company background financial calendar · 3 statutory manager’s report 34 3.1 balance sheet as at...
TRANSCRIPT
F I N A N C I A L C A L E N D A R
27 October 2006: General Meeting of Shareholders
26 January 2007: Publication of interim press release
31 August 2007: Publication of annual press release
26 October 2007: General Meeting of Shareholders
AN
NU
AL
R
EP
OR
T
20
05
/2
00
6
A N N U A L R E P O R T2 0 0 5 / 2 0 0 6
Almancora SCARegistered off ice
Phi l ipss i te 5/10 • B-3001 Leuven/BelgiumTel . : +32 (0)16 27 96 72 • Fax: +32 (0)16 27 96 94
www.almancora.be
C O M PA N Y B A C K G R O U N D
1998
Almancora SCA (Société en commandité par actions)
was incorporated on 18 December 1998 as Cera Ancora
SA (Société anonyme). Cera Ancora’s capital was formed
by the contribution of 35,950,000 Almanij shares and
approximately EUR 12.4 million in cash, subscribed virtu-
ally entirely by Cera (then ‘Cera Holding’) SCRL (Société
coopérative à responsabilité limitée). Cera Ancora was
thus an almost wholly owned subsidiary of Cera.
2001
The foundations were laid in 2000 for the fundamental
restructuring of Cera Ancora and of Cera, with approval
being granted on 12 and 13 January 2001, respectively.
The restructuring was carried out in implementation of a
settlement reached in conclusion of a legal dispute which
went back to the merger in 1998 of CERA Bank, ABB and
Kredietbank.
A brief review is given below of the steps taken as part of
the restructuring:
• Cera A-shares with a face value of EUR 24.79 were split
into B and D-shares, with a face value of EUR 6.20 and
EUR 18.59, respectively;
• Cera then contributed an additional 19,532,821 Almanij
shares to Cera Ancora at a value of EUR 50.89 per
share;
• Cera Ancora SA was transformed into Almancora SCA
on 12 January 2001. Following a share split, Almancora’s
capital was represented by 55,929,510 shares;
• Having subsequently purchased an additional 446,689
Almanij shares, giving it a total of 55,929,510 (28.56%
of the outstanding total) in its portfolio, Almancora at
that point held one Almanij share for each share it had
issued. In other words, at that time one Almancora share
was equivalent to one 'repackaged' Almanij share;
• The restructuring of Cera, which was approved on
13 January 2001, entitles Cera’s members to three
Almancora shares for each D-share surrendered on
withdrawal. This ‘reimbursement on withdrawal’ means
that the proportion of Cera’s participation in Almancora
to be distributed will decline steadily over time.
Almancora was listed on the stock exchange for the fi rst
time on 4 April 2001. From that date onwards, it has
been possible to trade the shares on the 'double fi xing'
segment of the Brussels Stock Exchange.
2005
On 2 March 2005 the structure of the Almanij/KBC group
was simplifi ed by means of a merger in the form of the
acquisition of Almanij by KBC Bancassurance Holding.
The merger was preceded by an unconditional public cash
bid by Almanij for the KBL shares which were not yet in
the hands of Almanij or its subsidiaries. The new merged
company, known as KBC Group, now controls the under-
lying companies KBC Bank, KBC Assurances and Krediet-
bank SA Luxembourgeoise.
The merger to form KBC Group had a number of impor-
tant consequences for Almancora:
• As a result of the merger Almancora acquired KBC
Group shares on 2 March 2005, based on an exchange
ratio of 1.35 KBC Group shares for each Almanij share.
Almancora shares thus became ‘repackaged’ KBC Group
shares.
• Until the merger the shareholder stability of the Almanij/
KBC group was guaranteed by Cera, Almancora and the
Other Permanent Shareholders via a shareholder agree-
ment. Following the merger this was replaced by a new
shareholder agreement, to which MRBB also became
a party. The core shareholders1 of the KBC group will
henceforth be Cera, Almancora, MRBB and the Other
Permanent Shareholders.
• The disappearance of Almanij also brought to an end
the reserving of profi t at Almanij level and therefore
boosted Almancora’s dividend income considerably.
