Texaf S.A. — Interim / Quarterly Report 2015

Sep 4, 2015

INTERIM MANAGEMENT REPORT September 4

th , 2015

REGULATED INFORMATION

• RECURRING OPERATING RESULT UP BY 9% TO EUR 3,585 K
• REAL ESTATE IMPACTED BY NON-RECURRING ELEMENTS
• CARRIGRES RESULT BUOYED BY A REDUCTION IN COSTS

TEXAF's Board of Directors closed the company's consolidated accounts (in accordance with the IFRS standards as adopted in the European Union) on 30 June 2015. These interim accounts have not been audited. The Board wishes to point out that the company's assets are located in the Democratic Republic of Congo (DRC) and that the specific environment of the country entails certain risks. The accounts were drawn up based on the assumption of stability in the social-economic and regulatory environment.

HIGHLIGHTS FOR THE FIRST HALF OF 2015

• The economic slowdown observed over the past year is continuing and is in particular impacting investments in infrastructure. The monetary situation remains highly stable and the Congolese franc has followed the dollar's rise against the euro.
• Income from real estate activity continued to grow by 7% to EUR 7,133 K compared to the 1st half of 2014 thanks to the new buildings placed on the market and in spite of the partial departure of an international agency. However, the recurring operating result declined by 4% to EUR 2,676 K due to the rise in value of the Congolese franc and dollar, tax increases and recruitment.
• CARRIGRES turnover was up 6% to EUR 2,674 K, with its recurring operating result up 88% to EUR 909 K compared to the 1st half of 2014, thanks to the impact of the dollar on selling prices and capital expenditure made in 2014.
• The Group's recurring operating result reached EUR 3,585 K, an increase of 9%. A non-recurring net charge of EUR 381 K impacted the six-month period to such an extent that the operating result fell by 2% to EUR 3,204 K. The net result (Group's share) of EUR 2,848 K in turn rose by 26%. In light of the new shares issued in May 2014, net earnings per share increased by 16% to EUR 0.804.

	H1 2011	H1 2012	H1 2013	H1 2014	H1 2015
Recurring operating result	1,671	2,413	3,011	3,281	3,585
As% of turnover	26%	28%	32%	35%	34%

CONSOLIDATED RESULTS FOR TEXAF GROUP (in EUR thousands)

(not audited)

	30.06.2013	30.06.2014	30.06.2015
Revenue from ordinary activities	9,103	9,083	9,807
Other recurring operating income	250	398	728
Recurring operating expenses	-6,342	-6,200	-6.950
Recurring operating result	3,011	3,281	3,585
∆ y-1	17%	9%	9%
Other non-recurring operating items	-1	0	-381
Operating result	3,010	3,281	3,204
∆ y-1	25%	9%	-2%
Financial results	-92	-137	-172
Other non-operating results	5	0	-
Results before tax (for continued operations)	2,923	3,144	3,032
∆ y-1	31%	8%	-4%
Taxes	-514	-782	-189
Results from discontinued operations	-	-	-
Net result after tax	2,409	2,362	2,843
Consolidated net result (Group's share)	2,208	2,267	2,848
∆ y-1	16%	3%	26%
Per share
Recurring operating results in EUR	0.944	0.926	1.012
Operating result in EUR	0.944	0.926	0.904
Consolidated net result (Group's share) in EUR	0.692	0.691	0.804
Number of outstanding shares	3,189,330	3,543,700	3,543,700

STATEMENT OF COMPREHENSIVE CONSOLIDATED INCOME (in EUR thousands)

(not audited)

	30.06.2013	30.06.2014	30.06.2015
Result for the financial year	2,409	2,362	2,843
Comprehensive result	2,409	2,362	2,843
Allocated to:
TEXAF shareholders	2,208	2,267	2,848
Minority interests	201	95	-5

CONSOLIDATED BALANCE SHEET (in EUR thousands)

(not audited)

	31.12.2013	31.12.2014	30.06.2015
Non-current assets	92,749	97,345	101,720
Property, plant and equipment	14,216	14,878	14,563
Investment properties	77,158	81,644	86,250
Intangibles	42	33	51
Other financial assets	1,333	790	856
Current assets	15,213	13,128	14,395
Assets available for sale		1,179	1,179
Inventories	4,516	5,026	5,263
Receivables	2,171	1,226	1,710
Tax assets	634	731	1,020
Cash and cash equivalent	7,216	3,984	4,697
Other current assets	676	982	526
TOTAL ASSETS	107,962	110,473	116,115
Equity	66,728	70,964	72,106
Capital	7,857	21,508	21,508
Group reserves	49,429	49,136	50,284
Minority interests	9,442	320	314
Non-current liabilities	30,883	31,211	34,312
Deferred income tax liabilities	22,874	22,215	22,114
Other non-current liabilities	8,009	8,996	12,198
Current liabilities	10,351	8,298	9,697
Liabilities available for sale		337	337
Other current liabilities	10,351	7,961	9,360
TOTAL LIABILITIES	107,962	110,473	116,115

CONDENSED CASH FLOW STATEMENT (in EUR thousands)

(not audited)

	30.06.2013	30.06.2014	30.06.2015
Cash and cash equivalents at the beginning of the year	4,465	7,216	3,984
Cash flows from operating activities	4,085	2,856	3,835
Cash flows from investment activities	-2,025	-2,383	-5,877
Cash flows from financing activities	-1,879	-2,454	2,755
Net increase (decrease) of cash and cash equivalents	181	-1,981	713
Currency conversion discrepancies	-	-	-
Cash and cash equivalents at close of reporting period	4,646	5,235	4,697
Of which Texaf SA	2,426	2,478	1,599

Comments on consolidated results

The full half-yearly report drawn up in accordance with IAS 34 is available at www.texaf.be.

