consolidated 1,224,532 1,643,545

5. ACQUISITIONS AND DISPOSALS OF SUBSIDIARIES

ACQUISITIONS AS OF JUNE 30, 2016

On June 29th, 2016 through its subsidiary CFE Contracting SA, CFE increased its stake in Groep Terryn from 77.5% to 100%. Groep Terryn remains fully integrated.

DISPOSALS AS OF JUNE 30, 2016

On June 29th ,2016 CFE SA sold its 25% stake in Locorail NV.

COMPREHENSIVE INCOME

6. REVENUE FROM AUXILIARY ACTIVITIES

Revenues from auxiliary activities amount to 31,227 thousand Euro (June 2015 : 63,755 thousand Euro) and include gains on disposals of property, plant and equipment for 783 thousand Euro (June 2015: 13,052 thousand Euro), as well as rent income, recharges of costs and other compensation for 30,444 thousand Euro (June 2015 : 50,703 thousand Euro). The substantial decrease in the revenue of auxiliary activities is mainly due to the decrease of revenues from auxiliary activities in the segment Dredging and environment.

7. NET FINANCIAL INCOME/EXPENSE

As of June 30
(in thousand Euro) 2016 2015
Cost of financial debt (13,265) (13,692)
Derivative instruments - fair value adjustments through profit and loss 183 154
Derivative instruments used as hedging instruments 0 0
Assets measured at fair value 0 0
Available-for-sale financial instruments 0 0
Assets and liabilities at amortized cost - income from availabilities 5,249 4,686
Assets and liabilities at amortized cost - interest charges (18,697) (18,532)
Other financial income and expense 1,428 5,078
Realized / unrealized translation gains/(losses) (8,834) (1,184)
Dividends received from non-consolidated companies 64 3,628
Impairment of financial assets 0 (1,393)
Other 10,198 4,027
Financial result (11,837) (8,614)

The evolution of the exchange gain/(loss) realized/not realized in the first half year of 2016 compared to the same period in 2015 is mostly explained by the valuation of the Euro against other foreign currencies in DEME.

The caption "Other" includes the capital gain related to the sale of CFE's participation in the company Locorail NV, in charge for the maintenance and the financing of the railway connection Liefkenshoek in Antwerp.

8. NON-CONTROLLING INTERESTS

As of June 30, 2016 the part of non-controlling interests in the result amounts to 799 thousand Euro (June 2015 : 2,569 thousand Euro).

9. INCOME TAX

The tax expense amounts to 11,373 thousand Euro for the first half year 2016 (June 2015 : 35,804 thousand Euro). The effective tax rate amounts to 19.38 % (June 2015 : 26.64%). The effective tax rate is defined as the income tax expense over the pre-tax income from which the earnings from associates and joint ventures are deducted.

STATEMENT OF FINANCIAL POSITION

10. PROPERTY, PLANT & EQUIPMENT

As of June 30, 2016
(In thousand Euro)
Land &
buildings
Installations
&
equipments
Furniture &
fittings
Under
construction
Total
Acquisition cost
Balance at the end of the previous period 113,239 3,070,912 58,355 90,422 3,332,928
Effect of foreign currency fluctuations (382) (799) (526) 55 (1,652)
Acquisitions 4,169 74,644 1,530 31,025 111,368
Transfers from one asset to another 12,994 17,984 (180) (28,096) 2,702
Disposals (1,690) (10,359) (1,437) (9) (13,495)
Acquisitions through business
combinations
0 (5) (1) 0 (6)
Balance at the end of the year 128,330 3,152,377 57,741 93,397 3,431,845
Depreciations & impairment
Balance at the end of the previous period (54,244) (1,503,845) (47,160) 0 (1,605,249)
Effect of foreign currency fluctuations 308 1,042 391 0 1,741
Depreciations (1,478) (106,011) (2,462) 0 (109,951)
Transfers from one asset to another (2,924) 51 173 0 (2,700)
Disposals 1,261 9,694 1,394 0 12,349
Acquisitions through business - 0 4 1 0 5
combinations
Balance at the end of the period (57,077) (1,599,065) (47,663) 0 (1,703,805)
Net carrying amount
At January 1st, 2016
At June 30, 2016
58,995
71,253
1,567,067
1,553,312
11,195
10,078
90,422
93,397
1,727,679
1,728,040

The net carrying amount of tangible assets amounts to 1,728,040 thousand Euro on June 30, 2016 ( December 31, 2015: 1,727,679 thousand Euro).

