HALF-YEAR REPORT FOR THE PERIOD ENDING 30 JUNE 2015€¦ · 2. Highlights for H1 2015 and...

HALF-YEAR REPORTFOR THE PERIOD ENDING 30 JUNE 2015

PargesaHolding SA

Pargesa Holding SA Half-year report 2015

3

Half-year report of Pargesa Holding SA for the period ending 30 June 2015

Through its holdings held by its subsidiary GBL, Pargesa Holding SA is active in various industrial and services sectors. The company seeks to create long-term value by focusing its portfolio on a limited number of significant holdings and by implementing a continuous professional activity as a strategic shareholder. Alongside these key strategic shareholdings, which will continue to form the basis of the portfolio, in 2012 GBL began to progressively develop two diversification arms: incubator-type investments, which may become strategic over time, and the “financial pillar”, which brings together within Sienna Capital influential positions in private equity and investment funds.

1. Economic diagram of Pargesa Group at 30 June 2015 (1)

PargesaHolding SA

(1) shareholdings are expressed as a percentage of capital(2) the 9.8% equity stake in Lafarge is at 10 July 2015, on the exchange date of Lafarge shares against HolcimLafarge shares, further to the results of the

public exchange offer. This stake was subsequently reduced to 9.4% following the results of the reopening. At 30 June 2015, GBL had a 21.0% equity stake in Lafarge.

50.0%

53.2% 9.8% 2.9% 2.3% 7.5% 15.0%

Half-year report 2015Pargesa Holding SA

4

2. Highlights for H1 2015 and subsequent period

The Group’s portfolio

During the first half of 2015, the Boards of Directors of Holcim and Lafarge announced that they had reached an agreement on revised terms for the merger of equals between both groups. The parties agreed on a new exchange ratio of 9 Holcim shares for 10 Lafarge shares. Lafarge and Holcim also agreed that the new group would announce a post-closing scrip dividend of 1 new LafargeHolcim share for each 20 existing shares. On 1 June 2015, Holcim launched its public exchange offer for all Lafarge shares, which was closed on 3 July 2015, with 87.46% of Lafarge shares having been tendered to the offer. The reopening of the offer closed on 28 July 2015, and the results were disclosed on 31 July 2015, with Holcim holding 96.4% of the capital, which represents more than 95% of Lafarge’s voting rights. Following the reopening, GBL held a 9.4% stake in LafargeHolcim, the shares of which are admitted for trading on the SIX Swiss Exchange and on Euronext Paris. As the threshold of 95% has been passed, LafargeHolcim announced on 4 August 2015 that it would launch a squeeze-out for the remaining Lafarge SA shares. At 30 June 2015, GBL considered that the merger was highly probable and, hence, in accordance with IFRS, it recognised a partial reversal of impairment previously booked with regards to Lafarge for EUR 403 million. Pargesa’s share of this reversal came in at CHF 221.1 million. That reversal stems from the fair value accounting method applied to the Lafarge stake on 30 June 2015 while the equity method was previously applied.

In early 2015, GBL sold 1.8 million Total shares for an amount of EUR 84 million, generating a capital gain of EUR 42 million for GBL. At 30 June, GBL held 2.9% of Total, which remains one of the Group’s largest holdings with a market value of EUR 3.0 billion (CHF 1.6 billion for Pargesa) at 30 June 2015. In addition, GBL entered into forward contracts for the sale of 10.3 million Total shares at an average spot price of EUR 48.17 (forward price of EUR 45.98 at end-December). This will generate a capital gain of EUR 240 million for GBL. In accordance with IFRS, the gain will be recorded when the contracts expire in Q4 2015 (see below for more details).

Imerys’ completed the acquisition of Greek group S&B on 26 February 2015. The purchase price was set at EUR 624 million, taking into account the value of the Imerys shares issued in partial payment of the purchase price, and includes an additional performance-related payment of EUR 21 million. As the acquisition was partially paid in Imerys shares, the Kyriacopoulos family, the founding shareholder of S&B, now holds 4.7% of Imerys’ capital. GBL’s holding has therefore been slightly diluted, from 56.5% at end-2014 to 53.2%.

In H1 2015, GBL received additional requests for the early conversion of bonds exchangeable for Suez Environnement shares maturing in September 2015. GBL therefore delivered 4.8 million Suez Environnement shares, representing EUR 55 million in bond par value. The conversions reduced debt by the amount of the converted par value, and the outstanding debt now amounts to EUR 4 million. The conversions also resulted in a reversal in the value adjustments previously recorded on the derivatives implicitly embedded in the bonds, as well as a gain on the Suez Environnement shares delivered. The holding in Suez Environnement’s capital is now below 0.1%, compared with 1.1% at end-2014.

In terms of incubator-type investments, GBL slightly increased its stake in Umicore; at 30 June 2015, GBL held 13.1% of Umicore’s capital (versus 12.4% at end-2014) worth EUR 626 million.

Also, In Q1 2015, GBL paid EUR 130 million for a 7.4% stake in the capital of listed Belgian group Ontex, a leading global provider of disposable hygiene products. And GBL announced that on 24 July 2015, it had crossed the legal statutory threshold of 3% in the capital of Adidas, a world leader in the design and distribution of sportswear.

Within GBL’s Financial Pillar (Sienna Capital), Ergon Capital Partners III (ECP III) acquired in May 2015 a majority interest in Golden Goose, an Italian designer of contemporary shoes, clothes and accessories. In Q1 2015, Ergon Capital Partners II (ECP II) disposed of its majority holding in Joris Ide, a leader in insulating sandwich panels and steel profiles. This transaction generated a net consolidated gain of EUR 14 million for GBL. In February 2015, Sienna Capital announced that it was investing EUR 150 million in PrimeStone, a new fund whose strategy consists of making medium- to long-term investments in medium-sized listed companies in Europe. At 30 June 2015, debt fund Kartesia had invested EUR 192 million (approximately 38% of the fund) in primary and secondary financing transactions. Kartesia’s capital raising ended on 23 March 2015 with total commitments of EUR 508 million, including EUR 150 million from Sienna Capital. Sagard III also made new investments during H1 : Safic-Alcan, Délices des 7 Vallées and Alvest.


5

Finally, in July 2015, the Sagard II fund, in which both GBL and Pargesa are investors, disposed of its stake in Cérélia, generating a capital gain of CHF 12 million for Pargesa. This gain will be recorded in Q3 2015.

At the end of March, Pargesa Holding SA issued a CHF 150 million Swiss domestic bond in order to increase its financial resources and partially fund the redemption of its 2.5% bond of CHF 150 million maturing in November 2016. The nine-year bond pays an annual coupon of 0.875% and is redeemable on 24 April 2024. The transaction took place under favourable market conditions and significantly increased Pargesa’s average debt maturity.

Company organisation

Following the Annual General Meeting held on 5 May 2015, Gérald Frère, Vice Chairman of the Board of Directors since 2002 and a member of the Board since 1992, replaced Albert Frère as Executive Director. As previously announced, on 2 February 2015 Albert Frère, then Vice Chairman of the Board of Directors and Executive Director, and a Board member since 1981, informed the Board of Directors that he would not seek another term as Director at the Annual General Meeting on 5 May 2015.

3. Main shareholdings

Imerys

At Imerys, a world leader in mineral specialties for industry, activity remained firm overall in North America in Q2 despite a slack start to the year and the sharp downturn in oil-related activities. In Europe signs of a recovery appeared, driven in particular by consumer goods. However, there was a more contrasted trend in manufacturing, and the construction sector remained in negative territory in France. Trends varied across emerging markets, with continued growth in India and Southeast Asia, recession in Brazil and a downturn in construction-related sectors in China.

On 26 February 2015, Imerys completed its acquisition of S&B, a global player and European leader in bentonite (binders for foundry, sealing solutions, and additives for drilling and consumer products) and a world leader in continuous casting fluxes for the steel industry and in wollastonite (functional additives for polymers and paints). S&B also provides perlite-based solutions for building materials and horticulture. The integration process of S&B, started in March, is progressing in line with expectations and should be effective from 1 October. The acquisition, which is expected to be accretive on Imerys’ net income from current operations per share already in 2015, should create value from 2018, with the annual synergy run-rate estimated at more than EUR 25 million, half of which should be achieved in 2016. In addition, Imerys continued to expand, signing on 7 May 2015 an exclusive agreement with Solvay to acquire its precipitated calcium carbonates division comprising four plants in Europe. On 8 June 2015, Imerys signed an agreement with BASF to acquire its paper hydrous kaolin business, including a production site in Wilkinson County, Georgia (USA). These transactions are pending approval from the relevant regulatory authorities.

In H1 2015, Imerys recorded revenue of EUR 2’057 million, up 11.9% on the year-earlier period. This improvement reflects the positive impact of changes in scope of EUR 143 million, mainly stemming from the consolidation of S&B since 1 March 2015, and a positive exchange rate effect of EUR 147 million as the euro has lost ground against numerous currencies. At constant scope and exchange rates, revenue decreased 3.9%. Volumes were down 5.3% from the high figure recorded in H1 2014. The price/mix effect was positive in all business groups and represented 1.4% for the group as a whole.

Current operating income rose 10.6% to EUR 274.0 million on a reported basis. At constant scope and exchange rates, it fell 7.1%, reflecting the impact of lower sales volumes, which was only partially offset by the price/mix effect and improved variable costs. The operating margin was 13.3%, compared with 13.5% in H1 2014.

Net income from current operations was up 11.0% to EUR 174.7 million. Group share of net income amounted to EUR 145.2 million, compared with EUR 131.5 million in H1 2014, after taking account of restructuring costs and other non-recurring items totalling −EUR 29.5 million (−EUR 26.0 million in H1 2014).

Imerys faces a contrasted economic environment as it enters H2 2015. The group will benefit from healthy demand in several regions and in sectors that continue to show growth, such as automotive and consumer goods. However, some of its markets will remain depressed (e.g. paper and construction in France), and visibility on ceramic proppants markets for non-conventional oil exploitation remains limited. Given the results achieved in H1 2015 and the expected contribution from the initial synergies with S&B, Imerys expects to see a rise in net income from current operations for 2015 as a whole.


6

Lafarge

Lafarge is a world leader in building materials and in each of the areas in which it operates: Cement, Aggregates and Concrete.

In H1 2015, growth in the construction sector was moderate, with trends varying across countries. On a comparable basis, cement sales volumes decreased 3% and concrete 4% while sales of aggregates were up 1% compared with H1 2014. On a reported basis, volumes were down 4% for cement and concrete and remained stable for aggregates.

In this context, Lafarge recorded sales of EUR 6’319 million in H1 2015, a rise of 5%. This reflects the divestments made, particularly those in Ecuador, Russia and Pakistan, together with the positive impact of exchange rate trends as a result of the appreciation of many currencies against the euro. On a comparable basis, turnover in H1 2015 was stable compared with the previous year.

