Solvac S.A. — Interim / Quarterly Report 2019

Jul 31, 2019

Press Release Embargo, July 31, 2019 at 6:00 pm Regulated information

Solvac: First interim gross dividend 2019 at €3.13

1. The cash revenue1 , driven by dividends from the investment in Solvay amounted to €121.9 million compared to €117.1 million in 2018, which is an increase of 4.1% coming from the Solvay dividend increase as indicated in the table below.

	1st Half 2018	1st Half 2019
Solvay dividend per share – January (in EUR)	1.38	1.44
Number of Solvay shares held by Solvac (in million)	32.5	32.5
Solvay dividend received in January (in million EUR) (a)	44.9	46.8
Solvay dividend per share – May (in EUR)	2.22	2.31
Number of Solvay shares held by Solvac (in million)	32.5	32.5
Solvay dividend received in May (in million EUR) (b)	72.2	75.1
Cash revenue (a) + (b)1 (in million EUR)	117.1	121.9
Operating expenses (in million EUR)	-0.8	-0.8
Cost of borrowing (in million EUR)	-2.0	-1.8
Cash income1 (in million EUR)	114.3	119.3

Solvac holds 30.71% in Solvay as of the end of June 2019, stable compared to December 31st, 2018. Insofar the company's statutory accounts authorise, it is on the basis of cash income, after covering expenses (primarily financial charges), that the Board of Directors determines the amounts proposed for distribution by Solvac.

1. The Board of Directors has prepared the Solvac consolidated financial statements at June 30, 2019. These accounts have been approved by the Board on July 31st, 2019. These accounts have been submitted to the Statutory Auditor. They are presented according to IFRS standards as adopted in the European Union.

Consolidated income statement

EUR million	1st Half 20183	1st Half 2019
Income from investments accounted for under the equity method	109.8	156.7
Operating expenses	-0.8	-0.8
Cost of borrowings	-2.0	-1.8
Net income	107.0	154.1
Net income and diluted earnings per share (EUR)2	5.0	7.2

¹ Solvac uses certain non-IFRS performance indicators that are defined here:

• Cash revenue refers to income received during the period. It is defined as the cash flow obtained by the payment of dividends received from Solvay.

• Cash income means the cash revenue reduced by the interest charges and other income and expenses (financial/operational). It is on the basis of this indicator that the Board of Directors determines the amounts proposed for distribution by Solvac. See detail

of calculation in note 8, page 11 of current press release. 2 The net income per share and the net diluted income per share are identical. The average weighted number of shares used for the calculation

per share was 21,375,033 in 2017 and in 2018

3 The numbers presented –for comparison- have been restated to consider the application of IAS12 Income Tax at Solvay (see page 9)

On June 30, 2019 Solvac recorded net consolidated income of €154.1 million (namely, €7.2 per share) versus €107.0 million (namely, €5.0 per share) in the same period in 2018, as a result of the evolution in the equity method applied to Solvay's results.

The 1st half 2019 net result of the participation calculated by the equity method (€157 million) is higher than the €110 million obtained in the same period 2018, reflecting the evolution of Solvay's net result in the first Half of 2019, as published this 31st of July 2019.

1. The Board of Directors reports the figures of the statutory accounts relating to Solvac SA (Belgian GAAP) for the 1st half of 2019 :

€ million	1st Half 2018	1st Half 2019
Financial result	70.1	73.3
Operating result	-0.8	-0.8
Profit before tax	69.3	72.5
Profit after tax	69.3	72.5

The net income after tax is € 72.5 million, up to 4.6% compared to the result at the 1st half 2018 (€ 69.3 million) attributable to the increase in dividends per share paid by Solvay.

1. In accordance with the dividend distribution policy of the company, the Board of Directors decided to set the first interim dividend at €3.13 gross, an increase of 4.3% compared to the first interim dividend of 2018. This amount represents 60% of the total dividend of the previous year.

The net amount of the first interim dividend settles at €2.1910, after deduction of a withholding tax of 30%. This first interim dividend will be paid on August 27, 2019 and will lead to a gross distribution of €66.9 million. The Solvac shares will trade ex-dividend on Euronext Brussels, from August 8, 2019.

The second interim dividend which will be decided by the Board, will be released on December 12, 2019 and will be paid on December 27, 2019.