On June 30, 2016, the acquisitions of tangible assets amount to 111,368 thousand Euro, and are mainly related to DEME (107,517 thousand Euro).

The net value of the fixed assets held in leasing amounts to 124,125 thousand Euro (December 31 2015: 123,542 thousand Euro). Those contracts relate mainly to the vessels held by DEME, the building of the subsidiary Louis Stevens & Co NV, the building of the subsidiary Engema, the trucks of the subsidiary ETEC and the buildings and equipment of Groep Terryn and its subsidiaries.

The amount of property, plant, and equipment constituting a guarantee for some borrowing amounts to 264,919 thousand Euro (December 31, 2015 : 313,244 thousand Euro).

As of June 30, 2015
(In thousand Euro)
Land &
buildings
Installations
&
equipments
Furniture &
fittings
Under
construction
Total
Acquisition cost
Balance at the end of the previous period 123,862 2,802,541 57,561 2,274 2,986,238
Effect of foreign currency fluctuations 132 6,089 57 60 6,338
Acquisitions 792 128,475 4,288 51,906 185,461
Transfers from one asset to another (3,882) 106 (268) (345) (4,389)
Disposals (9,044) (80,107) (3,126) (108) (92,385)
Acquisitions through business
combinations
0 254,607 (84) 0 254,523
Balance at the end of the year 111,860 3,111,711 58,428 53,787 3,335,786
Depreciations & impairment
Balance at the end of the previous period (50,613) (1,385,290) (47,060) 0 (1,482,963)
Effect of foreign currency fluctuations (230) (5,943) (56) 0 (6,229)
Depreciations (9,382) (115,825) (2,458) 0 (127,665)
Transfers from one asset to another 2,965 258 268 0 3,491
Disposals 5,589 75,297 2,715 0 83,601
Acquisitions through business - 0 (50,706) 30 0 (50,676)
combinations
Balance at the end of the period (51,671) (1,482,209) (46,561) 0 (1,580,441)
Net carrying amount
At January 1st, 2015
At June 30th, 2015
73,249
60,189
1,417,251
1,629,502
10,501
11,867
2,274
53,787
1,503,275
1,755,345

11. INVESTMENTS IN ASSOCIATES AND JOINT VENTURE

On June 30, 2016 investments in associates amount to 152,908 thousand Euro (December 2015: 151,377 thousand Euro) in the statement of financial position. The decrease is mainly explained by the earnings from associates and joint ventures which amounts to 4,938 thousand Euro (June 2015: 9,674 thousand Euro).

12. INVENTORIES

.

On June 30, 2016 the inventories amount to 98,524 thousand Euro (December 2015: 77,946 thousand Euro) and are detailed as follows:

(In thousand Euro) June 30, 2016 December 31, 2015
Raw materials and consumables 53,835 31,543
Raw material and consumables (impairment losses) 0 (91)
Finished products and goods purchased for resale 46,657 47,873
Finished products (impairment losses) (1,968) (1,379)
Inventories 98,524 77,946

13. TRADE AND OTHER RECEIVABLES

On June 30, 2016, the trade and other receivables amount to 1,135,129 thousand Euro (December 2015: 1,192,977 thousand Euro). The decrease during the 1st half year 2016 is mainly due to DEME's activities.

In order to reduce the current risk, the group CFE monitors regularly its outstanding clients and adapts its position towards them. Regarding this matter, it should be noted that CFE is involved in two projects in Chad. One project consists of the construction of the "Grand Hôtel" which was delivered in 2016 to client's satisfaction; the other project consists in the building for the Ministry of Finance. The Chadian government received a proposal during the second quarter for a conditional refinancing of the outstanding receivables relating to the Grand Hôtel in N'Djamena. This proposal is currently being examined by the Chadian authorities.

The exposure to this country remains unchanged at €60 million.

