Solvac S.A. — Annual Report 2011

Mar 1, 2012

Embargo, 1 March 2012, 5.50 p.m. REGULATED INFORMATION

SOLVAC: IMPROVED 2011 CASH RESULT AND HIGHER DIVIDEND COMPARED TO 2010

1. The Board of Directors has closed the consolidated financial statements of Solvac on December 31, 2011. These statements have been submitted to the Statutory Auditor and are presented in accordance with IFRS standards.

CONSOLIDATED INCOME STATEMENT
EUR million	2010	2011
Income from investments accounted for under	559	78
the equity method
Operating costs	-1	-1
Capital gain from sale of Solvay shares	0	0
Cost of borrowings	-5	-5
Net income	553	72
Net earnings per share (EUR) (1)	36.2	4.7

On 31 December 2011 Solvac recorded a consolidated net income of EUR 72 million (EUR 4.7 per share) against EUR 553 million (EUR 36.2 per share) over the same period in 2010. The 2010 net income included the gain on the sale of Solvay's pharmaceutical activities.

1. The cash income, fed by dividends from the stake in Solvay, amounts to EUR 78.2 million (against EUR 74.8 million in 2010):

EUR million	2010	2011
Cash income	74.8	78.2	+ 5%
of which: - Final dividend Solvay (year 2009/2010)	44.2	47.6
- Interim dividend Solvay (year 2010/2011)	30.6	30.6
Business expenses (including cost of	5.7	5.6
borrowings)
Cash result	69.1	72.6	+ 5%

Following the acquisition of 23 000 Solvay shares on the stock market, at the end of December 2011, Solvac holds 30.15 % of the Solvay shares compared to 30.12 % at the end of December 2010.

The dividend from Solvay is higher compared to last year following the dividend increase in fiscal year 2010.

⁽¹⁾ The net earnings per share and the diluted net earnings per share are identical. The number of shares used for per share calculation is 15 300 527 in 2010 and 15 297 338 in 2011.

To the extent that the statutory accounts allow it (see below under 3), the proposed amount of dividends to be distributed by Solvac is determined by the Board of Directors on the basis of this cash income and after coverage of the costs (mainly cost of borrowings).

EUR thousand	2010	2011
Recurrent financial result	69 916	73 406
Other recurrent result	-793	-683
Recurrent result	69 123	72 723
Capital gains	--	--
Profit before taxes	69 123	72 723
Profit after taxes	69 123	72 723
Gross payment to shareholders	66 062	69 269

1. The Board of Directors of Solvac SA has issued the following figures for 2011:

There being no exceptional items in both 2010 and 2011, the recurrent result is identical to the profit before taxes. The profit after taxes amounts to EUR 72.7 million in 2011 compared to EUR 69.1 million in 2010.

1. Two interim dividends were paid, respectively on 27 October 2011 and 29 December 2011, the latter in fact being the final dividend, to be confirmed by the General Assembly. In total, for each share the following amount was paid:

EUR	2010	2011
Gross dividend per share	4.32	4.53
Net dividend per share	3.67	3.849

REMARKS

1. Financial statements

Deloitte will issue an unqualified audit report on the annual accounts as of December 31, 2011 and confirmed that the accounting information in this press release requires no comments on its part and is in agreement with these annual accounts. The complete audit report related to the audit of the annual financial information will be part of the annual report 2011 to be published on internet (www.solvac.be) in March 2012.

2. Content

This press release contains regulated information and is established in compliance with IAS 34. A risk analysis is included in the annual report, which is available on internet (www.solvac.be).

3. Solvac shares

	2010	2011
Number of shares issued at the end of the period	15 300 527	15 281 741
Average number of shares for calculating IFRS earnings per share	15 300 527	15 281 741
Average number of shares for calculating IFRS diluted earnings per	15 300 527	15 297 338
share

4. Statement by responsible persons

Mr. JP. Delwart, Chairman of the Board and Mr. B. de Laguiche, Managing Director of Solvac, confirm that to the best of their knowledge:

• a) the summary financial information, prepared in conformity with applicable accounting standards, reflects a true and fair view of the net worth, the financial situation and results of the Solvac Group and of Solvac S.A.;
• b) the intermediate report contains a faithful presentation of significant events occurring in 2011, and their impact on the summary financial information;
• c) there are no transactions with related parties.

Key dates for financial communications

• March 2012 : Publication of 2011 annual report on www.solvac.be
• May 8, 2012: General Shareholders Meeting (3:30 pm)
• August 31, 2012: Results from first half 2012 and announcement of first interim dividend for 2012
• October 25, 2012: payment of first interim dividend for 2012
• December 17, 2012: Announcement of second interim dividend for 2012

For additional information, please contact:

SOLVAC S.A.