In H1 2015, EBITDA came in at EUR 1’223 million, up 6%. On a like-for-like basis, it rose 2% as a result of cost reduction and innovation measures, together with carbon credit sales.

Current operating income increased 8% to EUR 813 million on a reported basis and 6% on a like-for-like basis. Lafarge recorded a net loss of EUR 477 million in H1 2015, due to the impact of various one-off items, mainly EUR 450 million in impairments on some of the assets to be divested to CRH in Q3, restructuring costs, and costs relating to the merger with Holcim.

Lafarge’s net debt stood at EUR 10.3 billion, reflecting the usual seasonality in cash flow and the dividend payment, which, in the context of the merger, was paid earlier than in previous years.

Total

Total is one of the leading international oil and gas groups. The group operates in more than 130 countries and covers the entire oil industry chain, from Upstream – exploration, development and production of oil and gas – to Downstream – refining, distribution, transport and international trading of crude oil and refined products. Total is also a major player in Chemicals and is committed to the development of renewable energy sources.

In H1 2015, the average Brent price dropped steeply to 57.8$/b, from 108.9$/b in H1 2014. Refining margins in Europe rose sharply, reaching 50.6$/t, compared with 8.7$/t a year earlier, supported by strong demand for finished products, particularly gasoline, and major maintenance activity, especially in Asia.

Adjusted net operating income from business segments was USD 6.1 billion, down 19% on H1 2014, to be compared with the 47% drop in the Brent price. The group benefited from its cost reduction programme, the resilience of the Upstream business (the decrease in the average realized price of hydrocarbons was partially offset by an increase in production), the good performance of the Downstream business, and a drop in the average tax rate.

Adjusted net income amounted to USD 5.7 billion in H1 2015, a year-on-year drop of 12%. Adjusted net income in Q2 2015 fell 2% compared with the year-earlier period. Group share of net income came in at USD 5.6 billion, compared with USD 6.4 billion in H1 2014. Investments excluding acquisitions amounted to USD 11.2 billion in H1 2015, compared with USD 12.4 billion in H1 2014.


7

Engie

Formed through the merger of Suez and Gaz de France in 2008, Engie (formerly GDF Suez) is a world leading energy group in gas, electricity and energy-related and environmental services.

The economic climate in Europe’s energy sector remained difficult in H1 2015.

Revenues came in at EUR 38.5 billion, down 1.9% year on year and 5.4% in organic terms. This decrease was mainly due to the drop in commodity prices, the unavailability of the Doel 3 and Tihange 2 nuclear plants and the fact that Doel 1 in Belgium was offline. This was partially offset by the appreciation in the US dollar against the euro and more favourable weather in France, as the first half of 2014 was particularly warm.

EBITDA was EUR 6.1 billion, down 4.8% on a reported basis and 8.4% on an organic basis, for the reasons stated above. EBITDA was nevertheless boosted by the commissioning of new assets and the further performance measures taken on costs.

Group share of net recurring income fell 12% to EUR 1.8 billion. Group share of net income was EUR 1.1 billion, compared with EUR 2.5 billion at 30 June 2014, when the figure was boosted by EUR 0.5 billion in revaluation gains. The H1 2015 figure was also weighed down by impairments of EUR 0.7 billion.

Net debt came in at EUR 26.8 billion, down EUR 0.7 billion from year-end 2014 despite a negative forex impact relating to the depreciation of the euro, thanks to a strong cash flow from operations of EUR 6.0 billion, and after payment of the final dividend to shareholders. The net debt/EBITDA ratio was stable at 2.3x.

On the back of these results, Engie is on target to achieve group share of net recurring income of between EUR 2.9 and 3.2 billion in 2015, at average weather and assuming no significant regulatory changes.

The group also reiterated its other financial targets: a net debt/EBITDA ratio below or equal to 2.5x, an A category credit rating, and a dividend offering a 65-75% payout ratio (based on group share of net recurring income), with a minimum of EUR 1 per share and payable in cash.


8

SGS

SGS is the world leader in inspection, verification, testing and certification.

In H1 2015, SGS delivered revenue growth of 3.4% (constant currency basis) to CHF 2.8 billion, corresponding to organic revenue growth of 1.8% and an additional 1.6% contributed by recently acquired companies. Due to the strength of the Swiss franc against most currencies in which SGS operates around the world, group revenue for the year decreased 1.9% on a reported basis.

Organic growth was affected by reduced and delayed capital and operating expenditures by clients in the oil and mining industries. These market conditions had a significant impact on three business lines: Oil, Gas & Chemicals Services, Industrial Services, and Minerals Services. Growth was achieved in all other business lines, particularly Automotive Services, Governments & Institutions Services, Environmental Services, and Systems & Services Certification. The group undertook a number of restructuring measures to align operations with current market conditions, resulting in one-off expenses amounting to CHF 47 million net of taxes.

The group reported adjusted EBITDA of CHF 548 million, up 3.8% on a constant currency basis but down 1.1% on a reported basis. Adjusted operating income was CHF 412 million. The adjusted operating income margin remained stable at 15% on a constant currency basis. Cash flow from operations was particularly robust, rising 13.8% to CHF 296 million. Group share of net income reached CHF 214 million for the period, down 11.2% over the prior year (constant currency basis), and down 16.1% compared with the CHF 255 million reported in June 2014 due to the increase in restructuring expenses and the strength of the Swiss franc.

At 30 June 2015, the group’s net debt position amounted to CHF 1’169 million, compared with CHF 721 million and CHF 340 million at 30 June 2014 and 31 December 2014, respectively. The increase is related to the issuance of new corporate bonds for a total of CHF 550 million.

SGS expects to deliver organic growth comparable to the first half, with improved margins and solid cash-flow generation.

Pernod Ricard

Pernod Ricard is joint world leader in wine and spirits and holds a top position on every continent.

Pernod Ricard’s financial year ends on 30 June, and the results for the 2014-2015 financial year will be published at the end of August 2015.

At the end of April, the group published its sales results for the first nine months of the financial year (July 2014 to March 2015). Sales for the first nine months of 2014-2015 totalled EUR 6’542 million, representing organic growth of 2%, reflecting a gradual improvement in sales, in line with the objectives outlined in October 2014. Reported growth was 6%, due to the very favourable foreign-exchange impact.

Regionally, this was driven by a further improvement in Asia-Rest of the World (+4%), a better performance in the Americas in Q3 (+3%), and overall stability in Europe (0%).

The Top 14 (+2%) confirmed their return to growth, while Priority Premium Wines were stable, and Key Local Brands (+5%) reported buoyant growth driven by Indian whiskies.

Pernod Ricard reported organic growth of 7% in sales in Q3 2014-2015 (+3% restated for the later Chinese New Year) and a significant positive foreign exchange impact (+12%). Growth was boosted by a favourable basis for comparison.

When Pernod Ricard reported its YTD Q3 sales figures, the company reiterated its 2014-2015 guidance of 1-3% organic growth in profit from recurring operations despite the still-difficult environment.


9

4. GBL – Incubator, Financial PillarIn addition to the large strategic holdings that make up the majority of its portfolio, GBL began to diversify into two areas in 2012:

• incubator-type investments of smaller size in companies that may or may not be listed and have the potential to become strategic assets over time. This type of investment may eventually account for 10-15% of GBL’s adjusted net asset value.

• significant stakes in investment or private equity funds, grouped for the most part under Sienna Capital (GBL’s «Financial Pillar»). These investments may eventually account for up to 10% of group adjusted net asset value.

Incubator

Umicore

Umicore was GBL’s first investment in its incubator portfolio. At 30 June 2015, GBL held 13.1% of Umicore’s capital (12.4% at end-December 2014). The market value of GBL’s stake stood at EUR 626 million at end-June.

Umicore is a global group specialised in materials technology and recycling of precious metals. Its business focuses on areas where its expertise in materials science, chemistry and metallurgy is widely recognised. It has three business segments: Catalysis, Energy and Surface Technologies, and Recycling.

At EUR 1.3 billion, H1 2015 revenues were up sharply (+12%) compared to the same period last year, reflecting strong growth in Catalysis and Energy & Surface Technologies, boosted by strong underlying demand in both automotive catalysts and precious metals chemistry. Recycling revenues remained stable. Recurring EBIT was EUR 171 million compared with EUR 138 million in H1 2014 (+24%) as a result of higher demand coupled with an increased contribution from recent investments and, to a lesser extent, a favourable currency impact.

Group share of recurring net profit rose 38% to EUR 131 million. Group share of net profit stood at EUR 90 million, compared with EUR 82 million in H1 2014.

Other investments

As part of the expansion of its portfolio of incubator-type investments, in Q1 2015 GBL acquired for EUR 130 million a 7.4% stake in the capital of listed Belgian group Ontex, a leading global provider of disposable hygiene products. Its product range includes babies’ diapers, feminine hygiene products and adult incontinence products. Ontex products are distributed in more than 100 countries, both under its own brand and under leading retail brands.

In July 2015, GBL announced that it had passed the statutory threshold of 3% in the capital of Adidas, a world leader in the design and distribution of sportswear.


10

Sienna Capital / Financial PillarAt end-June 2015, Sienna Capital’s portfolio comprised investments in private equity funds Ergon and Sagard, debt fund Kartesia, the PrimeStone investment fund, and healthcare investment vehicle Mérieux Développement.

Ergon Capital Partners («ECP»)

ECP was launched in 2005. It is a mid-market private equity fund investing between EUR 20 million and EUR 50 million in companies in niche European markets.

In H1 2015, Ergon Capital Partners II (ECP II) disposed of its majority holding in Joris Ide, a leader in insulating sandwich panels and steel profiles. In May 2015, Ergon Capital Partners III (ECP III) acquired a majority stake in Golden Goose, an Italian designer of contemporary shoes, clothes and accessories.

Sagard

Created in 2002 at the initiative of Power Corporation of Canada, Sagard invests in companies valued at more than EUR 100 million that are leaders in their markets, primarily in French-speaking European countries. Working with company management, it supports them in their growth.

In H1 2015, the Sagard III fund made several new acquisitions: Safic-Alcan, Délices des 7 Vallées, and Alvest. In July 2015, the Sagard II fund, in which both GBL and Pargesa are investors, sold its stake in Cérélia.

Kartesia

Kartesia was launched in 2013. An initial round of funding raised EUR 227 million, with EUR 150 million coming from Sienna Capital. It is a primary and secondary debt fund active on the European market. After additional fund raising, Kartesia’s total fund size is now EUR 507.5 million.

At 30 June 2015, Kartesia had invested EUR 192 million in 19 companies across five countries and 14 industries.