14. PROVISIONS OTHER THAN THOSE RELATING TO RETIREMENT BENEFIT OBLIGATIONS AND NON- CURRENT EMPLOYEE BENEFITS

On June 30, 2016 these provisions amount 104,937 thousand Euro, which represents a decrease of 4,737 thousand Euro compared to the end of December 2015 (109,674 thousand Euro).

After - sale
service
Other current
risks
Negative
equity method
Other non
current risks
Total
14,012 50,808 30,258 14,596 109,674
(182)
0
(4,342)
25,058
(25,120)
0 (151) 0 0 (151)
15,061 51,182 26,419 12,275 104,937
(80)
0
20
2,038
(929)
(102)
0
(1,519)
21,692
(19,546)
0
0
(3,839)
0
0
0
0
996
1,328
(4,645)

The provision for after-sale service increased by 1,049 thousand Euro to reach 15,061 thousand Euro on June 30, 2016.

  • The provision for other current risks increased by 374 thousand Euro and amounts to 51,182 thousand Euro at June 30, 2016. This category includes : - provisions for customer claims (9,886 thousand Euro), for social litigation (1,037 thousand Euro), for remaining work to be completed (148 thousand Euro) and provisions for other risks (11,615 thousand Euro). Since negotiations with customers are still in progress, we cannot give more information about the considered assumptions, nor on the time of the probable cash outflow.
  • provisions for losses on completion (28,496 thousand Euro) are recognised when the expected economic benefits of certain contracts are lower than the inevitable costs attendant on compliance with obligations under those contracts. Provisions for losses on completion are used up when the related contracts are performed.

The other non-current risks which amount 12,275 thousand Euro at the end of June 2016 include, among others, provisions for restructuring.

If the share of CFE group in the economic losses of associates and joint ventures exceeds the carrying amount of investment, the carrying amount is limited to zero. Losses higher than the carrying amount are not recognised, except for the amount of commitments of CFE as regards to some of those associates and joint ventures. The amounts of those commitments are accounted as non-current provisions to the extent that the group considers it has an obligation to support those subsidiaries and their projects.

15. CONTINGENT ASSETS AND LIABILITIES

Based on available information at the date on which the financial statements were approved by the Board of Directors, we are not aware of any contingent assets or liabilities, with the exception of contingent assets or liabilities related to construction contracts (for example, the group's claims against customers or claims by subcontractors) that can be described as normal in the construction and the dredging sector and which are treated by applying the percentage-of-completion method during the recognition of revenue.

16. FINANCIAL INSTRUMENTS

CFE group uses derivatives financial instruments mainly in order to reduce the risks linked to unfavourable movements of interests rates, exchange rate, price of commodities and other market risks. The company does not hold or does not sell any financial instruments for trading purposes. However, derivatives which are not eligible to be considered as hedging instruments are disclosed as financial instruments held for trading.

On June 30, 2016 the derivative financial instruments have been estimated at their fair values.

17. NET FINANCIAL DEBT

17.1. THE NET FINANCIAL DEBT

30/06/2016 31/12/2015
(In thousand Euro) Non-current Current Total Non-current Current Total
Bank loans and other financial debt (281,862) (120,410) (402,272) (253,749) (95,406) (349,155)
Bonds (304,376) 0 (304,376) (305,216) 0 (305,216)
Drawings on credit facilities (10,000) 0 (10,000) (50,000) 0 (50,000)
Borrowings under finance leases (52,007) (51,090) (103,097) (95,148) (15,136) (110,284)
Total long-term financial debt (648,245) (171,500) (819,745) (704,113) (110,542) (814,655)
Short-term financial debt 0 (11) (11) 0 (16) (16)
Cash equivalents 0 9,705 9,705 0 13,863 13,863
Cash 0 444,851 444,851 0 478,089 478,089
Net short-term financial debt/(cash) 0 454,545 454,545 0 491,936 491,936
Total net financial debt (648,245) 283,045 (365,200) (704,113) 381,394 (322,719)
Derivative instruments used as
interest-rate hedges
(12,178) (7,102) (19,280) (8,517) (7,611) (16,128)