Investor Relations (Solvay Campus) Rue de Ransbeek 310 1120 Brussels Tel: +32 2 264 21 11 Fax: +32 2 264 16 09

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CONSOLIDATED FINANCIAL STATEMENTS

The financial statements that follow were approved by the Board of Directors on 1st March 2012. They were established in compliance with the IFRS accounting standards described on the following pages. The information on related parties requested under IAS 24 is included in the Corporate Governance chapter.

Consolidated income statement

EUR million	Notes	2010	2011
Income from investments accounted for under the equity method	(1)	559	78
Operating costs		-1	-1
Capital gain from sale of shares		0	0
Cost of borrowings	(2)	-5	-5
Net income		553	72
Earnings per share and diluted earnings per share (EUR)	(3)	36.2	4.7

Consolidated statement of total comprehensive income

EUR million	Notes	2010	2011
Net income		553	72
Gains and losses on impairment of available-for-sale financial assets		-3	-2
Effective portion of gains and losses on hedging instruments in a cash flow hedge		0	2
Actuarial differences pertaining to defined contribution pension schemes	(4)	2	-27
Currency translation differences		75	13
Share in the other items of the total comprehensive income of the investments accounted for under the equity method		74	-14
Total comprehensive income		627	58

Consolidated cash flow statement

EUR million	Notes	2010	2011
Operating charges		-1	-1
Changes in working capital	(5)	0	-25
Dividends received from Solvay		75	78
Cash flow from operating activities		74	52
Acquisition of Solvay shares		-3	-1
Sale of Solvay shares		0	0
Cash flow from investing activities		-3	-1
Capital increase		0	0
Purchase of own shares		0	-2
Changes in borrowings	(6)	0	47
Interest paid		-5	-5
Dividends paid	(7)	-66	-91
Cash flow from financing activities		-71	-51
Net change in cash and cash equivalents		0	0
Opening cash balance		0	0

Consolidated balance sheet

EUR million	Notes	2009	2010	2011
ASSETS
Non-current assets: investments accounted for under the equity method	(1)	1 772	2 321	2 277
Goodwill		342	342	341
Investments accounted for under the equity method, excluding goodwill		1 430	1 979	1 936
Current assets: short term receivables	(8)	31	31	31
Cash and cash equivalents		0	0	0
Total assets		1 802	2 352	2 308
EQUITY AND LIABILITIES
Total equity	(9)	1 635	2 186	2 143
Share capital		138	138	138
Reserves		1 497	2 048	2 005
Non-current liabilities: long-term financial debt	(2)	110	110	110
Current liabilities		56	56	55
Short-term financial debt				47
Income tax payable		4	4	4
Other current liabilities	(6)	52	52	4
Total equity and liabilities		1 802	2 352	2 308

Consolidated statement of changes in equity

EUR million	Notes	Share capital	Own shares	Issue premiums	Retained earnings	Reserves2	Total equity
Balance at 31/12/2009		138		173	1 540	-174	1 677
Balance at 1/1/2010 (adjusted)	(4)	138		173	1 540	-216	1 635
Comprehensive income					553	74	160
Dividends					-66		-66
Scope and other variations					-10		-10
Balance at 31/12/2010		138	0	173	2 017	-142	2 186
Comprehensive income					72	-14	58
Dividends					-69		-69
Purchase / sale of own shares	(10)		-2				-2
Scope and other variations					-30		-30
Balance at 31/12/2011		138	-2	173	1 990	-156	2 143

Reference is made to the profit allocation in the Management Report.

² Reserves include currency translation differences, fair value adjustments of assets held for sale and of hedging instruments and actuarial differences.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(1) Investments accounted for under the equity method

It relates to the 31% shareholding of Solvac in Solvay S.A. (after deducting the treasury shares held by Solvay). The value of the shareholding under the equity method amounts to EUR 2 277 million (of which EUR 341 million of goodwill and EUR 1 936 million of value excluding goodwill). Based on the stock exchange price as of December 31, 2011 it amounts to EUR 1 626 million.