Mérieux Développement

Mérieux Développement was created in 2009 and is a subsidiary of the Institut Mérieux. It is an investment fund specialised in the healthcare sector, conducting growth and venture capital investments. Sienna Capital has committed to invest EUR 75 million in the two funds managed by Mérieux Développement.

PrimeStone

In February 2015, Sienna Capital invested EUR 150 million in PrimeStone, a new fund whose strategy consists of making medium- to long-term investments in medium-sized listed companies in Europe.

PrimeStone was created in 2014. It applies a constructive and active management strategy, investing in companies that offer significant potential for value creation through strategic, operational and financial improvements.


11

5. Consolidated H1 2015 financial results (unaudited)5.1. Presentation of results in accordance with IFRS

The simplified income statement in accordance with IFRS is as follows:

CHF millions H1 2015 H1 2014

Operating income 2'362.8 2'409.1 Operating expenses (2'153.3) (2'187.4)Other income and expenses 545.4 594.8

Operating profit 754.9 816.5 Dividends and interest from long-term investments 202.4 238.9 Other financial income and expenses 49.3 (221.0)Taxes (66.2) (75.5)Income from associates and joint ventures (86.3) 55.6

Consolidated net profit (before minority interests) 854.1 814.5 Attributable to minority interests 455.5 436.5

Attributable to Pargesa shareholders (Group share) 398.6 378.0

Average number of shares in circulation (thousands) 84'659 84'648

Basic earnings per share attributable to Pargesa shareholders (CHF) 4.71 4.47

Average EUR/CHF exchange rate 1.056 1.221

Operating income and operating expenses are primarily the revenues and operating expenses of Imerys, whose accounts are fully consolidated.

Other income and expenses includes net capital gains and losses and impairments or their reversals on Group shareholdings and operations. In H1 2015, this figure included an amount of +CHF 426 million, representing the partial reversal at 30 June 2015 of the impairment previously recorded by GBL on its holding in Lafarge. It also included the capital gain recorded on GBL’s sale of 0.1% of Total’s share capital, together with the capital gain recorded by GBL in H1 2015 following the delivery of Suez Environnement shares to bondholders who had exercised their right to exchange the bonds early. In H1 2014, this line item mainly represented the capital gain recorded on GBL’s sale of 0.4% of Total’s share capital and the capital gain recorded by GBL following the delivery of Suez Environnement shares to bondholders who exercised their right to exchange the bonds early.

The dividends and interest from long-term investments item comprises the net dividends received by the Group from its non-consolidated investments, mainly dividends from Total, SGS, Engie and Pernod Ricard.

The other financial income and expenses and taxes items provides consolidated figures for Pargesa, GBL and Imerys. The other financial

income and expenses item includes the non-cash impact of GBL’s derivative financial instruments being marked to market.

Income from associates and joint ventures represents the share of the consolidated net profit contributed by shareholdings accounted for in the Pargesa financial statements using the equity method. The H1 2015 figure mainly reflects Pargesa’s share of Lafarge’s loss.

The item minority interests mainly relates to the share of income due to the minority shareholders of GBL and Imerys, as these two companies are fully consolidated into the Pargesa Group financial statements.


12

5.2. Economic presentation of Pargesa financial results

In addition to the accounts drawn up in accordance with IFRS, Pargesa continues to publish an economic presentation of its results, in order to provide continuous information over the long term about the contribution of each of its major shareholdings to its results. IFRS require different accounting treatments depending on the Group’s percentage holding in each of its investments (full integration –mainly of Imerys-, equity method for Lafarge up to 30 June 2015, with other Group holdings being booked as financial instruments), so this continuous view would be interrupted without this additional economic presentation of the Group’s results.

The economic presentation shows, in terms of the Group’s share of results, the operating contribution of the main shareholdings to the consolidated income of Pargesa, together with the income from the operations of the holding companies (Pargesa and GBL), which highlight in particular the income from private-equity activities and other investment funds (i.e. GBL’s Financial Pillar, now combined under Sienna Capital) and the impact of net financial income. The analysis also draws a distinction between the operating and non-operating items in the income, the non-operating part being in particular composed of net capital gains and losses in connection with disposals and any restructuring costs and impairment or their reversal.

According to this approach, the economic results for H1 2015 were as follows:


Operating contribution of the main shareholdings

• Consolidated (Imerys) or equity-accounted (Lafarge):Imerys share of operating income 51.2 56.0 Lafarge share of operating income 12.5 14.7

• Non-consolidated:Total net dividend 40.4 50.1 SGS net dividend 37.3 39.6 Engie net dividend 12.7 19.8 Pernod Ricard net dividend 8.9 10.3 Suez Environnement net dividend 0.3 1.8

Operating contribution of the main shareholdings 163.3 192.3 per share (CHF) 1.93 2.27

Contribution from private-equity activities and other funds 0.7 11.0 Net financial income and expenses 51.9 (41.3)Other operating income from holding company activities 6.0 2.5 General expenses and taxes (14.7) (16.2)

Economic operating income 207.2 148.3 per share (CHF) 2.45 1.75

Non-operating income from consolidated or equity-accounted companies (76.2) (14.6)Non-operating income from holding company activities 267.6 244.3

Net income 398.6 378.0 per share (CHF) 4.71 4.47

Average number of shares in circulation (thousands) 84'659 84'648

Average EUR/CHF exchange rate 1.056 1.221

H1 2015 results were affected by the euro’s depreciation against the Swiss franc since the beginning of the year. Most income derives from GBL’s contribution, which is denominated in euros. The average EUR/CHF exchange rate in H1 2015 was 1.06, compared with 1.22 in H1 2014, a year-on-year decline of 13.6%.


13

Consolidated and equity-accounted holdings:

Imerys recorded an 11% rise in net income from current operations to EUR 174.7 million in H1 2015, compared with EUR 157.5 million in H1 2014. Net income stood at EUR 145.2 million (after non-recurring items of –EUR 29.5 million net of taxes), compared with EUR 131.5 million a year earlier (after non-recurring items of −EUR 26.0 million net of taxes). Pargesa’s share of Imerys’ operating income, in Swiss francs, was down 8.6% to CHF 51.2 million, mainly reflecting the dilution of the holding in Imerys, from 56.6% in H1 2014 to 53.4% in H1 2015, as well as the drop in the average EUR/CHF exchange rate.

At the level of Lafarge, growth in the construction sector was moderate, with trends varying across countries. Sales rose 5% but were flat at constant scope and exchange rates, and EBITDA was up 6%. Net income, however, came in at −EUR 477 million in H1 2015 (compared with +EUR 70 million in H1 2014). This was a result of non-recurring items including impairments on assets to be divested to CRH, costs related to the merger and other restructuring costs. Pargesa’s share of Lafarge’s operating contribution, in Swiss-franc terms, was CHF 12.5 million, compared with CHF 14.7 million in H1 2014.

Non-consolidated holdings:

The contributions from Total, SGS, Engie, Pernod Ricard and Suez Environnement represent Pargesa’s share of net dividends recorded by GBL from these companies.

Total declared a 2014 dividend of EUR 2.44 per share, an increase of 2.5%. The remaining 2014 dividend (EUR 0.61 per share) and the first interim dividend for 2015 (also EUR 0.61 per share) were recorded in Q2 2015. In H1 2015, Pargesa’s share amounted to CHF 40.4 million, a decrease on the year-earlier period, in part due to GBL’s sale of Total shares over the past 12 months.

As part of its new dividend policy, in Q2 2015 Engie announced that the remaining 2014 dividend would be EUR 0.50 per share, compared with EUR 0.67 per share a year earlier. Engie’s contribution was therefore CHF 12.7 million.

In Q2 2015, Pernod Ricard paid an interim dividend of EUR 0.82 per share, the same amount as a year earlier. Pargesa’s share was CHF 8.9 million; the remaining is due in the second half of the year.

SGS paid an annual dividend of CHF 68 per share, compared with CHF 65 per share in 2014. Pargesa’s share came to CHF 37.3 million. Even though SGS increased its dividend by 4.6%, there was a slight year-on-year decrease in the contribution from SGS, mainly because GBL had hedged the Swiss-franc-denominated SGS dividend before the Swiss National Bank removed the EUR/CHF floor in January 2015.

Contributions from holding company activities:

Contribution from private-equity activities and other investment funds represents primarily the contribution from the funds held for the most part by GBL’s Financial Pillar (Sienna Capital), as well as general expenses relating to these funds (including management fees). In H1 2015, the net contribution of CHF 0.7 million included Pargesa’s CHF 7.8 million share of the gain realised by ECP II on the disposal of its majority holding in Joris Ide. In H1 2014, the net contribution amounted to CHF 11.0 million, driven by Pargesa’s CHF 16.6 million share of the capital gain recorded by Ergon on its disposal in early 2014 of its holding in Zellbios, a leader in the production of active pharmaceutical ingredients.


14

Net financial income and expenses includes interest income and expenses as well as other financial income and expenses, including the marking to market of derivative financial instruments. It stood at +CHF 51.9 million in H1 2015, compared with −CHF 41.3 million in H1 2014.

This item includes non-cash impacts relating to the derivative instruments implicitly embedded in the bonds exchangeable for Suez Environnement and Engie shares or convertible into GBL shares. At 30 June 2015, Pargesa’s share of these non-cash impacts was +CHF 42.5 million (−CHF 26.2 million in H1 2014) and comprised:

• +CHF 36.1 million (−CHF 81.2 million in H1 2014), relating to the marking to market of the derivative instruments implicitly embedded in outstanding exchangeable and convertible bonds, mainly as a result of changes in the stock market prices of the shares underlying the bonds;

• +CHF 6.4 million (+CHF 55 million in H1 2014), representing the reversal, recorded when the bonds are converted, of the cumulative negative value adjustments on the derivatives implicitly embedded in the bonds exchangeable for Suez Environnement shares recorded since the corresponding bonds were issued (85% of the bonds were converted in H1 2014, and almost all remaining bonds were converted in H1 2015).

As mentioned at end-2013 and throughout 2014, exchangeable and convertible bonds lead to accounting asymmetry and volatility in reported financial results throughout the bonds’ lifetime. This is clearly illustrated in the figures for H1 2015.

Net financial income also included CHF 20.7 million relating to the marking to market of the forward contracts for the sale of Total shares mentioned above. The value adjustments recorded on these contracts will be reversed when the contracts expire in Q4 2015.

Other operating income from holding company activities mainly comprises Pargesa’s share of net dividends booked by GBL on its incubator-type investments.

The general expenses and taxes line item represents Pargesa’s general expenses and taxes as well as its share of those of GBL.

Non-operating income: Non-operating income from consolidated or equity-accounted companies comprises Pargesa’s share of the non-operating income of Imerys and Lafarge. In H1 2015, non-operating income included Pargesa’s share of impairments and restructuring costs and of costs booked by Lafarge as a result of the merger with Holcim.