1 MRBB: Maatschappij voor Roerend Bezit van de Boerenbond.
Other Permanent Shareholders: the various shareholders which together
with Cera, Almancora and MRBB, constitute the core shareholders of
KBC Group and which entered into a shareholder agreement to this end
on 23 December 2004.
| 1 | A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6
A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6
Legal form: Civil company having taken the form of
a partnership limited by shares
Registered offi ce: Philipssite 5/10, 3001 Leuven, Belgium
Company number: 0464.965.639
Website: www.almancora.be
| 3 | A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6
C O N T E N T S
Letter from the Chairman of the Board of Directors and
the Managing Directors of Almancora Société de gestion SA,
statutory manager of Almancora SCA 7
1 Investor information 9
1.1 Share price, discount and traded volumes 9
1.2 Key fi gures as at balance sheet date 13
1.3 Dividend, fl ow-through percentage and dividend yield 14
1.4 Distribution of Almancora shares 16
1.4.1 The road to the market 16
1.4.2 Almancora shareholdership 16
2 Group structure and effective corporate governance 17
2.1 Group structure 17
2.1.1 Fondation Almancora ASBL 17
2.1.2 Almancora Société de gestion SA 18
2.1.3 Ancora ASBL 18
2.1.4 Almancora SCA 18
2.2 Effective corporate governance 19
2.2.1 Management structure 19
2.2.2 Board of Directors of Almancora Société de gestion SA 20
2.2.2.1 Composition of the Board of Directors 22
2.2.2.2 Powers of the Board of Directors 24
2.2.2.3 Functioning of the Board of Directors 24
2.2.3 Committees appointed within the Board of Directors 25
2.2.3.1 Day-to-Day Management Committee 25
2.2.3.2 Audit Committee 26
2.2.3.3 Appointments Committee 26
2.2.3.4 Remuneration Committee 27
2.2.4 Auditor 28
2.3 Remuneration 28
2.3.1 General 28
2.3.2 Remuneration of B and C directors 29
2.3.3 Remuneration of A directors 30
2.4 Rotation system 31
2.5 Code of conduct in respect of confl icts of interest 32
2.6 Code of conduct to prevent market abuse 32
2.7 Guidelines for the exercise of directorships 32
2.8 Openness in investor communication 33
A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6 | 4 |
3 Statutory manager’s report 34
3.1 Balance sheet as at 30 June 2006 34
3.1.1 Assets 34
3.1.2 Liabilities 34
3.2 Profi t and loss account for the fi nancial year 2005/2006 35
3.2.1 Income 35
3.2.2 Expenses 36
3.3 Result and proposed profi t appropriation 38
3.4 Arbitration procedure 39
3.5 No consolidated fi nancial statements for Almancora SCA 39
3.6 Most recent fi nancial year and available information for 2006 on KBC Group 39
3.6.1 Past fi nancial year of KBC Group 39
3.6.2 First half of KBC Group’s fi nancial year 2006 43
3.7 Outlook 45
4 Financial report 48
4.1 Balance sheet 48
4.2 Profi t and loss account 50
4.3 Notes 51
4.4 Valuation principles 55
4.5 Auditors’ Reports 57
4.5.1 Report on the fi nancial year 57
4.5.2 Report concerning interim dividend 59
5 Financial calendar
| 5 | A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6
L I S T O F C H A R T S
Chart 1: Trend in Almancora and KBC Group share price during the last fi nancial year 9
Chart 2: Trend in discount of Almancora share price relative to its intrinsic value over
the last fi nancial year 10
Chart 3: Trend in discount of Almancora share price relative to the underlying value
over the period April 2001-June 2006 10
Chart 4: Traded volumes of Almancora shares on a daily basis in the last fi nancial year 11
Chart 5: Trend in Almancora and KBC Group share prices relative to the BEL20-Index
in the last fi nancial year 12
Chart 6: Trend in Almancora and KBC Group share prices relative to Dow Jones EURO
STOXX Bank Index in the last fi nancial year 13
Chart 7: Trend in dividend receipts versus dividend payout 15
Chart 8: Position of Almancora group structure within KBC Group 17
Chart 9: Trend in KBC Group profi t 42
L I S T O F TA B L E S
Table 1: Summary of stock market fi gures in recent fi nancial years 12
Table 2: Key fi gures on balance sheet date 13
Table 3: Results for the most recent fi nancial years 14
Table 4: Trend in dividend receipts versus dividend payout 15
Table 5: Composition of the Board of Directors of Almancora Société de gestion and
overview of individual attendees 21