17.2. DEBT MATURITY SCHEDULE

Less than 1
year
Between 1
and 2 years
Between 2
and 3 years
Between 3
and 5 years
Between 5
and 10 years
More
than 10
Total
(In thousand Euro) years
Bank loans and other financial debt (120,410) (133,167) (55,680) (56,915) (36,100) 0 (402,272)
Bonds (1,752) (101,710) (200,914) 0 0 0 (304,376)
Drawings on credit facilities 0 (10,000) 0 0 0 0 (10,000)
Borrowings under finance leases (51,090) (9,983) (7,305) (12,576) (18,713) (3,430) (103,097)
Total long-term financial debt (173,252) (254,860) (263,899) (69,491) (54,813) (3,430) (819,745)
Short-term financial debt (11) 0 0 0 0 0 (11)
Cash equivalents 9,705 0 0 0 0 0 9,705
Cash 444,851 0 0 0 0 0 444,851
Net short-term financial debt 454,545 0 0 0 0 0 454,545
Change in net financial debt 281,293 (254,860) (263,899) (69,491) (54,813) (3,430) (365,200)

17.3. CREDIT FACILITIES AND LONG TERM BANK LOANS

At June 30th, 2016 the CFE group had confirmed long-term bank credit facilities of 125 million Euro, of which 10 million Euro were drawn at the end of June 2016.

On June 2012, 21st CFE issued 100 million Euro of bond maturing on June 21st, 2018 and paying a coupon of 4.75%. On February 14th, 2013 DEME issued 200 million Euro of bond maturing on February 14th, 2019 and paying a coupon of 4.145%.

Bank loans and other financial debts mainly concern DEME and loans relating to real-estate projects and are without recourse against CFE.

17.4. FINANCIAL COVENANTS

Bilateral loans are subject to specific covenants that take into account factors such as financial debt and the ratio of debt to equity or non-current assets, as well as cash flow. The group complied with all these covenants.

18. FINANCIAL RISK MANAGEMENT

18.1. INTEREST RATE RISK

The policy and the risk management procedures defined by the group are the same as the one's declared in the 2015 annual report.

Fixed rate Floating rate Total
Type of debts Amounts Quota Rate Amounts Quota Rate Amounts Quota Rate
Bank loans and
other financial
debts
274 0.07% 1.32% 401,998 97.12% 0.62% 402,272 49.07% 0.62%
Bonds 304,376 75.00% 4.34% 0 0.00% 0.00% 304,376 37.13% 4.34%
Credit line used 0 0.00% 0.00% 10,000 2.42% 1.45% 10,000 1.22% 1.45%
Loans related to
finance lease
101,178 24.93% 0.29% 1,919 0.46% 0.07% 103,097 12.58% 0.29%
Total 405,828 100% 3.33% 413,917 100% 0.64% 819,745 100% 1.97%

Effective average interest rate before considering derivative products

Effective average interest rate after considering floating derivative products

Fixed rate Floating rate
Floating rate capped + inflation
Total
Type of debts Amounts Quota Rate Amounts Quota Rate Amounts Quota Rate Amounts Quota Rate
Bank loans and other
financial debts
400,594 49.69% 1.89% 1,678 12.34% 1.69% 0 0.00% 0.00% 402,272 49.07% 1.89%
Bonds 304,376 37.76% 4.34% 0 0.00% 0.00% 0 0.00% 0.00% 304,376 37.13% 4.34%
Credit line used 0 0.00% 0.00% 10,000 73.54% 1.45% 0 0.00% 0.00% 10,000 1.22% 1.45%
Loans related to
finance lease
101,178 12.55% 0.29% 1,919 14.12% 0.07% 0 0.00% 0.00% 103,097 12.58% 0.29%
Total 806,148 100% 2.62% 13,597 100% 1.29% 0 0.00% 0.00% 819,745 100% 2.60%

18.2. LONG TERM FINANCIAL DEBTS BY CURRENCY

The outstanding debts by currency are:

(In thousand Euro) June 2016 December 2015
Euro 819,745 814,655
US Dollar 0 0
Other currencies 0 0
Total long term debts 819,745 814,655