Net non-operating income from holding company activities was CHF 267.6 million, compared with CHF 244.3 million in H1 2014.

H1 2015 non-operating income mainly included:

• Pargesa’s CHF 221.1 million share of the partial reversal at 30 June 2015 of the impairment previously recorded by GBL on its holding in Lafarge;

• Pargesa’s CHF 34.3 million share of the capital gain on GBL’s sale of 1.8 million Total shares, including an historical exchange-rate gain of CHF 11.2 million for Pargesa.

• Pargesa’s CHF 13.8 million share of the net gain (including an historical exchange-rate gain of CHF 8.4 million for Pargesa) recorded in H1 2015 on the delivery of 4.8 million Suez Environnement shares (1.0% of the share capital of Suez Environnement) to bondholders who exercised their exchange rights early.

H1 2014 non-operating income of CHF 244.3 million mainly consisted of Pargesa’s CHF 168.7 million share of the income from GBL’s sale of 0.4% of the share capital of Total, and Pargesa’s CHF 74.2 million share of the net gain recorded in Q2 2014 on the delivery of 29.8 million Suez Environnement shares to bondholders who exercised their exchange rights early and the subsequent cancelling of the corresponding debt.


15

6. Outlook for 2015 as a wholeSome net dividends from available-for-sale financial assets were recorded in the first half of the year, while some interim and remaining dividends (mainly from Total, Engie, Pernod Ricard and Umicore) are expected to be paid in the second half of 2015.

Annual income will also be affected by fair value adjustments on financial instruments, by contributions in the second half from associates and consolidated companies (mainly Imerys), and by income on any disposals or fair value adjustments.

Finally, the consolidated results for FY 2015 will reflect the impact of the deconsolidation of Lafarge, and record a net gain of EUR 89 million for GBL, which will be recognised in Q3 2015. In Q4 2015, GBL will record a EUR 240 million gain on the sale of Total shares resulting from forward contracts.

7. Adjusted net asset valuePargesa’s flow-through adjusted net asset value, which is calculated on the basis of the current market values and exchange rates for the listed shareholdings, and on the book value of consolidated shareholders’ equity (or fair value for private-equity activities) and current exchange rates for unlisted investments, was CHF 94.8 per share at 30 June 2015. It is broken down as follows:

Pargesa's flow-through adjusted net asset value at 30 June 2015

CHF millions % of capital% of economic

interestShare price

and currencyFlow-through

valueWeighting as

a % of total

Lafarge 21.0% 10.5% EUR 59.2 1'871 23% Total (1) 2.9% 1.5% EUR 43.6 1'589 20% Imerys 53.2% 26.6% EUR 68.6 1'533 19% Pernod Ricard 7.5% 3.8% EUR 103.6 1'075 13% SGS 15.0% 7.5% CHF 1'706 1'002 12% Engie (2) 2.3% 1.2% EUR 16.6 475 6% Suez Environnement 0.1% 0.05% EUR 11.5 (3) 2 0%

Incubator investments 580 7% Financial Pillar 382 5%

Total portfolio 8'509 106% GBL treasury shares 226 3% Net cash (debt) (707) (9%)

Adjusted net asset value 8'029 100%

per Pargesa share CHF 62.9 94.8

EUR/CHF exchange rate 1.043

(1) The percentage of capital and the value of the Total holding used in calculating the adjusted net asset value do not include forward contracts (affecting 10.3 million shares) that will expire in Q4 2015. The fair value of these contracts is recorded in the Net cash(debt) item.

(2) The percentage of capital in Engie includes shares held as treasury investments (0.1% of the total), representing dividends received in the form of shares in 2012.

(3) At 30 June 2015, the value of the shareholding in Suez Environnement was capped at the conversion price for the exchangeable bonds (EUR 11.45), which was lower than the share price on that date.

Pargesa’s flow-through adjusted net asset value is published every week on the Pargesa website.

8. Data per share and stock market performance

CHF per share 2011 2012 2013 2014 30.06.2015

Share price at the end of the period 61.50 62.65 71.90 77.05 62.90Average share price 74.37 61.66 67.07 76.55 68.27Adjusted net asset value at the end of the period 78.99 90.36 104.20 104.85 94.84Gross dividend attributed for the period 2.57 2.57 2.64 2.27 n.a.(Average) gross yield 3.5 % 4.2 % 3.9 % 3.0%


16

2010 2011 2012 2013 2014

40

50

60

70

80

90

100

110

120

130

140

150

2015

Market price CHF Flow-through adjusted net asset value CHF Relative SPI CHF


1717

Consolidated financial statements

9 - CONSOLIDATED FINANCIAL STATEMENTS

AT 30 JUNE 2015(UNAUDITED)


1818



1919

Contents

Consolidated income statement and Consolidated statement of comprehensive incomeConsolidated balance sheetConsolidated cash flow statementConsolidated statement of changes in equity

Notes to the half-yearly consolidated financial statements 1 Accounting policies 2 Segment reporting 3 Other operating income and expenses 4 Financial instruments 5 Dividends and net interest from available-for-sale financial assets 6 Other financial income and expenses 7 Available-for-sale financial assets 8 Financial debt 9 Restructuring costs10 Impairment of assets and impairment reversals11 Acquisitions and disposals of subsidiaries12 Investments in associates and joint ventures13 Share capital and treasury shares14 Dividend paid by Pargesa Holding SA15 Share-based payments16 Important events taking place after the closing date



2020

Consolidated income statementNote H1 2015 H1 2014

CHF millions CHF millions

Revenue 2 2’301.4 2’361.8Other operating income 33.0 28.5Changes in inventory 28.4 18.8Raw materials, goods intended for resale and consumables (779.2) (798.4)Staff costs (507.7) (515.1)Amortisation of tangible and intangible assets (135.8) (134.2)Other operating expenses (730.6) (739.7)Other operating income and expenses 3 545.4 594.8Operating profit 754.9 816.5

Dividends and net interest from available-for-sale financial assets 5 202.4 238.9Other financial income 6 127.3 12.5Other financial expenses 6 (78.0) (233.5)Financial profit 251.7 17.9

Operating and financial profit 1’006.6 834.4

Income from associates and joint ventures 12 (86.3) 55.6Net profit before tax 920.3 890.0

Income taxes (66.2) (75.5)

Net profit for the period (including minority interests) 854.1 814.5

- attributable to non-controlling interests 455.5 436.5- attributable to Pargesa shareholders (Group share) 398.6 378.0

Basic net earnings per share in CHF (Group share) 4.71 4.47

Diluted net earnings per share in CHF (Group share) 4.68 4.47

Consolidated statement of comprehensive incomeNote H1 2015 H1 2014


Net profit for the period (including minority interests) 854.1 814.5

Other comprehensive income

Items not subsequently reclassified as income

Actuarial gains/losses 54.1 (41.5)Share of other comprehensive income of associates and joint ventures 3.5 (32.4)Total items not subsequently reclassified as income (1) 57.6 (73.9)

Items that are or may be subsequently reclassified as income

Change in fair value of available-for-sale financial assets 91.5 716.8Change in hedging reserve 0.7 3.0Translation difference (2’183.8) (112.7)Share of other comprehensive income of associates and joint ventures 111.3 33.9Total items that are or may be subsequently reclassified as income (2) (1’980.3) 641.0

Total other comprehensive income (1’922.7) 567.1

Total comprehensive income for the period (including minority interests) (1’068.6) 1’381.6

- attributable to non-controlling interests (560.2) 701.2- attributable to Pargesa shareholders (Group share) (508.4) 680.4

(1) including −CHF 13.4 million in taxes in H1 2015 (+CHF 13.4 million in H1 2014))(2) including +CHF 10.5 million in taxes in H1 2015 (−CHF 1.5 million in H1 2014)



2121

Consolidated balance sheetASSETS Note 30.06.2015 31.12.2014


Long-term assets

Intangible assets 227.7 243.5Goodwill 11 2’161.8 1’583.0Tangible assets 2’329.0 2’415.2Investments in associates and joint ventures 12 308.2 4’224.7Available-for-sale financial assets 7 9’824.4 10’452.1Deferred tax assets 62.4 50.0Other long-term financial assets 245.4 102.9Other long-term non-financial assets 10.2 10.8

Total long-term assets 15’169.1 19’082.2

Short-term assets

Inventories 854.6 839.2Trade receivables 763.1 713.1Financial assets held for trading 644.2 997.2Cash and cash equivalents 899.1 1’778.7Other short-term financial assets 185.0 272.0Other short-term non-financial assets 283.3 253.5Assets held for sale 12 3’742.4 -Total short-term assets 7’371.7 4’853.7

TOTAL ASSETS 22’540.8 23’935.9

LIABILITIES AND EQUITY Note 30.06.2015 31.12.2014CHF millions CHF millions

Equity

Share capital 13 1’698.7 1’698.7Share premium reserve 256.6 256.6Treasury shares 13 (5.5) (5.5)Revaluation and hedging reserve 1’988.1 1’936.9Translation reserve (4’290.4) (3’317.5)Consolidated reserves 7’418.4 7’155.8Equity attributable to the Group 7’065.9 7’725.0Equity attributable to non-controlling interests 8’774.4 9’315.9Total equity (including minority interests) 15’840.3 17’040.9

Long-term liabilities

Provisions 305.8 315.1Pension liabilities and similar benefits 312.4 396.9Deferred tax liabilities 105.7 92.7Financial debt 8 4’128.8 4’451.0Other long-term financial liabilities 113.7 223.6Other long-term non-financial liabilities 49.1 14.6Total long-term liabilities 5’015.5 5’493.9

Short-term liabilities

Provisions 21.8 29.2Trade payables 569.4 540.8Income tax payable 86.3 76.2Financial debt due within the year 8 570.5 248.7Other short-term financial liabilities 115.5 102.6Other short-term non-financial liabilities 321.5 403.6Total short-term liabilities 1’685.0 1’401.1

TOTAL LIABILITIES AND EQUITY 22’540.8 23’935.9



2222

Consolidated cash flow statement

Note H1 2015 H1 2014


OPERATING ACTIVITIESNet profit before tax 920.3 890.0Adjusted for:Income from associates and joint ventures 86.3 (55.6)Dividends received from associates and joint ventures 85.2 1.0Dividends recognised on available-for-sale financial assets (202.4) (238.9)Dividends received on available-for-sale financial assets 139.1 223.2Profit/loss from the sale of tangible and intangible assets (1.2) (1.8)Profit/loss from the sale of available-for-sale financial assets (114.6) (582.9)Profit/loss from the sale of subsidiaries (1.9) (50.2)Amortisation, impairment, provisions and negative goodwill (277.4) 211.9Miscellaneous items of income not involving cash movements (93.8) 142.7Interest income (14.6) (12.5)Interest expenses 67.7 92.9Operating cash flow before changes in working capital and provisions 592.7 619.8Changes in working capital and provisions 207.2 (60.8)Cash from operating activities 799.9 559.0Income taxes paid (29.8) (81.9)Cash flows from operations 770.1 477.1