Table 6: Remuneration of B and C directors, excluding reimbursement of expenses 30
Table 7: Fixed and variable remuneration of A directors 31
Table 8: Trend in Almancora income 36
Table 9: Trend in Almancora’s costs 38
Table 10: Profi t fi gures and key ratios of KBC Group for the fi nancial years 2004
and 2005 41
Table 11: Profi t fi gures and key ratios of KBC Group for the fi rst half of
the fi nancial years 2006 and 2005 44
A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6 | 6 |
B O A R D O F D I R E C T O R S O F
A L M A N C O R A S O C I E T E D E G E S T I O N S A
Upper row from left to right:Germain VantieghemIvo VerhaegheTheo Erauw (auditor)Léopold Bragard
Centre row from left to right:Paul PeetersWilly DanneelsJean-Marie Géradin Gilbert MarquenieHerman Jacobs
Down row from left to right:Cynthia Van HulleGeorges BeerdenRik Donckels
| 7 | A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6
L E T T E R F R O M T H E C H A I R M A N O F T H E B O A R D O F D I R E C T O R S A N D T H E M A N A G I N G D I R E C T O R S O F A L M A N C O R A S O C I É T É D E G E S T I O N S A , S TAT U T O R Y M A N A G E R O F A L M A N C O R A S C A
In the last fi nancial year, which ran from 1 July 2005 to 30 June 2006, Almancora’s result after
tax increased to EUR 185.8 million (+ 36%), while the share price climbed 35% to EUR 102. These
increases refl ect the increased dividend that Almancora received from its participating interest
in KBC Group and which was made possible by the excellent results of the KBC group companies
in virtually all areas of activity.
Use was made of the possibility of distributing an interim dividend in the fi nancial year under
review. The Board of Directors decided to do this in order to ensure a more rapid distribution
of the result to Almancora shareholders and because the Board believes that reinvestment of
the KBC Group dividend received by Almancora in early May for the short period until what
was formerly the usual dividend distribution date in early November, generated too little added
value for shareholders. In view of the current low interest rates and Almancora’s increased tax-
able base, the net interest income that can be generated from that reinvestment has shrunk to
very low levels.
On 5 May 2006, three days after the KBC Group dividend distribution date, Almancora paid
out an interim dividend of EUR 3.16 (gross) per share. This meant that virtually the entire result
available for distribution for the last fi nancial year (all but EUR 0.01 per share) was distributed.
As already stated on 23 December 2005, a fi nal dividend will not longer be distributed; instead,
the remaining balance will be carried forward to the next fi nancial year. The interim dividend
was 35.6% higher than the dividend for the previous fi nancial year.
During the last fi nancial year Almancora purchased 164,662 KBC Group shares, so that on
the balance sheet date Almancora held 75,980,000 KBC Group shares in portfolio. This pur-
chase, but in particular the cancellation by KBC Group of 3.5 million repurchased shares, took
Almancora’s stake in KBC Group from 20.69% to 20.93%, confi rming Almancora’s position as
the largest individual shareholder in KBC Group. On the balance sheet date, one Almancora
share corresponded to 1.358 ‘repackaged’ KBC Group shares.
The Almancora share price stood at EUR 102 on 30 June 2006, an increase of 35% compared
with the price of EUR 75.55 on 30 June 2005. This meant that the Almancora share easily
outperformed the BEL20 Index and the Dow Jones EURO STOXX Bank Index over the same
period.
On average, approximately 55,000 Almancora shares were traded each day in the year under
review. While this is roughly a fi fth down on the volumes in the fi nancial year 2004/2005, it is
still more than double the volumes in the fi nancial year 2003/2004.
A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6 | 8 |
The discount to the KBC Group share fl uctuated between 8.3% and 19.7%, which - like last year -
is less than the discount in the preceding fi nancial year.
Since 1 January 2006 Almancora’s Corporate Governance Charter has been available on the
company’s website. Almancora complies fully with the principles contained in the Corporate
Governance Code.