18.3. BOOK VALUE AND FAIR VALUE BY ACCOUNTING CATEGORY

June 30, 2016
(In € thousands)
Financial
instruments
not
designated
as hedging
instruments
Derivatives
designated as
hedging
instruments
Financial
instruments
available for
sales
Loans and trade
receivables at
amortised costs
Total of carrying
amount
Fair value
measurements
of financial
assets by
level
Fair value of the
class
Non-current
financial assets
2,190 4,672 101,572 108,434 108,434
Investments (1) 4,672 4,672 Level 2 4,672
Financial loans and
receivables (1)
101,572 101,572 Level 2 101,572
Interest rate 2,190 2,190 Level 2 2,190
derivatives – cash
flow hedges
Current financial 1,330 1,589,685 1,591,015 1,591,015
assets
Interest rate
derivatives – non
hedge
Trade and other 1,135,129 1,135,129 Level 2 1,135,129
receivables
Cash management 1,330 1,330 Level 2 1,330
financial assets
Cash equivalents (2) 9,705 9,705 Level 2 9,705
Cash at bank and in
hand (2)
444,851 444,851 Level 2 444,851
Total assets 3,520 4,672 1,691,257 1,699,449 1,699,449
Non-current 28,941 648,245 677,186 703,138
financial debts
Bonds 304,376 304,376 Level 1 314,899
Financial debts
Interest rate
28,941 343,869 343,869 Level 2
Level 2
359,298
derivatives – cash 28,941 28,941
flow hedges
Current financial 26,975 7,102 1,264,962 1,299,039 1,307,046
liabilities
Interest rate 104 104 Level 2 104
derivatives – highly
probable projected
cash flow hedges
Interest rate 6,998 6,998 Level 2 6,998
derivatives – cash
flow hedges
Exchange rate 14,485 14,485 Level 2 14,485
derivatives – non cash
flow hedges
Other derivatives 12,490 12,490 Level 2 12,490
instruments – non
hedge
Trade payables and 1,093,451 1,093,451 Level 2 1,093,451
other operating debts
Financial debts 171,511 171,511 Level 2 179,518
Total liabilities 26,975 36,043 1,913,207 1,976,225 2,010,184
December 31st, 2015 Financial Derivatives Financial Loans and Total of Fair value Fair value
(In € thousands) instruments
not designated
designated as
hedging
instruments
available for
trade
receivables at
carrying
amount
measurements
of financial
of the class
as hedging instruments sales amortised assets by
instruments costs level
Non-current financial assets 1,381 2,811 126,690 130,882 130,882
Investments (1) 2,811 2,811 Level 2 2,811
Financial loans and receivables (1) 126,690 126,690 Level 2 126,690
Interest rate derivatives – cash flow 1,381 1,381 Level 2 1,381
hedges
Current financial assets 8,514 1,684,929 1,693,443 1,693,443
Interest rate derivatives – non hedge
Trade and other receivables 1,192,977 1,192,977 Level 2 1,192,977
Cash management financial assets 8,514 8,514 Level 2 8,514
Cash equivalents (2) 13,863 13,863 Level 2 13,863
Cash at bank and in hand (2) 478,089 478,089 Level 2 478,089
Total assets 9,895 2,811 1,811,619 1,824,325 1,824,325
Non-current financial debts 33,359 704,113 737,472 762,424
Bonds 305,216 305,216 Level 1 315,824
Financial debts 398,897 398,897 Level 2 413,241
Interest rate derivatives – cash flow 33,359 33,359 Level 2 33,359
hedges
Current financial liabilities 27,535 7,611 1,295,444 1,330,590 1,346,326
Interest rate derivatives – highly 288 288 Level 2 288
probable projected cash flow hedges
Interest rate derivatives – cash flow 7,323 7,323 Level 2 7,323
hedges
Exchange rate derivatives – non cash 4,795 4,795 Level 2 4,795
flow hedges
Other derivatives instruments – non 22,740 22,740 Level 2 22,740
hedge
Trade payables and other operating debts 1,184,886 1,184,886 Level 2 1,184,886
Financial debts 110,558 110,558 Level 2 126,294
Total liabilities 27,535 40,970 1,999,557 2,068,062 2,108,750

(1) Included in items "Other non-current financial assets" and "Other noncurrent assets".

(2) Included in item "Cash and cash equivalents".