INVESTMENT ACTIVITIES

Acquisitions of subsidiaries, net of cash acquired 11 (402.3) (43.8)Disposals of subsidiaries, net of cash paid 10.8 85.5Acquisitions of associates and joint ventures (7.2) (63.4)

Disposals of associates and joint ventures 40.5 -Acquisitions of tangible and intangible assets (135.2) (137.9)Disposals of tangible and intangible assets 2.4 3.4Long-term advances granted (157.4) -Repayments of long-term advances granted - 3.0Acquisitions of available-for-sale financial assets (664.1) (163.2)Disposals of available-for-sale financial assets 89.5 518.2Cash flows from investments (1’223.0) 201.8

FINANCING ACTIVITIES

Reserve shares put into circulation by the parent company - 0.8Share issue/capital reduction by subsidiaries (share of non-controlling interests) 89.5 31.1Additional/partial acquisitions and disposals in existing subsidiaries 3.7 10.6Long-term financial debt taken out 302.2 113.6Interest received 7.9 13.4Interest paid (51.6) (78.2)Dividend paid by parent company to shareholders 14 (192.2) (223.5)Dividends paid by subsidiaries to minority shareholders (285.0) (314.5)Repayment of long-term debt and finance lease debt (360.0) (841.9)Short-term financial debt taken out 289.3 303.3Short-term financial debt repaid (12.1) (27.2)Cash flows from financing (208.3) (1’012.5)

Effect of exchange rate variation (218.4) (5.8)Effect of changes in the scope of consolidation - 1.1

Increase/decrease in cash and cash equivalents (879.6) (338.3)

Cash and cash equivalents at 1 January 1’778.7 1’543.6

Cash and cash equivalents at 30 June 899.1 1’205.3



2323

Consolidated statement of changes in equity

CHF millionsShare

capital

Share premium

reserveTreasury

shares

Revaluation and hedging

reserveTranslation

reserve

Consoli- dated

reserve

Group share

of equity

Non- controlling

interestsTotal

equity

1 January 2014 1’698.7 256.1 (5.8) 2’145.9 (3’362.2) 6’812.3 7’545.0 9’094.6 16’639.6

H1 2014 net profit - - - - - 378.0 378.0 436.5 814.5

Change in fair value of available-for-sale financial assets - - - 387.9 - (12.1) 375.8 341.0 716.8

Change in hedging reserve - - - 0.9 - - 0.9 2.1 3.0

Translation reserve - - - - (63.0) - (63.0) (49.7) (112.7)

Actuarial gains/losses - - - - - (12.0) (12.0) (29.5) (41.5)

Share of other comprehensive income of associates and joint ventures - - - - 17.6 (16.9) 0.7 0.8 1.5

Other comprehensive income - - - 388.8 (45.4) (41.0) 302.4 264.7 567.1

H1 2014 total comprehensive income - - - 388.8 (45.4) 337.0 680.4 701.2 1’381.6

Dividend paid by parent company - - - - - (223.5) (223.5) - (223.5)

Dividends paid by subsidiaries - - - - - - - (314.5) (314.5)

Reserve shares put into circulation - 0.5 0.3 - - - 0.8 - 0.8

Other changes in equity (1) - - - - - 4.8 4.8 9.8 14.6

Effects of changes in scope and capital increases on non-controlling interests - - - - - (6.5) (6.5) 16.9 10.4

Changes in items other than total comprehensive income - 0.5 0.3 - - (225.2) (224.4) (287.8) (512.2)

Total changes in H1 2014 - 0.5 0.3 388.8 (45.4) 111.8 456.0 413.4 869.4

30 June 2014 1’698.7 256.6 (5.5) 2’534.7 (3’407.6) 6’924.1 8’001.0 9’508.0 17’509.0

1 January 2015 1’698.7 256.6 (5.5) 1’936.9 (3’317.5) 7’155.8 7’725.0 9’315.9 17’040.9

H1 2015 net profit - - - - - 398.6 398.6 455.5 854.1

Change in fair value of available-for-sale financial assets - - - 50.6 - (2.3) 48.3 43.2 91.5

Change in hedging reserve - - - 0.2 - - 0.2 0.5 0.7

Translation reserve - - - - (1’030.2) - (1’030.2) (1’153.6) (2’183.8)

Actuarial gains/losses - - - - - 15.1 15.1 39.0 54.1

Share of other comprehensive income of associates and joint ventures - - - 0.4 57.3 1.9 59.6 55.2 114.8

Other comprehensive income - - - 51.2 (972.9) 14.7 (907.0) (1’015.7) (1’922.7)

H1 2015 total comprehensive income - - - 51.2 (972.9) 413.3 (508.4) (560.2) (1’068.6)

Dividend paid by parent company - - - - - (192.2) (192.2) - (192.2)

Dividends paid by subsidiaries - - - - - - - (285.0) (285.0)

Other changes in equity (1) - - - - - (2.3) (2.3) (5.1) (7.4)

Effects of changes in scope and capital increases on non-controlling interests (2 - - - - - 43.8 43.8 308.8 352.6

Changes in items other than total comprehensive income - - - - - (150.7) (150.7) 18.7 (132.0)

Total changes in H1 2015 - - - 51.2 (972.9) 262.6 (659.1) (541.5) (1’200.6)

30 June 2015 1’698.7 256.6 (5.5) 1’988.1 (4’290.4) 7’418.4 7’065.9 8’774.4 15’840.3

(1) these lines mainly comprise various changes originating in subsidiaries, especially the cost of share-based payments at GBL and Imerys, as well as changes originating in GBL’s equity-accounted shareholdings

(2) in 2015 this item mainly comprised the impact of the dilution of GBL’s holding in Imerys, from 56.5% at end-2014 to 53.2% at 30 June 2015, which was primarily the result of the Imerys capital increase relating to the acquisition of S&B, with +CHF 43.1 million attributable to the Group and +CHF 266.1 million attributable to minority interests (see note 11); the item also included minority interests of CHF 38.6 million following the acquisition of Golden Goose (see note 11)



2424

Notes to the half-yearly consolidated financial statements

Note 1 - Accounting policiesPARGESA HOLDING SA («the Company»), 11 Grand-Rue, 1204 Geneva, Switzerland, is recorded in the Commercial Register of the Canton of Geneva. Its main purpose is the purchase, sale, administration and management, in Switzerland and abroad, of investments of a financial, commercial and industrial nature.

The half-yearly consolidated accounts of the Company for the accounting period ending 30 June 2015 bring together the Company and the subsidiaries it controls («the Group») and the Group’s interests in associated undertakings and joint ventures. The Company’s Board of Directors authorised the publication of the consolidated accounts for the first half of 2015 at its meeting held on 30 July 2015.

Accounting principles and basis of consolidation

The unaudited half-yearly consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) and comply with International Accounting Standard (IAS) 34 «Interim Financial Reporting». The half-yearly financial statements are presented in condensed form and must be read in conjunction with the annual financial statements at 31 December 2014.

The accounting procedures and computing methods used in the preparation of the interim financial statements are the same as those used for the 2014 consolidated financial statements, with the exception of those referred to in the section «Changes in accounting principles and methods».

Changes in accounting principles and methods

The following amendments and improvements, which came into effect in 2015, apply to the accounting for, and the measurement and presentation of transactions, events or conditions existing in the Group, but were not applied in advance at 31 December 2014:

Standard Application date

Amendments to IAS 19 Employee benefits - Employee contributions 01.07.14Annual improvements 2010 - 2012 cycle 01.07.14Annual improvements 2011 - 2013 cycle 01.07.14

These amendments and improvements had no significant impact on the accounts at 30 June 2015.

Changes in the scope of consolidation

In H1 2015, Imerys acquired 100% of the voting rights concerning the main industrial minerals activities of Greek group S&B. GBL’s holding in Imerys was diluted, from 56.5% at end-December 2014 to 53.2% at end-June 2015.On 19 May 2015, Ergon Capital Partners III acquired an indirect majority stake in Golden Goose.Lafarge, which had been accounted for under the equity method until June 30, 2015, was accounted for as «Asset held for sale» as of that date. (See notes 11 and 12 for more details)

Rates of exchange

The following rates of exchange were used in the translation of the half-yearly consolidated accounts:

Closing rate of exchange Average rate of exchange30.06.2015 31.12.2014 30.06.2014 H1 2015 FY 2014 H1 2014

EUR / CHF 1.0430 1.2026 1.2143 1.0556 1.2144 1.2212



2525

Seasonality

Some net dividends from available-for-sale financial assets are recorded in the first half of the year. Interim and final dividends (mainly from Total, ENGIE, Pernod Ricard and Umicore) are also expected to be paid in the second half of 2015.Annual income will also be affected by fair value adjustments on financial instruments, by contributions in the second half from associates and consolidated companies (mainly Imerys), and by the results of any disposals or fair value adjustments.Finally, the consolidated results for FY 2015 will reflect the final impact of the deconsolidation of Lafarge, which will be recognised in the income statement in Q3 2015. GBL will also record a gain on the disposal of Total shares resulting from forward contracts, which will be booked in Q4 2015 (see note 16).

Note 2 – Segment reporting

The Group’s business is subdivided into two segments: Holdings and Imerys.

The Holdings segment groups together Pargesa and GBL, a company listed on NYSE Euronext Brussels, and their wholly-owned subsidiaries and private equity funds. The main purpose of the group of companies in the Holdings segment is the management of investments.

The Imerys segment comprises the Imerys group, which holds leading positions in each of its four business groups:

• the Energy Solutions & Specialties business group: functional additives used in construction (e.g. plastics, paints, etc.), paper production, monolithic refractory products used for protecting high temperature industrial equipment (steel works, foundries, petrochemical plants, glass, cement, etc.) and specialty mineral for mobile energy markets, electronics and unconventional oil exploration;

• Filtration & Performance Additives: mineral agents for the filtration of food liquids, mineral specialties for plastics, paints, polymers and paper used in construction, consumer goods (e.g. food and drink, magazines, packaging, pharmaceutical products, and health and beauty products) and durable goods (particularly cars);

• Ceramic Materials: clay roof tiles, and minerals for tiles, sanitaryware, tableware, technical ceramics paints, plastics and paper;

• High Resistance Minerals: fused minerals for abrasives (tools for cutting, grinding and polishing) and minerals for refractories used in high temperature industries (e.g. steelmaking, casting, energy generating, etc.).

Imerys is listed on NYSE Euronext Paris.