In line with its policy of distributing almost all the Solvay dividends and considering Solvay is increasing its exdividend by 4.2%, the Board should decide in December 2019 to bring the dividend from €5.22 to €5.44 per share. This distribution would result in a cash outflow of €116.3 million in 2019.

The second interim dividend should settle at €2.31 gross per share, or €1.6170 net per share (after deduction of a withholding tax of 30%).

5. Limited review opinion on the financial accounts

Report on the review of the interim consolidated financial information of Solvac SA/NV for the six-month period ended June 30, 2019

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 June 30, 2019, 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 8.

Report on the consolidated interim financial information

We have reviewed the consolidated interim financial information of Solvac SA/NV ("the company") and its subsidiaries (jointly "the group"), prepared in accordance with International Accounting Standard (IAS) 34, "Interim Financial Reporting" as adopted by the European Union.

The consolidated condensed statement of financial position shows total assets of €3.543 million and the consolidated condensed income statement shows a consolidated profit (group share) for the period then ended of €154 million.

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 Solvac SA/NV has not been prepared, in all material respects, in accordance with IAS 34, "Interim Financial Reporting" as adopted by the European Union.

Zaventem, July 31, 2019

The statutory auditor

DELOITTE Bedrijfsrevisoren / Reviseurs d'Entreprises

Represented by Michel Denayer

6. Remarks

Content

This press release contains regulated information and is prepared in accordance with the IAS34 standard. The analysis of risk management is presented in the annual report, available on the Internet (www.solvac.be). There is no change as at June 30, 2019 in the risk identification compared to December 31, 2018.

Solvac Shares

	December 2018	June 2019
Number of shares outstanding at end of period	21,375,033	21,375,033
Average number of shares for calculating results per share according to IFRS	21,375,033	21,375,033
Average number of shares for calculating diluted results per share according to IFRS	21,375,033	21,375,033

7. Statement of the accountable persons

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

• a) the condensed financial statements, prepared in accordance with applicable accounting standards, give a true and fair view of the assets, of the financial position and the results of the issuer and the business included in the consolidation;
• b) the interim report includes a faithful statement on the development of the business, the results and the situation of the issuer and the business included in the consolidation, as well as a description of the main risks and uncertainties they face.

Key financial reporting dates

• August 27, 2019: Payment of the first interim dividend for the 2019 financial year
• December 12, 2019: 6:00 pm Press Release "Second interim dividend"
• December 27, 2019: Payment of the second interim dividend for the 2019 financial year.

For more information, please contact:

SOLVAC S.A. Investor Relations Rue des Champs Elysées, 43 - 1050 Brussels Tel.: 32/2/639 66 30 Fax: 32/2/639 66 31 Email: Investor.relations@solvac.be

Solvac is a public limited company under the Belgian law founded in 1983 and listed on Euronext Brussels under the ISIN code BE0003545531 (SOLV). Its assets exclusively consist of a stake of more than 30 % in the capital of Solvay SA. Its titles are exclusively nominative. They may be freely held by natural persons, or subject to the approval of the Board of Directors, by legal persons or assimilated to the conditions set out in its accreditation policy. As of June 30, 2019 its market capitalization was €2,6 billion.

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Solvac – Condensed Half Year Financial Statements IFRS

Condensed Consolidated Statement of Financial Position

€ million	Notes	December 31,2018	June 30, 2019
ASSETS
Tangible fixed assets		0	0
Non-current assets : investments according to the equity method	2	3,655	3,477
Goodwill		343	343
Participations according to the equity method excluding goodwill		3,312	3,134
Current assets : short-term receivables		47	0
Cash and cash equivalents	3	1	65
Total assets		3,703	3,543
EQUITY AND LIABILITIES
Equity	4	3,493	3,389
Capital		192	192
Reserves		3,301	3,197
Non-current liabilities : long term financial debt	5	150	150
Current liabilities		60	4
Short-term financial debt		42	0
Tax liabilities		14	0
Other current liabilities	6	4	4
Total equity and liabilities		3,703	3,543

Condensed Consolidated Income Statement

€ million	Notes	1st Half 20182	1st Half 2019
Income from investments accounted for under the equity method	2	110	157
Operating expenses		-1	-1
Cost of borrowings	5	-2	-2
Net income		107	154
Net income and diluted income per share (EUR)1		5.0	7.2

