KBC ANCORA : Interim Financial Report 2015/2016

Regulated information, Leuven, 29 January 2016 (17.40 hrs CET)

Interim Financial Report 2015/2016

KBC Ancora recorded a negative result of EUR 10.5 million in the first half of the financial year 2015/2016, an improvement of 1.9% compared with the same period in the previous financial year. This result was principally determined by the usual operating costs and interest charges in the first half of each financial year.

Abridged financial summary and notes^[1]:
#_ftn1

Results for the first half of the financial year 2015/2016

* No instruments have been issued which could lead to dilution.

KBC Ancora recorded a negative result of EUR 10.5 million in the first six months of the current financial year, equivalent to EUR 0.13 per share, compared with a negative result of EUR 10.7 million in the same period in the previous financial year.

The result principally comprised the usual operating costs (EUR 1.1 million) and interest charges on debt (EUR 9.4 million).

Balance sheet as at 31 December 2015

* The balance sheet as at 30 June 2015 is shown after appropriation of profit.

The balance sheet total stood at EUR 2.4 billion and remained unchanged over the past six months.

The number of shares held by KBC Ancora in KBC Group remained unchanged.

Capital and reserves fell by an amount equal to the negative result over the first six months of the year (EUR 10.5 million). Current assets increased by EUR 1.2 million, while amounts owed to creditors rose by EUR 9.3 million.

Interim report on the first six months of the current financial year 2015/2016

Notes on the first half of the current financial year 2015/2016

Rearrangement of debt

At the end of August 2015, KBC Ancora extended its long-term financial liability of EUR 175 million, originally scheduled to mature in 2017, by a further two years, until 31 May 2019. The interest rate applying for this extension was also revised downwards. As a result, the interest charges in the financial years 2017/18 and 2018/19 are projected to fall by approximately EUR 3.5 million compared with the present interest charges on this long-term liability. The long-term liabilities are secured by the existing collateral package.

Results for the first six months of the financial year 2015/2016

KBC Ancora recorded a negative result of EUR 10.5 million in the first six months of the current financial year, compared with a negative result of EUR 10.7 million in the same period in the previous financial year.

This result was influenced principally by the following costs:

• Interest charges (EUR 9.4 million) were EUR 0.2 million lower than in the same period in the previous financial year. This reduction was due principally to the elimination of KBC Ancora's short-term liabilities in the spring of 2015. At year-end 2014, those liabilities amounted to EUR 27.0 million.
• Operating expenses amounted to EUR 1.1 million, in line with the previous financial year. The recurring operating expenses consisted primarily of costs incurred within the cost-sharing association with Cera (EUR 0.8 million). In addition, there were the usual costs such as listing fees (EUR 0.1 million) and management expenses (EUR 0.1 million).

Participating interest in KBC Group, net debt position and net asset value

The number of KBC Group shares in portfolio remained unchanged during the past six months at 77,516,380. KBC Ancora holds 0.99 KBC Group shares per KBC Ancora share in issue. The average book value of the KBC Group shares is EUR 31.5 per share.

KBC Ancora's net debt amounted to EUR 4.93 per share as at 31 December 2015, an increase of EUR 0.13 per share compared with 30 June 2015.

The net asset value of one KBC Ancora share as at 31 December 2015 was thus equivalent to the price of 0.99 KBC Group shares less EUR 4.93.
Based on the closing price of the KBC Group share on 31 December 2015 (EUR 57.67), the net asset value of one KBC Ancora share amounted to EUR 52.16, and the KBC Ancora share price (EUR 38.915) was trading at a discount of 25.4% to the net asset value.
Based on the closing price of the KBC Group share on 28 January 2016 (EUR 50.01) the net asset value of one KBC Ancora share amounted to EUR 44.58, and the KBC Ancora share (EUR 32.875) was trading at a discount of 26.3% to the net asset value.

The following charts illustrate the movements in the price of the KBC Group and KBC Ancora shares and the discount of the KBC Ancora share to its net asset value.

Principal risks and uncertainties in the remaining months of the financial year

Certain risk factors could have an impact on the value of the assets held by KBC Ancora and on its ability to distribute a dividend. Reference is made in this regard to the description of the risks in the most recent annual report (page 10).

KBC Group, which repaid all remaining government instruments to the Flemish Government (including premium) at the end of 2015, five years earlier than planned, reported a net result of EUR 1.78 billion for the first nine months of 2015. KBC Group will announce its annual result for the financial year 2015 on 18 February 2016.

KBC Group announced that it would not be distributing a dividend in respect of the financial year 2015. With effect from the financial year 2016, KBC Group will aim for a dividend payout ratio (including the coupon on the outstanding Additional Tier-1 instruments) of at least 50%.

As a consequence, KBC Ancora's costs in the second half of the current financial year 2015/2016 will consist principally of interest charges plus the usual limited operating expenses (costs within the cost-sharing association with Cera, listing costs and costs in connection with management).

Based on these assumptions KBC Ancora will record a negative result for the year and will of course not distribute a dividend in respect of the financial year 2015/2016. KBC Ancora will use debt finance to meet its operating costs and interest charges.

Declaration by the responsible individuals

"We, the members of the Board of Directors of Almancora Société de gestion, statutory manager of KBC Ancora SCA, hereby jointly declare that, in so far as we are aware:

1. the abridged financial summaries, drawn up in accordance with the applicable standards for financial statements, present a true and fair picture of the capital position, financial position and results of KBC Ancora,
2. the interim financial report presents a true and fair view of the key events and principal transactions with affiliated parties during the first six months of the current financial year and of their impact on the abridged financial summaries, as well as a description of the principal risks and uncertainties during the remaining months of the financial year."

Information on the external audit

The auditor has reviewed the interim financial information. The auditor's report is appended to this interim report.

                                                          ---------------------------------

KBC Ancora is a listed company which holds 18.5% of the shares in KBC Group and which together with Cera, MRBB and the Other Permanent Shareholders is responsible for the shareholder stability and further development of the KBC group. As core shareholders of KBC Group, these parties have signed a shareholder agreement to this effect.

Financial calendar:
26 August 2016 (17.40 hrs CEST)            Annual press release for the financial year 2015/2016
27 September 2016 (17.40 hrs CEST)     Annual Report 2015/2016 available
28 October 2016                                       General Meeting of Shareholders

This press release is available in Dutch, French and English on the website www.kbcancora.be.

KBC Ancora Investor Relations & Press contact: Jan Bergmans
Tel.: +32 (0)16 279672
E-mail: jan.bergmans@kbcancora.be or mailbox@kbcancora.be

Appendix: Detailed balance sheet and profit and loss account with comparative figures

Statutory auditor's report to the statutory manager of KBC Ancora SCA on the review of the condensed interim financial information as at 31 December 2015 and for the six-month period then ended.

Introduction

We have reviewed the accompanying condensed statement of financial position and profit and loss of KBC Ancora SCA as at 31 December 2015 ("the condensed interim financial information"). The board of directors is responsible for the preparation and presentation of this condensed 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 condensed interim financial information based on our review.

Scope of Review

We conducted our review in accordance with the International Standard on Review Engagements 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 conducted in accordance with International Standards on Auditing 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.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed interim financial information as at 31 December 2015 and for the six-month period then ended has not been prepared, in all material respects, in accordance with IAS 34, "Interim Financial Reporting" as adopted by the European Union.

Brussels, 29 January 2016

KPMG Bedrijfsrevisoren
Statutory Auditor
Represented by

Olivier Macq
Partner