2626


Segment analysis by business

H1 2015 income by segment

CHF millions Holdings Imerys TotalRevenue 129.7 2’171.7 2’301.4Other operating income 7.5 25.5 33.0Changes in inventory 0.1 28.3 28.4Raw materials, goods intended for resale and consumables (48.3) (730.9) (779.2)Staff costs (52.2) (455.5) (507.7)Amortisation of tangible and intangible assets (14.5) (121.3) (135.8)Other operating expenses (52.5) (678.1) (730.6)Other operating income and expenses 544.7 0.7 545.4Operating profit 514.5 240.4 754.9Dividends and net interest from available-for-sale financial assets 202.4 - 202.4Other financial income 113.1 14.2 127.3Other financial expenses (39.0) (39.0) (78.0)Financial profit 276.5 (24.8) 251.7Operating and financial profit 791.0 215.6 1’006.6Income from associates and joint ventures (90.2) 3.9 (86.3)Net profit before tax 700.8 219.5 920.3Income taxes (1.7) (64.5) (66.2)Net profit for the period (including minority interests) 699.1 155.0 854.1

Other information:Impairment of tangible assets - (12.5) (12.5)Impairment (reversal) on investments, operations, goodwill, intangible assets and negative goodwill 420.9 (0.6) 420.3Capital gains/losses on investments and operations 123.8 1.3 125.1Interest income 10.3 4.3 14.6Interest expenses (34.8) (32.9) (67.7)

Balance sheet at 30 June 2014

CHF millions Holdings Imerys TotalLong-term assets 10’700.5 4’468.6 15’169.1- of which investments in associates and joint ventures 165.2 143.0 308.2Short-term assets 5’141.7 2’230.0 7’371.7Total assets 15’842.2 6’698.6 22’540.8Long-term liabilities 2’745.4 2’270.1 5’015.5Short-term liabilities 319.5 1’365.5 1’685.0Total liabilities 3’064.9 3’635.6 6’700.5


2727

H1 2014 income by segment

CHF millions Holdings Imerys TotalRevenue 117.4 2’244.4 2’361.8Other operating income 3.8 24.7 28.5Changes in inventory 2.0 16.8 18.8Raw materials, goods intended for resale and consumables (46.5) (751.9) (798.4)Staff costs (49.6) (465.5) (515.1)Amortisation of tangible and intangible assets (11.4) (122.8) (134.2)Other operating expenses (46.6) (693.1) (739.7)Other operating income and expenses 580.3 14.5 594.8Operating profit 549.4 267.1 816.5Dividends and net interest from available-for-sale financial assets 238.9 - 238.9Other financial income 9.2 3.3 12.5Other financial expenses (194.5) (39.0) (233.5)Financial profit 53.6 (35.7) 17.9Operating and financial profit 603.0 231.4 834.4Income from associates and joint ventures 52.5 3.1 55.6Net profit before tax 655.5 234.5 890.0Income taxes (1.7) (73.8) (75.5)Net profit for the period (including minority interests) 653.8 160.7 814.5

Other information:Impairment of tangible assets - (10.6) (10.6)Impairment (reversal) on investments, operations, goodwill, intangible assets and negative goodwill (3.5) (34.8) (38.3)Capital gains/losses on investments and operations 583.8 49.3 633.1Interest income 9.2 3.3 12.5Interest expenses (64.7) (28.2) (92.9)

Balance sheet at 31 December 2014

CHF millions Holdings Imerys TotalLong-term assets 15’063.8 4’018.4 19’082.2- of which investments in associates and joint ventures 4’124.6 100.1 4’224.7Short-term assets 2’351.1 2’502.6 4’853.7Total assets 17’414.9 6’521.0 23’935.9Long-term liabilities 2’942.5 2’551.4 5’493.9Short-term liabilities 402.6 998.5 1’401.1Total liabilities 3’345.1 3’549.9 6’895.0

Revenue comes mainly from Imerys and can be broken down as follows:

CHF millions H1 2015 H1 2014Sale of goods 2’032.1 2’046.1Rendering of services 269.3 315.7Total 2’301.4 2’361.8

Revenue from ordinary operations resulting from transactions between Imerys and each of its external clients never exceeds 10% of the revenue from the ordinary operations of the Imerys group.



2828

Note 3 - Other operating income and expenses

Capital gains/losses and impairments on investments and operations

CHF millions H1 2015 H1 2014Capital gain on disposal of Total shares at GBL 44.4 253.3Translation difference on the reversal of the Total revaluation reserve at Pargesa 21.7 72.3Capital gain on disposal of Suez Environnement shares at GBL 37.3 177.4Translation difference on the reversal of the Suez Environnement revaluation reserve at Pargesa 16.3 77.8Impairment reversal on Lafarge at GBL (see note 12) 425.5 - Impairment on private equity funds at Pargesa and GBL - (3.7)Goodwill impairment at Imerys (0.5) (36.8)Miscellaneous 0.7 54.5Total 545.4 594.8

In H1 2015, in addition to the CHF 44.4 million capital gain on the disposal of Total shares at GBL, Pargesa recorded an historical exchange rate gain of CHF 21.7 million as a result of the reversal of the Total revaluation reserve at Pargesa. Pargesa also recorded an historical exchange rate gain of CHF 16.3 million as a result of the reversal of the Suez Environnement revaluation reserve at Pargesa, in addition to the CHF 37.3 million gain on the delivery of Suez Environnement shares following the partial redemption of the Suez Environnement exchangeable bond at GBL.Impairment reversal on Lafarge represents GBL’s partial impairment reversal on Lafarge, pursuant to IFRS 5, which amounted to EUR 403 million (CHF 425.5 million). The reversal is a result of the fair valuation at 30 June 2015 of the holding in Lafarge, which was previously accounted for using the equity method (see note 12).

Note 4 - Financial instruments

Financial asset and liability categories at carrying amount - Comparison between carrying amount and fair value

CHF millions30.06.2015 30.06.2015 31.12.2014 31.12.2014

Carrying amount Fair value Carrying amount Fair valueAvailable-for-sale financial assets (see note 7) 9’824.4 9’824.4 10’452.1 10’452.1Other long-term financial assets 245.4 245.4 102.9 102.9Trade receivables 763.1 763.1 713.1 713.1Financial assets held for trading 644.2 644.2 997.2 997.2Cash and cash equivalents 899.1 899.1 1’778.7 1’778.7Other short-term financial assets 185.0 185.0 272.0 272.0Total financial assets 12’561.2 12’561.2 14’316.0 14’316.0Financial debt (see note 8) (4’128.8) (4’417.8) (4’451.0) (4’872.1)Other long-term financial liabilities (113.7) (113.7) (223.6) (223.6)Trade payables (569.4) (569.4) (540.8) (540.8)Financial debt due within the year (see note 8) (570.5) (570.5) (248.7) (264.7)Other short-term financial liabilities (115.5) (115.5) (102.6) (102.6)Total financial liabilities (5’497.9) (5’786.9) (5’566.7) (6’003.8)Total 7’063.3 6’774.3 8’749.3 8’312.2



2929

Valuation at fair value of financial assets/liabilities in the 3-level fair value hierarchy(financial assets and liabilities carried at fair value on the closing date)

30.06.2015CHF millions Level 1 Level 2 Level 3 Total

Available-for-sale financial assets 9’446.5 - 377.9 9’824.4Other long-term financial assets - 11.0 - 11.0Financial assets held for trading 644.0 - 0.2 644.2Other short-term financial assets - 46.3 - 46.3Total financial assets carried at fair value 10’090.5 57.3 378.1 10’525.9Financial debt - (8.8) - (8.8)Other long-term financial liabilities - (109.3) - (109.3)Financial debt due within the year - (0.9) - (0.9)Other short-term financial liabilities - (22.2) - (22.2)Total financial liabilities carried at fair value - (141.2) - (141.2)

30.06.2014CHF millions Level 1 Level 2 Level 3 Total

Available-for-sale financial assets 10'302.9 - 149.2 10'452.1Other long-term financial assets - 14.1 - 14.1Financial assets held for trading 997.2 - - 997.2Other short-term financial assets - 7.3 - 7.3Total financial assets carried at fair value 11'300.1 21.4 149.2 11'470.7Financial debt - (10.0) - (10.0)Other long-term financial liabilities - (215.3) - (215.3)Financial debt due within the year (4.3) - (4.3)Other short-term financial liabilities - (56.4) - (56.4)Total financial liabilities carried at fair value - (286.0) - (286.0)

During H1 2015 and FY 2014, there were no significant transfers between the various levels.

The tables above present the valuation of the financial assets/liabilities in a fair value hierarchy that reflects the importance of the data used for the measurements. This fair value hierarchy is as follows :

• Level 1 : quoted prices (unadjusted) in active markets for identical assets or liabilities;

• Level 2 : inputs other than quoted prices included within level 1 that are observable for the asset or liabilites, either directly (i.e. as prices) or indirectly (i.e. derived from prices);;

• Level 3 : inputs for the asset or liability that are not based on observable market data (unobservable inputs).



3030


Change in level 3 available-for-sale financial assets

CHF millions 30.06.2015 31.12.2014Balance at 1 January 149.2 167.0Acquisitions 232.2 17.7Disposals - (60.6)Profits and losses recognised in equity 17.4 11.9Profits and losses recognised in the income statement (1.5) (0.9)Other (19.4) 14.1Balance at 30 June / 31 December 377.9 149.2

Note 5 - Dividends and net interest from available-for-sale financial assets

CHF millions H1 2015 H 1 2014Total dividend 77.8 96.5SGS dividend 70.8 76.1ENGIE dividend (formerly GDF Suez) Pernod Ricard dividend 24.5 38.0Suez Environnement dividend 17.2 19.9Umicore dividend 0.5 3.5

Other dividends and interest 7.7 4.9Total 3.9 - Total 202.4 238.9

In H1 2015, GDF Suez changed its name to ENGIE.

Note 6 - Other financial income and expensesThe income statement line items «Other financial income» and «Other financial expenses» are mainly comprised of interest income and expenses as well as results from financial trading and derivatives.

At 30 June 2015, other financial income and expenses included the positive impact of +CHF 69.5 million of GBL’s marking to market of derivative instruments embedded in the bonds exchangeable for Suez Environnement and ENGIE shares or convertible into GBL shares (–CHF 156.2 million in H1 2014). This non-cash gain of CHF 69.5 million was a result of the change in value of the call options on shares implicitly embedded in exchangeable and convertible bonds issued by GBL in 2012 and 2013. Under IFRS, changes in the fair value of these derivative instruments must be recorded in the income statement, while changes in the value of the corresponding Suez Environnement and Engie shares held by GBL to cover the exchangeable bonds are recorded directly in equity and do not appear on the income statement, except in the event of impairment or if the shares are sold. Own equity shares held by GBL to cover the convertible bonds are deducted from equity in the consolidated accounts.