The fair value of financial instruments can be classified into three levels based on the degree to which the inputs to the fair value measurements are observable:

  • Fair value measurements of level 1 are based on quoted prices (unadjusted) in active markets for identical assets or liabilities;
  • Fair value measurements of level 2 are based on inputs, other than quoted prices included within level 1, that are observable for the asset or liability, either directly (through prices) or indirectly (through input derived from prices);
  • Fair value measurements of level 3 are based on valuation techniques comprising inputs which are unobservable for the asset or liability.

The fair value of financial instruments have been determined using the following methods :

  • For short-term financial instrument, such as trade receivables and payables, the fair value is considered not to be significantly different from the carrying amount measured at amortised cost;
  • For floating rate liabilities, the fair value is considered not to be significantly different from the carrying amount measured at amortised cost;
  • For derivative financial instruments (foreign currency, interest rate or forecasted cash flows), the fair value is determined using valuation models discounting future cash flows based on futures interest rate curves, foreign currency curves or other forward prices;
  • For the other derivative instruments, the fair value is determined by discounting future estimated cash flows;
  • For the quoted bonds issued by CFE and DEME, the fair value is based on the quoted price at reporting date.
  • For fixed rate liabilities, the fair value is based on the discounted cash flows based on the market interests rates at the closing date.

19. OTHER COMMITMENTS GIVEN

The total amount of commitments granted other than guarantees for the period ended June 30th, 2016 is 992,408 thousand Euro (December 2015: 1,268,387 thousand Euro) and is detailed by nature as follows:

(In thousand Euro)
June 2016 December 2015
Performance guarantees and performance bonds (a) 690,016 905,798
Bid bonds (b) 17,630 11,292
Repayment of advance payments (c) 20,224 21,241
Retentions (d) 25,112 41,985
Deferred payments to subcontractors and suppliers (e) 51,016 77,405
Other commitments given - including 132,866 thousand Euro of corporate guarantees at 188,410 210,666
DEME
Total 992,408 1,268,387

a) Guarantees given in relation to the performance of works contracts. If the construction entity fails to perform, the bank (or insurance company) undertakes to compensate the customer to the extent of the guarantee.

b) Guarantees provided as part of tenders relating to work contracts.

c) Guarantees provided by a bank to a customer guaranteeing the repayment of advance payments in relation to contracts (mainly at DEME).

d) Security provided by a bank to a client to replace the use of retention money.

e) Guarantee covering the settlement of a liability to a supplier or subcontractor.

20. OTHER COMMITMENTS RECEIVED

(In thousand Euro) June 2016 December 2015
Performance guarantees and performance bonds
Other commitments received
109,700
2,634
102,720
2,110
Total 112,334 104,830

21. LITIGATION

The CFE group has a number of claims that we qualify as normal for the construction and the dredging industry. In most of the cases, the group CFE expects to conclude a transactional convention with the counterparty, which substantially reduces the number of procedures. Currently, negotiations are on-going regarding some receivables. At the moment, it is not possible to assess the potential asset.

22. RELATED PARTIES

  • Ackermans & van Haaren (AvH) owns 15,289,521 shares of CFE at the end of June 2016, being therefore the main shareholder of the CFE group with a stake of 60.40%. CFE concluded a service contract with its main shareholder AvH. The yearly amount due by CFE related to this contract reaches 150 thousand euro.
  • Dredging Environmental and Marine Engineering NV concluded a service contract with Ackermans & van Haaren NV on November 26th 2001. The amounts related to this contracts due by Dredging Environmental and Marine Engineering NV, a 100% subsidiary of CFE, amount 1,126 thousand euro each year.
  • There were no transactions with the Managing Directors other than relating to remuneration, There are no transactions with the companies Trorema SPRL, Frédéric Claes SA or Artist Valley SA, without prejudice to the remuneration of executives representing these companies.
  • At June 30, 2016 CFE has a joint control on Rent-A-Port NV, Rent-A-Port Energy and their subsidiaries.
  • The transactions with related parties concern mainly the operations with the entities in which CFE has a significant influence or a joint control. The transactions between related parties are executed at arm's length;
  • In the first half year of 2016, there was no significant variation in the nature of transactions with related parties compared to December 31, 2015. The trade transactions or financial transactions between the group and the joint ventures integrated under equity method are as follows:
(In thousand Euro) June 30, 2016 December 31, 2015
Assets with related parties 333,763 333,963
Non-current financial assets 103,705 129,966
Trade receivables and other operating trades 206,306 195,383
Other current assets 23,752 8,614
Liabilities with related parties 102,721 121,433
Other non-current liabilities 5,550 11,461
Trade payables and other operating trades 97,171 109,972
(In thousand Euro) June 30, 2016 June 30, 2015
Expenses and incomes with related parties 85,602 34,164
Turnover and incomes from auxiliary activities 90,715 69,946
Purchases and other operating expenses (4,881) (37,788)
Expenses and financial incomes (232) 2,006