On 19 May the Boards of Directors of Cera Société de gestion SA and Almancora Société de
gestion SA announced the appointment of Mr Franky Depickere as a full-time managing direc-
tor. He will join the Board on 15 September 2006, following in the footsteps of Mr Rik Donckels,
who reaches the statutory age limit for his directorships on that date. The careful selection pro-
cedure which preceded this appointment was intended to ensure the continuation of the high
standard of management and the strong presence within the KBC group.
Almancora accordingly not only looks back with satisfaction at a highly successful year, but also
looks to the future with confi dence.
Leuven, 29 August 2006
Rik Donckels Cynthia Van Hulle Germain VantieghemManaging Director and Chairman of the Board of Directors Managing DirectorPermanent representative Almancora Société de gestion Almancora Société de gestionAlmancora Société de gestion
| 9 | A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6
1 Investor information
1.1 Share price, discount and traded volumes
As at the balance sheet date Almancora had a total of 75,980,000 KBC Group shares in portfolio,
equivalent to 20.93% of the total number of KBC Group shares in issue. Since Almancora is a
mono-holding company and has issued 55,929,510 shares, one Almancora share corresponded
with 1.358 ‘repackaged’ KBC Group shares on the balance sheet date. Consequently, the intrin-
sic value2 of one Almancora share corresponded with the price of 1.358 KBC Group shares.
Chart 1 traces the performance of the Almancora and KBC Group shares during the last fi nan-
cial year.
Chart 1: Trend in Almancora and KBC Group share price during the last fi nancial year
Chart 2 shows the trend in the discount of the Almancora share relative to its intrinsic value.
Chart 3 portrays the monthly trend since the stock market listing and the discount of the
Almancorashare relative to the underlying patrimonial value. For the period prior to the merg-
er of Almanij and KBC Bancassurance Holding, the monthly estimated intrinsic value of Almanij
was taken as a basis. In the period before the announcement of the merger, Almanij was listed
at a discount to its intrinsic value. Almancora was moreover trading at an additional discount
to the Almanij share. Following the announcement of the merger in December 2004, the exist-
ing discount between the price of the Almanij share and its intrinsic value was eliminated, also
prompting a sharp reduction in the discount of the Almancora share to its patrimonial value
(from 2 March 2005 KBC Group).
2 Intrinsic value: value per share calculated on the basis of the stock market price of the underlying listed shares and, if applicable, on the basis of the estimated net value of the other assets (including the unlisted shares).
Patrimonial value: value per share based on the net asset value of the underlying shares.
A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6 | 1 0 |
Since 2 March 2005 the intrinsic value and patrimonial value of Almancora have de facto been
the same.
Chart 2: Trend in discount3 of Almancora share price relative to its intrinsic value over the last
fi nancial year
Chart 3: Trend in discount of Almancora share price relative to the underlying value over the
period April 2001-June 20064
3 Discount = (KBC Group share price x factor – Almancora share price) / (KBC Group share price x factor) Factor = number of KBC Group shares held by Almancora / number of shares issued by Almancora. In the period between the payment of the KBC Group dividend and the payment of the (interim) Almancora dividend,
the calculation of the discount is adjusted for this difference in the distribution dates.4 The blue vertical line represents 23 December 2004, i.e. the date on which the merger between Almanij and KBC Bancassurance
Holding to form KBC Group was announced. The red vertical line indicates 2 March 2005, i.e. the date on which the merger between Almanij en KBC Bancassurance Holding to form KBC Group was formally approved.
| 1 1 | A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6
Chart 4 illustrates the high liquidity of the Almancora share.
Chart 4: Traded volumes of Almancora shares on a daily basis in the last fi nancial year
Table 1 summarises a number of stock market fi gures and compares them with performance
in previous fi nancial years. The discount of the Almancora share to its intrinsic value reduced
further in the year under review. In the fi rst half of each calendar year the average number of
shares traded on a daily basis is considerably higher than in the second six months. This is largely
because of the way in which Almancora shares reach the market (see section 1.4.1 The road
to the market). For the fi rst time since the stock market listing in 2001 the average number of
Almancora shares traded fell in the fi nancial year 2005/2006. This was partly because the merger
between Almanij and KBC Bancassurance to form KBC Group generated additional interest in
the Almancora share in the fi nancial year 2004/2005.