The fair valuation of derivative instruments at 30 June 2015 included, for an amount of EUR 38 million (CHF 40 million), forward contracts for the sale of Total shares, which will expire in December 2015.

Following the redemption of the bonds exchangeable for Suez Environnement shares (see note 8), other financial income and expenses in H1 2015 also included the cancellation, on a pro-rata basis, of the derivatives embedded in the exchangeable bonds and recorded as a liability on the balance sheet. This produced a book-entry gain of CHF 15.2 million on the income statement. The cancellation of the debt, which was also recognised as a liability on the balance sheet, resulted in a charge of CHF 29.8 million, which was also included under other financial income and expenses.


3131

Note 7 - Available-for-sale financial assets

CHF millions TotalPernod Ricard SGS Engie * Umicore Ontex

Suez Environ- nement

Fonds de private equity Other Total

Fair value at 1st January 2014 4’686.2 2’022.1 2’407.8 1’147.1 280.0 - 559.7 149.9 46.2 11’299.0

Acquisitions - - - - 295.9 - - 17.7 108.6 422.2Disposals at acquisition price (383.8) - - - - - (358.0) (60.6) (57.2) (859.6)Change in fair value (534.6) 226.1 40.4 153.5 (10.0) - (104.3) 11.9 (9.8) (226.8)(Impairment)/impairment reversal - - - - - - - (3.6) 35.2 31.6Translation difference (91.0) (40.9) (48.7) (23.2) (8.5) - (7.8) (2.0) (1.5) (223.6)Other (7.0) - - - - - - 17.0 (0.7) 9.3Fair value at 31 December 2014 3’669.8 2’207.3 2’399.5 1’277.4 557.4 - 89.6 130.3 120.8 10’452.1

Acquisitions - - 2.9 - 32.3 136.9 - 234.2 261.5 667.8Disposals at acquisition price (43.7) - - - - - (50.5) - - (94.2)Change in fair value (6.5) 218.3 (79.5) (159.1) 137.8 5.9 (22.3) 17.6 18.8 131.0(Impairment)/impairment reversal - - - - - - - - (2.5) (2.5)Translation difference (486.5) (292.9) (318.5) (169.5) (74.4) (1.6) (11.3) (17.1) (18.1) (1’389.9)Other 45.2 17.0 - - - - - (2.1) - 60.1Fair value at 30 June 2015 3’178.3 2’149.7 2’004.4 948.8 653.1 141.2 5.5 362.9 380.5 9’824.4

* formerly GDF Suez

Total, Pernod Ricard, SGS, Engie, Umicore, Ontex and Suez Environnement are GBL holdings. These shares, which are all listed in euros (with the exception of SGS, which is listed in Swiss francs), are shown in the financial statements at fair value, which corresponds to the value in Swiss francs of their market price on the reference date.The «Private equity funds» column includes the Group’s investments in the funds Sagard, Mérieux Participations I and PrimeStone. These funds are recorded in the accounts at their fair value on the reference date. The «Other» column mainly comprised Adidas shares at 30 June 2015.Acquisitions in H1 2015 amounting to CHF 667.8 million included GBL’s further purchases of Umicore shares (at 30 June 2015 GBL held 13.1% of Umicore’s capital and voting rights) and purchases of shares in Adidas, Europe’s largest sportswear manufacturer (GBL held 2.4% of Adidas at 30 June 2015). In Q1 2015, GBL also continued to expand its portfolio of incubator investments, acquiring for EUR 129.7 million (CHF 136.9 million) a 7.4% stake in the capital of listed Belgian group Ontex, a leading global provider of disposable hygiene products. Acquisitions during the period also included an investment of EUR 150 million (CHF 158.3 million) in PrimeStone, a new fund whose strategy consists of making medium- to long-term investments in medium-sized listed companies in Europe.Disposals at acquisition price amounting to CHF 94.2 million in H1 2015 included GBL’s additional disposal of 0.1% of Total’s share capital (following this transaction, GBL held 2.9% of Total’s share capital) and the delivery of Suez Environnement shares by GBL following the partial redemption of the Suez Environnement exchangeable bond.In H1 2015, the «Other» item included the dividends declared but not yet paid.



3232

Note 8 - Financial debt

0.875% 2015-2024 Pargesa bond

On 24 April 2015, Pargesa Holding SA issued a Swiss-franc-denominated bond for a total par value of CHF 150 million; the bonds are listed, have a term of 9 years and pay a coupon of 0.875%. The issue price was 100.605%. The fair value of these bonds at 30 June 2015 was CHF 150.4 million (level 1 fair value under IFRS 13).

2.5% 2010-2016 Pargesa bond

In H1 2015, Pargesa Holding SA repurchased CHF 5.0 million in par value of these bonds at an average price of 100.9%, generating a book-entry loss of CHF 0.2 million.

0.125% 21.09.2012-21.09.2015 GBL bond exchangeable for Suez Environnement shares

In H1 2015, GBL received more early conversion requests for the GBL bonds exchangeable for Suez Environnement shares maturing in September 2015. Further to these requests, GBL delivered 4.8 million Suez Environnement shares for a total par value of EUR 55 million (CHF 58.6 million). GBL’s holding in Suez Environnement’s share capital was thus reduced from 1.1% at end-2014 to 0.1% at 30 June 2015. The conversions generated a book-entry gain of EUR 35.3 million (CHF 37.3 million) on the Suez Environnement shares delivered, representing the difference between the average price of the Suez Environnement shares when the exchanges took place in H1 2015 (EUR 17.2 per share) and the economic cost of EUR 9.9 per share. The cancellation, on a pro-rata basis of the bonds exchanged, of the derivatives embedded in the exchangeable bonds and recorded as a liability on the balance sheet, resulted in a book-entry gain of EUR 14.4 million (CHF 15.2 million) recognised in H1 2015 income. The cancellation of the debt resulted in a charge of EUR 28.2 million (CHF 29.8 million) and was also recorded in the income statement for the period.

The carrying amount of the remaining bonds (excluding the option component) was CHF 3.8 million at 30 June 2015 (CHF 70.0 million at 31 December 2014). The option component, which is carried at fair value (level 2 fair value under IFRS 13), amounted to CHF 1.7 million (under «Other short-term financial liabilities» on the balance sheet) at 30 June 2015 (CHF 18.5 million at 31 December 2014).

Note 9 - Restructuring costs

CHF millions H1 2015 H1 2014Restructuring expenditure during the year (32.4) (25.0)Impairment on assets in connection with restructuring (7.5) (11.1)Change in restructuring provisions (0.8) (29.4)Total (39.1) (65.5)

Restructuring costs in H1 2015 related mainly to Imerys and originated in the four areas in which Imerys operates. They related mainly to the adjustment of the Oilfield Solutions activity to a downturn in the ceramic proppant market and the integration of S&B. Restructuring costs are recognised in the income statement under «Other operating expenses».

Note 10 - Impairment of assets and impairment reversals

The net amount of impairments and impairment reversals recorded in H1 2015 was +CHF 407.8 million and mainly comprised the impairment reversal of CHF 425.5 million on Lafarge (see note 12) and impairments on tangible assets at Imerys of CHF 12.6 million.



3333


Note 11 - Acquisitions and disposals of subsidiaries

The following key acquisitions were made in H1 2015:

On 26 February 2015, Imerys acquired 100% of the voting rights corresponding to the main industrial minerals activities of Greek group S&B, i.e. bentonite (binders for foundry, sealing solutions, and additives for drilling and for consumer products), continuous casting fluxes for the steel industry, wollastonite (functional additives for polymers and paints), and perlite-based solutions for building materials and horticulture. These businesses were acquired from the Kyriacopoulos family and the Rhône Capital investment fund for EUR 624 million (CHF 658.5 million), with EUR 340 million (CHF 358.7 million) paid in cash, EUR 263 million (CHF 277.6 million) in Imerys shares, and EUR 21 million (CHF 22.2 million) in the form of an additional performance-related amount. The cash and shares remitted to the seller upon the acquisition of a controlling interest were funded, respectively, by the bonds issued by Imerys in December 2014, and by the issuance of 3.7 million Imerys shares, as part of a reserved capital increase. When the transaction was finalised, the Kyriacopoulos family held approximately a 4.7% interest in the capital of Imerys SA, and GBL’s holding was diluted slightly to 53.2% (56.5% at 31 December 2014).Independent experts were appointed to assess the fair value of most of the assets and liabilities that could be identified on the date when the controlling interest was acquired. At 30 June 2015, the high yield bond issue (EUR 315 million; CHF 328.1 million) and employee benefits (EUR 32 million; CHF 33 million) were recorded based on final valuation reports. Assessments of mineral reserves, intangible assets and property, plant and equipment, inventories, provisions, and income tax assets and liabilities are pending. In the meantime, the corresponding entries were provisionally kept at their pre-acquisition values. The goodwill resulting from the difference between these partially re-valued net assets and the investment value thus came to a provisional amount of EUR 590 million (CHF 623.1 million) at 30 June 2015. Since the acquisition, S&B group has contributed EUR 149 million (CHF 157.3 million) to turnover. If the acquisition had been finalised at 1 January 2015, the contribution to turnover would have been EUR 213 million (CHF 224.3 million).

Details of the S&B acquisition

CHF millions S&B

Long-term assets 282.0Short-term assets 245.5Long-term liabilities (400.4)Short-term liabilities (91.1)Non-controlling interests (0.6)Net assets acquired 35.4

Goodwill 623.1Total consideration 658.5

Paid- in cash (358.7)- in shares (277.6)- in installments (22.2)Net cash outflows and share payments relating to the acquisition- cash and share payments (658.5)- cash and bank balances acquired 85.8Total cash outflows and share payments relating to the acquisition (572.7)

On 19 May 2015, Ergon Capital Partners III acquired an indirect majority stake in Golden Goose S.r.l, an Italian designer of contemporary shoes, clothes and accessories. The purchase price was EUR 107 million (CHF 112.9 million), with EUR 87 million (CHF 91.8 million) paid in cash, EUR 4 million (CHF 4.2 million) in the form of a deferred payment due in April 2016, and EUR 16 million (CHF 16.7 million) in the form of an additional performance-related amount. The net cash impact of the acquisition was EUR 88 million (CHF 92.9 million). The provisional goodwill generated by the acquistion before acquisition accounting was EUR 118 million (CHF 124.3 million). The acquisition made a −EUR 1 million contribution to GBL’s net income (−CHF 0.5 million for the Group).

Disposals of subsidiaries

In H1 2015, no disposals of subsidiaries had a material impact.