23. SUBSEQUENT EVENTS

None.

24. IMPACT OF FOREIGN CURRENCIES

The international activities of the group CFE for the contracting and real estate segments are mainly within the Euro zone. As a consequence, the exposure to exchange risk and the impact on financial statements are limited. However, the dredging and environment segment realize a large part of its business internationally. These activities are mainly in US Dollars or in currencies strictly related to the US Dollar. DEME uses financial instruments to hedge exchange rate risk.

25. RESEARCH AND DEVELOPMENT

For DEME, the research and development relate to the improvement of the efficiency of the maritime-equipment. This company also lead a program in partnership with Belgian universities and the Flemish Region in order to develop the production of eco-friendly energy in the maritimeenvironment.

26. SEASONAL NATURE OF THE BUSINESS

The activity of construction is seasonal and depends on the climatic conditions of the winter.

Turnover and results achieved in the first half year cannot be extrapolated over the full year. The seasonal effect on the business is reflected in a higher use of cash in the first half year.

No adjustments were made to take account of the impact of seasonal factors on the group's financial statements for the first half year.

Income and expenses of the group from normal business operations which are subject to a seasonal, cyclical or occasional nature were recognized following the same valuation as at year end. They were therefore neither anticipated nor deferred in the interim financial statements.

27. STATUTORY AUDITORS REPORT

To the board of directors

In the context of our appointment as the company's statutory auditor, we report to you on the consolidated interim financial information. This consolidated interim financial information comprises the consolidated condensed statement of financial position as at 30 June 2016, the consolidated condensed income statement, the consolidated condensed statement of comprehensive income, the consolidated condensed statement of changes in equity and the consolidated condensed statement of cash flows for the period of six months then ended, as well as selective notes 1 to 26.

Report on the consolidated interim financial information

We have reviewed the consolidated interim financial information of Compagnie d'Entreprises CFE SA ("the company") and its subsidiaries (jointly "the group"), prepared in accordance with International Financial Reporting Standard IAS 34 – Interim Financial Reporting as adopted by the European Union.

The consolidated condensed statement of financial position shows total assets of 4.154.364 (000) EUR and the consolidated condensed income statement shows a consolidated profit (group share) for the period then ended of 53.046 (000) EUR.

The board of directors of the company is responsible for the preparation and fair presentation of the consolidated interim financial information in accordance with IAS 34 – Interim Financial Reporting as adopted by the European Union. Our responsibility is to express a conclusion on this consolidated interim financial information based on our review.

Scope of review

We conducted our review of the consolidated interim financial information in accordance with International Standard on Review Engagements (ISRE) 2410 – Review of interim financial information performed by the independent auditor of the entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit performed in accordance with the International Standards on Auditing (ISA) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion on the consolidated interim financial information.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the consolidated interim financial information of Compagnie d'Entreprises CFE SA has not been prepared, in all material respects, in accordance with IAS 34 – Interim Financial Reporting as adopted by the European Union.

Emphasis of matter

Without modifying the unqualified opinion expressed above, we draw your attention to the Note 13 of the consolidated interim financial information which describes the uncertainties regarding the amount due by the State of Chad and the undertaken actions in order to facilitate its payment.

Diegem, 26 August 2016

The statutory auditors

BV o.v.v.e. CVBA / SC s.f.d. SCRL BV o.v.v.e. CVBA / SC s.f.d. SCRL Represented by Michel Denayer Represented by Rik Neckebroeck

__ DELOITTE Bedrijfsrevisoren / Reviseurs d'Entreprises DELOITTE Bedrijfsrevisoren / Reviseurs d'Entreprises

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