¹ The net income per share and the net diluted income per share are identical. The average weighted number of shares used for the calculation per share is 21,375,033 in June 2019 and June 2018. ² Comparative numbers have been restated to reflect the application of IAS12 on earnings at Solvay (page 9)

Condensed Consolidated Statement of Total Comprehensive Income

€ million	1st Half 2018	1st Half 2019
Net income (a) Other elements of comprehensive income 1	107	154
Recyclable components
Gains and losses on hedging instruments in a cash-flow hedge	-5	-2
Currency translation differences (activities abroad)	39	33
Non-recyclable components
Remeasurement of the net defined benefit liability	56	-68
Income tax relating to recyclable and non-recyclable elements
Income tax relating to components of other comprehensive income.	-12	22
Other elements of comprehensive income net of related tax effects (b)	78	-15
Comprehensive income (a) + (b)	185	139

¹ Other elements of the comprehensive income come from the statement of changes in equity of Solvay S.A. More information is available in the latter's press release.

Condensed Consolidated Statement of Changes in Equity

€ million	Capital	Share premiums	Retained earnings	Hybrid Bond	Currency translation and fair value adjustments, and defined benefit pension plans	Total equity
Carrying amount as of 31/12/2017	192	568	2,235	675	-459	3,211
Net income for the first half1			107			107
Other elements of comprehensive income					78	78
Comprehensive income			107		78	185
Changes in scope and other			-22	-5		-27
Carrying amount as of 30/06/2018	192	568	2,320	670	-381	3,369
Net income for the second half			164			164
Other elements of comprehensive income					-15	-15
Comprehensive income			164		-15	149
Dividends			-112			-112
Hybrid Bond				93		93
Changes in scope and other			-6			-6
Carrying amount as of 31/12/2018	192	568	2,366	763	-396	3,493
Impact of adoption of IFRS 9 by Solvay			3			3
Carrying amount as of 31/12/2018 – restated	192	568	2,369	763	-396	3,496
Net income for the first half			154			154
Other elements of comprehensive income					-15	-15
Comprehensive income			154		-15	139
Hybrid Bond			-1	-220		-221
Changes in scope and other			-25			-25
Carrying amount as of 30/06/2019	192	568	2,497	543	-411	3,389

More information about the changes related to Solvay are available in Solvay's press release issued July 31, 2019.

¹ The numbers presented for comparative reasons have been restated to consider the application of IAS12 « Income Tax » at Solvay (see page 9)

Condensed Consolidated Statement of Cash Flows

€ million	1st Half of 2018	1st Half of 2019
Operational expenses	-1	-1
Change in working capital	1	1
Dividends received from Solvay	117	122
Cash flows from operational activities (a)	117	122
Acquisition of Solvay securities	0	0
Sale of Solvay securities	0	0
Cash flows from investment activities (b)	0	0
Acquisition of Own Shares	0	0
New Borrowings	50	0
Refund of borrowings	-91	-42
Interest paid	-2	-2
Changes in taxes linked to dividends paid	-13	-13
Cash flows from financing activities (c)	-56	-57
Net change in cash (a) + (b) + (c)	61	65
Cash and cash equivalent at opening	0	1
Cash and cash equivalent at closing	61	66

Notes to the consolidated financial statements

1. Conformity Declaration and Accounting Principles

The condensed consolidated financial statements have been prepared in conformity with the IAS34 Intermediate financial Information as adopted by the European Union.

No modification has been brought to the accounting principles as compared to those utilized for the setup of the latest consolidated accounts set at December 31 2018, at the exception of the following standards applicable for the annual period open as from January 1st, 2019 and detailed as below. The Group has not anticipatively adopted another standard, interpretation or modification which has been published but which is not applicable yet.

Impact of new standards and modifications

At January 1st, 2019, the Group applied for the first time, IFRS16 Leasing Contracts and the changes made to IAS12 Income Tax in the framework of annual improvements of standards of the IFRS Cycle 2015-2017. As requested by IAS34 for the condensed consolidated financial statements the nature and the effects of those changes are presented here below. Several other modifications and interpretations are applicable for the first time in 2019, but had a insignificant impact on the condensed consolidated financial statements.