• Rental income rose by 7% compared to the first half of 2014 thanks to the leasing of the second and third phases of the "Champ de Coton" project (28 apartments) and new premises for professional use, and in spite of the partial move of an international organisation.
• Turnover for CARRIGRES grew by 6% compared to the same period in 2014 as a result of an improvement in the average selling price.
• "Other recurring operating income" (EUR 728 K versus EUR 398 K at the end of June 2014) mostly consisted of the re-invoicing of expenses and of sales by the concession's restaurant.
• In total, the Group's recurring turnover increased by 11%. Recurring operating expenses (EUR 6.95 million versus EUR 6.2 million in 2014) rose by 12% under the combined effect of the rise in the dollar, tax increases and recruitment.
• The recurring operating result therefore increased by 9% to EUR 3,585 K. Nevertheless, the half-yearly results were impacted by non-recurring elements, principally termination liabilities associated with, among other things, the outsourcing of certain services, and the repayment of operating taxes, so much so that the total operating result only came to EUR 3,204 K, a fall of 2%.
• The Group's share of the net result was EUR 2,848 K, an increase of 26% or EUR 0.804 per share. IMMOTEX fully contributed to this result over the entire period whereas this was the case for only 6 weeks in the 1st half of 2014.

CARRIGRES (EUR 000)	30/06/2011	30/06/2012	30/06/2013	30/06/2014	30/06/2015
Revenue from ordinary activities	2,019	3,075	3,020	2,514	2,674
Operating result	328	829	710	483	1,037
Recurring operating result	328	829	711	483	909
Net result	386	730	754	577	1,050
Net result (Group's share)	386	730	754	577	1,050

REPORT ON CARRIGRES ACTIVITIES

• CARRIGRES sandstone production amounted to 162,000 tonnes, a fall of 19% compared to the 1st half of 2014. Specifically, production times were deliberately reduced in order to adapt to sales prospects.
• Sales declined by 6% in volume but increased by 6% in value. The improvement in the average selling price was attributable to both the rise in the dollar and the product mix.
• The recurring operating result grew by 88% compared to the 1st half of 2014, which was impacted by production stoppages. It benefitted from the savings yielded by the capital expenditure made in 2014, such as the renovation of the crushers, the replacement of the electrical system and the new drilling machine.
• The operating result includes a non-recurring repayment of operating taxes and the net result reversals of former tax provisions.

REPORT ON REAL ESTATE ACTIVITIES

REAL ESTATE (EUR 000)	30/06/2011	30/06/2012	30/06/2013	30/06/2014	30/06/2015
Revenue from ordinary activities	4,140	5,001	6,083	6,569	7,133
Operating result	1,640	1,584	2,300	2,798	2,167
Recurring operating result	1,382	1,737	2,300	2,798	2,676
Net result	1,229	1,308	1,655	1,785	1,793
Net result (Group's share)
	1,231	1,193	1,454	1,690	1,798

• Sectoral data for real estate activities must be interpreted while bearing in mind that it includes all the costs associated with the holding company, for example payroll and overhead.
• Rental income increased to + EUR 466 K (+ 7%) in spite of the partial move of an international agency to the east of the country and thanks to the leasing of the second and third phases of the "Champ de Coton" project (28 two-, three- and four-bedroom apartments) and offices for a major embassy. Total income rose by 9% to EUR 7,133 K.
• However, the recurring operating result fell by 4% to EUR 2,676 K, impacted by the rise in local expenses linked to the dollar, the increase in operating taxes and the announced expansion of the management team in the DRC.
• Non-recurring expenses of EUR 509 K reduced the operating result. These mainly consisted of termination liabilities associated with, among other things, the outsourcing of certain services.
• Construction of four buildings, with a total of 33 two- and three-bedroom apartments, continued on budget and on time. They are due to be delivered sometime in the 1st half of 2016.

EVENTS TAKING PLACE AFTER 30 JUNE 2015 AND OUTLOOK FOR THE REST OF 2015

• No significant events took place after 30 June.
• In light of the leasing over the entire period of the new investments, the recurring operating result for the 2nd half of the year should, excluding any new element and subject to the performance of CARRiGRES, be better than that for the first six months.
• TEXAF intends to maintain its dividend policy.

FINANCIAL CALENDAR

• Friday, 13 November 2015: Quarterly press release
• Mid-February 2016: Publication of 2015 annual results
• General meeting: 10 May 2016

TEXAF, established in 1925, is the only Euronext-listed industrial, real estate and agricultural investment company having all of its activities and subsidiaries to date based in the Democratic Republic of Congo. The listing of Congolese activities on the stock exchange and the resulting obligations in terms of good governance and transparency constitute a major asset of the group in the promotion of the formal sector in the DRC.

Contact: Philippe Croonenberghs, CEO: +32 495 24 32 64 Christophe Evers, CFO: + 32 495 24 32 60