3434


Note 12 - Investments in associates and joint venturesCHF millions 30.06.2015 31.12.2014

Carrying amount at 1 January 4’224.7 3’997.6

Acquisitions and transfers 63.7 107.6Disposals and redemptions (38.5) (43.8)Income (86.3) 91.8Dividend paid (announced) (88.9) (108.4)Translation and other differences (1) (444.5) 179.9Reclassification as assets held for sale (2) (3’322.0) - Carrying amount at 30 June / 31 December 308.2 4’224.7(1) this line item includes translation differences relating to Lafarge(2) in 2015, this line item included the reclassification of the holding in Lafarge under assets held for sale

Analysis of investments in associates and joint ventures

CHF millions 30.06.2015 31.12.2014

Lafarge - 3’915.5Ergon Capital Partners I and II 63.0 99.5Other GBL and Imerys equity associates 245.2 209.7Carrying amount at 30 June / 31 December 308.2 4’224.7

Lafarge, a company whose shares are owned by GBL and listed on Euronext Paris in EUR, and Ergon Capital Partners I and II are part of the «Holdings» sector in the segment reporting. Ergon Capital Partners I and II are unlisted companies. «Other GBL and Imerys equity associates» includes Kartesia, Visionnaire and Mérieux Participations II, which are held through GBL.

At 30 June 2015, the market value (level 1 under IFRS 13) of the holding in Lafarge was EUR 3’588 million (CHF 3’743 million) compared with EUR 3’518 million (CHF 4’231 million) at 31 December 2014.

Analysis of income from associates and joint ventures


Lafarge (105.9) 18.0Ergon Capital Partners I and II 14.3 38.5Other GBL and Imerys equity associates 5.3 (0.9)Income from associates and joint ventures (86.3) 55.6

In H1 2015, the contribution from Ergon Capital Partners I and II included a gain of EUR 14.2 million (CHF 15.0 million) on the disposal of the majority holding in Joris Ide, a leader in insulating sandwich panels and steel profiles.


3535

Holcim-Lafarge merger

In H1 2015, the Boards of Directors of Holcim and Lafarge announced that they had reached an agreement on revised terms for the merger of equals between both groups. The parties agreed on a new exchange ratio of 9 Holcim shares for 10 Lafarge shares. Lafarge and Holcim also agreed that the new group would announce a post-closing scrip dividend of 1 new LafargeHolcim share for each 20 existing shares. On 1 June 2015, Holcim launched its public exchange offer for all Lafarge shares, which was closed on 3 July 2015, with 87.46% of Lafarge shares having been tendered to the offer. The new LafargeHolcim shares are admitted to trading on the SIX Swiss Exchange and on Euronext Paris. GBL holds a stake of 9.84% in the new entity, the results of the reopening of the offer, which closed on 28 July, were not yet known by the Board of Directors at the date of closing of the accounts. At 30 June 2015, GBL considered that the merger was highly probable and hence, in accordance with IFRS, it recognized a partial reversal for EUR 403 million (CHF 425.5 million) of the impairment previously booked with regards to Lafarge. The reversal stems from the fair value accounting method applied to the Lafarge stake on 30 June 2015 while the equity method was previously applied.

Main judgements and accounting estimates

At 30 June 2015, GBL examined whether to reclassify the holding in Lafarge as «Assets held for sale» in accordance with IFRS 5 − Non- Current Assets Held for Sale and Discontinued Operations, GBL considered that, at that date, the criteria of IFRS 5 had been met, enabling it to conclude that the merger was highly probable, given the progress made in the merger project in Q2 2015. As a result:

• GBL accounted for its holding in Lafarge in accordance with the equity accounting method until 30 June 2015;

• The holding was reclassified under «Assets held for sale» and recorded at its fair value at 30 June 2015, i.e. EUR 3’588 million (CHF 3’742.4 million), generating a partial reversal of the impairment previously recorded (EUR 403 million; CHF 425.5 million), corresponding to the difference between (1) the equity-accounted value at 30 June 2015 (EUR 52.6 per share) and (2) the market price at 30 June 2015 (EUR 59.2 per share).



3636

Note 13 - Share capital and treasury shares

Share capital

Registered shares Bearer shares Total sharesCHF millions Number Par value (1) Number Par value (2) Number (3) Par valueShare capital at 1 January 2014 77’214’700 154.4 77’214’700 1’544.3 84’936’170 1’698.7Share capital at 31 December 2014 77’214’700 154.4 77’214’700 1’544.3 84’936’170 1’698.7Share capital at 30 June 2015 77’214’700 (4) 154.4 77’214’700 (4) 1’544.3 84’936’170 1’698.7

Share capital outstanding at 30 June 2015Share capital 77’214’700 154.4 77’214’700 1’544.3 84’936’170 1’698.7Treasury shares (5) (276’980) (5.5) (276’980) (5.5)Net share capital outstanding 77’214’700 154.4 76’937’720 1’538.8 84’659’190 1’693.2

(1) CHF 2 per share (2) CHF 20 per share (3) the number of registered shares is converted into the equivalent number of bearer shares by dividing by ten (4) each share carries one vote (5) these shares do not give entitlement to dividends or voting rights

On 1 June 1994, the Company created conditional capital with a par value of up to CHF 242 million by issuing 11’000’000 registered shares with a par value of CHF 2 and 11’000’000 bearer shares with a par value of CHF 20.

On 6 May 2014, the Company renewed its authorised capital. Consequently, the Board of Directors is authorised to increase the share capital, up to 6 May 2016, by CHF 253 million by issuing 11’500’000 registered shares with a par value of CHF 2 and 11’500’000 bearer shares with a par value of CHF 20. Bearer shares are listed on the SIX Swiss Exchange.

Treasury shares (1)

Not yet outstanding, reserved for Board use

Not yet outstanding, reserved for the exercise of

options (2)

Total

CHF millions NumberCarrying amount Number

Carrying amount Number

Carrying amount

1 January 2014 146’706 2.9 145’484 2.9 292’190 5.8Granting of options (23’930) (0.5) 23’930 0.5 - -Exercise of options - - (15’210) (0.3) (15’210) (0.3)31 December 2014 122’776 2.4 154’204 3.1 276’980 5.5Granting of options (26’780) (0.5) 26’780 0.5 - -30 June 2015 95’996 1.9 180’984 3.6 276’980 5.5

(1) treasury shares are all bearer shares(2) shares not yet outstanding and reserved for the exercise of options granted to the beneficiaries of share option schemes established by the Company

(see note 15)



3737

Note 14 - Dividend paid by Pargesa Holding SA

CHF millions H1 2015 H1 2014 Dividend for the previous financial year paid during the period 192.2 223.5- CHF per bearer share 2.27 2.64- CHF per registered share 0.227 0.264

The 2014 dividend was approved by shareholders at the Annual General Meeting on 5 May 2015 and paid on 11 May 2015.

Note 15 - Share-based payments

Pargesa share options granted by Pargesa Holding SA

On 3 May 2007, the Company established an incentive plan for the Company’s employees, managers and executives involving the annual awarding of options on Pargesa Holding SA shares. The right to exercise the options is vested over time, i.e. one third after one year, two thirds after two years and in full after three years. The options have a maximum term of ten years. The options may be exercised at any time from the fourth year and until maturity. The shares needed to exercise options will be taken from the Company’s reserve of treasury shares. In H1 2015, the Company granted 26’780 options, each option enabling the holder to acquire one Pargesa Holding SA share at a price of CHF 72, equal to the market price on the grant date.

At 30 June 2015, the total cost of this option plan was recognised in staff costs and amounted to CHF 0.1 million (CHF 0.1 million at 30 June 2014).

Changes in options granted

CHF per share

H1 2015

Number of optionsWeighted average

exercice priceOptions at 1 January 154’204 82.41Granted during the period 26’780 72.00Options at 30 June 180’984 80.87



3838

Note 16 - Important events taking place after the closing date

On 9 July 2015, the «Autorité des Marchés Financiers» published the results of Holcim’s public exchange offer for all Lafarge shares. Following settlement-delivery of the offer on 10 July 2015, Holcim held 252’230’673 Lafarge shares, representing 87.46% of the capital. At that date, GBL held a 9.84% stake in LafargeHolcim and does not exert significant influence over the new entity.

Starting in Q3 2015, this holding will therefore be booked as an available-for-sale financial asset and stated at fair value (i.e. the market price).

Under IAS 28 - Investments in Associates and Joint Ventures, the loss of influence in the Lafarge group and GBL’s reclassification of the holding in LafargeHolcim under available-for-sale financial assets will generate a net gain of EUR 89 million in Q3 2015, comprising the following:

• recognition in the income statement of the difference between the book value and the fair value of the group at the transaction date (13 July 2015), i.e. EUR 268 million, which corresponds to the difference between the share price of the new group when first listed (CHF 74.2 per share) and the share price at 30 June 2015 (EUR 59.2 per share), i.e. an additional reversal of the impairment that was previously recorded;

• recycling of the other items of comprehensive income that are attributable to Lafarge and have been recognised in GBL’s shareholders’ equity since it was first recorded as an equity-accounted company on 1 January 2008. This will have a negative impact of EUR 179 million on GBL’s net income.

The net gain of EUR 89 million will come in addition to the impairment reversal of EUR 403 million recorded on the income statement at 30 June 2015 (see note 12).

Under IFRS, LafargeHolcim’s distribution of an exceptional scrip dividend (1 new LafargeHolcim share for 20 existing shares), expected on 8 September 2015, will have no impact on GBL’s income statement.

As part of GBL’s portfolio diversification strategy and more specifically with respect to its incubator-type investments, on 24 July 2013, GBL announced that it had crossed the statutory threshold of 3% in the capital of Adidas, a world leader in the design and distribution of sportswear.

In July 2015, the Sagard II fund disposed of its stake in Cérélia, generating a capital gain of approximately CHF 19 million for Pargesa. This gain will be recorded in Q3 2015.

Finally, GBL entered into forward contracts for the sale of 10.3 million Total shares (see note 6) at an average spot price of EUR 48.17 (forward price of EUR 45.98 at end-December). This will generate a capital gain of EUR 240 million for GBL. In accordance with IFRS, the gain will be recorded when the contracts expire in Q4 2015 (i.e. when the main risks and advantages are transferred to the buyer). In addition, Pargesa will record an historical exchange rate gain as a result of the reversal revaluation reserve at Pargesa in proportion to the Total shares sold.


11, Grand-Rue

CH – 1204 Geneva T +41 (0) 22 817 77 77

www.pargesa.ch

[email protected]

PargesaHolding SA

HALF-YEAR REPORT FOR THE PERIOD ENDING 30 JUNE 2015€¦ · 2. Highlights for H1 2015 and...

Documents

Transcript of HALF-YEAR REPORT FOR THE PERIOD ENDING 30 JUNE 2015€¦ · 2. Highlights for H1 2015 and...