At January 1st 2019 the IFRS16 replaces the IAS17 standard on the leasing contracts. IFRS16 sets the principles for the accounting, the evaluation, the presentation and the publishing of the leasing contracts, and the standard obliges the lessees to state the leasing contracts following a unique balance, similarly to the accounting of contracts of financial leasing contracts following IAS17. At the effective date of the contract, the lessees accounts a leasing liability (an obligation to pay the leasing amounts) and an asset under the right of use (an asset representing the right to utilize the asset during the length of the leasing contract). At Solvay, applying this new standard had an impact on the tangible assets accounting and the financial liabilities. The impact accounted for in the equity amounts at €7 million (at 100%), being €3 million (the Group's share) at January 1st, 2019.

On top, from January 1st, 2019, the Group applies the changes introduced by IAS12 to the tax consequences of the dividends accounted for from the opening of the first comparative period, being January 1st, 2018. In 2018, the fiscal consequences of the coupons of the perpetual hybrid bonds, accounted for in equity, have been capitalized in equity. Following the adoption of changes, the fiscal consequences will be recognized in the income statement. Therefore the Solvay result of the first semester 2018 has been increased with €15 million (at 100%), or €5 Million (the Group's share) and the Solvay result of the second semester 2018 has been increased with €5 million (at 100%), or € 1 million (the Group's share).

The impact of the future application of these standards and the interpretations on the Solvay Group accounts is more detailed in its half year financial report.

The revenues perceived as dividends are generally higher in the first semester of the financial year than in the second semester.

There are no significant events after the half year closing.

2. Participations treated with the equity method

Solvac holds a participation of 31.53 % in Solvay SA (after deduction of the own shares held by Solvay).

The value of the participation equity amounts to €3.477 million (of which €343 million of goodwill and €3.134 nongoodwill), or €106.96 per held Solvay share compared to the share price of €91.10 at June 30, 2019.

The changes in equity method, goodwill excepted, are as follows:

€ million	2018	1st Half 2019
Value at January 1st	3.033	3.312
Retained Earnings	276	157
Distribution	-119	-75
Currency Translation and Fair Value Adjustments	63	-15
Changes in perimeter and others	-29	-24
Hybrid Bond	88	-221
Value at December 31st / June 30th	3.312	3.134

For the first half of 2019, the Solvac share in the net result of the Solvay Group, excluding non – controlling participations, amounts to €157 million (2018 : €276 million and first half of 2018 : €110 million).

3. Cash and Cash equivalents

Due to the low interest rates at the financial markets, Solvac has not invested the dividend cashed in May 2019 in cash notes. This amount is still booked on the Solvac bank account (without generating costs).

4. Equity

At the end of June 2019 the equity amounts to €3.389 million and includes the direct imputations and the own capital (other elements of the comprehensive income). The latter are mainly derived from the currency translations, the fair value adjustments of financial instruments from Solvay and the defined benefit pension plans.

5. Long term borrowings

At the end of June 2019, the non – current liabilities (€150 million) are stable compared to 2018.

The structural long term financial debt is still composed as follows:

• A loan of €150 million at an interest rate of 2.90% maturing in 2022
• A loan of €150 million at an interest rate of 1.50% maturing in 2023
• A loan of €150 million at an interest rate of 2.75% maturing in 2025

6. Other short term liabilities

It mainly concerns the interests paid, the debts to suppliers and the residual amounts to pay back to the shareholders.

7. Fair Value of financial instruments valued at their amortised cost

At the Statement of Financial Position of Solvac at June 30, 2019 the fair value of its financial instruments does not represent a significant difference with the bookvalue in the consolidated statement of Financial Position at December 31st, 2018.

8. Reconciliation between the cash revenue and the consolidated income statement for the first semesters 2019 and 2018

€ million	1st Half 2018	1st Half 2019
Cash Income	117	122
Operational Result	-1	-1
Finance Costs	-2	-2
Cash Result	114	119
Minus the Solvay dividends paid in January 2018 et 2019, accounted for in the net result of 2017 et 2018, respectively	-45	-47
Cancelation of Solvay dividends, retrenched in consolidation	-72	-75
Share of the Solvay net result in the year	110	157
Solvac Net Income - consolidated accounts	107	154