The evolution of goodwill is as follows:

EUR million	2010	2011
Balance at 1st January	341	342
Sold during the year	0	0
Acquired during the year	1	-1
Balance at 31 December	342	341

The evolution of the shareholding carried under the equity method, excluding goodwill, is as follows:

EUR million	2010	2011
Balance at 1st January	1 430	1 979
Sold during the year	0	0
Acquired during the year	2	2
Result 3	559	77
Distribution	-75	-78
Other differences in equity	63	-44
Balance at 31 December	1 979	1 936

The summary consolidated financial statements of the Solvay Group are as follows:

EUR million	2010	2011
Total assets	13 723	19 437
Total liabilities	7 015	12 784
Sales	5 959	8 109
Net income of the Group	1 776	247

(2) Long-term financial debt

Long-term financial debts are stable at EUR 110 million (borrowings from BNP Paribas Fortis). It represents the structural indebtedness of Solvac: a borrowing of EUR 60 million and one of EUR 50 million. The total interest rate (fixed all-in cost) for the two credit lines has been reduced from 4.26% to 3.90% with maturation in 2015 and 2017. The interest on debt at more than one year amounts to EUR 5 million for the fiscal year 2011.

³ In 2011, the share of Solvac in the Solvay Group net result, except third parties, amounts to EUR 77 million EUR (2010: EUR 559 million). In 2011, the share of Solvac in the result of Discontinued Operations amounts to EUR -12 million (2010: EUR 543 million).

(3) Net earnings per share

Net earnings per share and diluted net earnings per share are identical. The number of Solvac shares used for per share calculation amounts to 15 281 741 at the end of 2011 and to 15 300 527 end 2010.

(4) Comprehensive income

The Solvay group has decided to adapt its evaluation method for pension provisions under IAS19. Instead of amortizing actuarial differences by the profit and loss account (commonly known as the corridormethod), they are now directly recognised as capital. Equity has been adjusted since 1/1/2010.

(5) Variation in working capital

Mainly the reimbursement of the current account with Solvay

(6) Short term financial liabilities

Mainly two Straight Loans contracted on 19/12/2011: a loan of EUR 42 million (maturing on 20/01/2012; fixed annual cost: 1.72%) and a loan of EUR 5 million (maturing on 19/01/2012; fixed annual cost: 1.73%) to finance the balance of the dividend payable on December 29, 2011.

(7) Dividend paid

The dividends paid during the period amount to EUR 91 million including the final dividend of 2010 paid on February 17, 2011 (EUR 26 million) and the interim dividend of 2011 paid on October 27, 2011 (EUR 40 million) and the final dividend off withholding tax of 2011 paid on December 29, 2011 (EUR 25 million).

(8) Short-term receivables

The short-term receivables mainly include the interim dividend to be received from Solvay.

(9) Total equity

The information concerning the capital and the shares are part of the notes to the statutory accounts. Total equity at the end of 2011 amounted to EUR 2 143 million and includes direct negative bookings in equity of EUR 156 million. The latter arise from conversion differences and the mark-to-market of financial instruments of Solvay.

The accounting method for post-employment benefits has been changed as from 1 July 2011. That is why Solvay now prefers recognition of actuarial differences in other comprehensive income (equity) to the application of the corridor method. For Solvac, the impact of the restatement on 1 January 2010 amounts to EUR 42 million.

(10) Own shares

Solvac has acquired 18 786 of its own shares for cancellation for an amount of EUR 1.59 million.

(11) Financial instruments

EUR million	2010
	Net carrying amount	Fair value	Net carrying amount	Fair value
Financial assets at fair value through income statement - upon initial recognition	0	0	0	0
Financial assets at fair value through income statement - held for trading	0	0	0	0
Held-to-maturity investments	0	0	0	0
Loans and receivables (including cash and cash equivalents)	31	31	31	31
Available-for-sale investments	0	0	0	0
Financial liabilities at fair value through income statement - upon initial recognition	0	0	0	0
Financial liabilities at fair value through income statement - held for trading	0	0	0	0
Financial liabilities measured at amortized cost (includes trade liabilities)	160	161	161	164

Book value of loans and receivables is a good approximation of fair value. As far as the financial liabilities at amortized cost are concerned, the net book value of long term financial debt (EUR 110 million, see note 2) is very close to their fair value (estimated at EUR 113 million). Fair value of fixed rate debt was calculated with the discounted cash flow method. Net book value of other financial liabilities is a good approximation of their fair value.

(12) Relations with the Directors of the consolidating company

Compensation and pensions: Directors do not receive financial compensation.

Advances and loans provided by the consolidating company or by an affiliated company: the current account with Solvay SA (EUR 1.6 million) is compensated in line with the internal financing rate of the Solvay Group (Euribor incremented with a spread).

(13) Off balance sheet posts

Real coverage by the company on its own assets: collateralisation of 2 243 951 Solvay shares in favour of BNP Paribas Fortis for an amount of EUR 143 million.

(14) List of consolidated companies

Solvay Group is proportionately consolidated.