Table 1: Summary of stock market fi gures in recent fi nancial years
Financial year
2005/2006
Financial year
2004/2005
Financial year
2003/2004
Financial year
2002/2003
High (EUR) 109.60 79.95 41.70 32.39
Low (EUR) 74.90 41.12 28.60 21.20
Maximum discount relative to
intrinsic value (%)19.7 21.2 22.0 28.4
Minimum discount relative to
intrinsic value (%)8.3 10.8 14.7 11.8
Average number of shares traded
per day
• Period 01.07-30.06 (fi nancial year) 55,070 70,146 26,617 9,727
• Period 01.07-31.12 45,478 32,131 7,693 5,527• Period 01.01-30.06 64,888 109,659 45,988 14,095
Charts 5 and 6 show the trend in Almancora’s share price relative to that of KBC Group,
the BEL20 Index and the Dow Jones EURO STOXX Bank Index in the year under review.
Chart 5: Trend in Almancora and KBC Group share prices relative to the BEL20-Index in the
last fi nancial year
A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6 | 1 2 |
Chart 6: Trend in Almancora and KBC Group share prices relative to Dow Jones EURO STOXX
Bank Index in the last fi nancial year
1.2 Key fi gures as at balance sheet date
Table 2 contains a number of key fi gures as at the balance sheet date for the most recent fi nan-
cial years.
Table 2: Key fi gures on balance sheet date
30 June 2006 30 June 2005 30 June 2004
Number of issued Almancora
shares55,929,510 55,929,510 55,929,510
Number of shares in portfolio75,980,000
(KBC Group)
75,815,338
(KBC Group)
56,089,510
(Almanij)
Balance sheet total in EUR 3,251,648,377 3,346,596,802 3,288,508,296
Market capitalisation in EUR
(to share price on balance sheet
date)5,704,810,020 4,225,474,481 2,321,074,665
Book value of capital and
reserves in EUR3,224,443,527 3,215,359,576 3,209,410,425
Market capitalisation/book value
of capital and reserve1.77 1.31 0.72
| 1 3 | A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6
Table 3 recategorises the results recorded in previous fi nancial years in the manner prescribed
by the Belgian Banking, Finance and Insurance Commission (BFIC) for companies whose busi-
ness operations are primarily defi ned as ownership of equity holdings. A distinction is made
between fi nancial and other results. The results are also broken down into recurring and non-
recurring elements.
Table 3: Results for the most recent fi nancial years
Result of Almancora SCA
(x EUR 1,000)
Financial year
2005/2006
Financial year
2004/2005
Financial year
2003/2004
Recurring fi nancial profi t/loss 191,690 140,658 84,836
Other recurring profi t/loss -3,356 -3,765 -4,235
Profi t/loss from capital operations 0 0 0
Extraordinary profi t/loss 0 0 0
Result before taxes 188,334 136,893 80,601
Result after taxes 185,821 136,265 80,6075
Result of Almancora SCA
per share (in EUR)
Financial year
2005/2006
Financial year
2004/2005
Financial year
2003/2004
Recurring fi nancial profi t/loss 3.43 2.52 1.52
Other recurring profi t/loss -0.06 -0.07 -0.08
Profi t/loss from capital operations 0.00 0.00 0.00
Extraordinary profi t/loss 0.00 0.00 0.00
Result before taxes 3.37 2.45 1.44
Result after taxes 3.32 2.44 1.44
1.3 Dividend, fl ow-through percentage and dividend yield
On 2 May 2006 Almancora received dividend from KBC Group amounting to EUR 190.5
million (EUR 2.51 per KBC Group share held). On 5 May 2006 Almancora distributed an interim
dividend of EUR 3.16 gross per share. The total dividend payout amounted to EUR 176.7
million. Almancora Société de gestion SA, statutory manager of Almancora, proposes that EUR
0.7 million (EUR 0.01 per share) be carried forward to the next fi nancial year. The fl ow-through
percentage in the year under review stood at 92.78%. The limited fall compared with the fl ow-
through percentage for the previous fi nancial year was largely the result of an increase in the
corporation tax liability.
A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6 | 1 4 |
5 In the fi nancial year 2003/2004 the result after tax was slightly higher than the result before tax owing to the withdrawal of a provision for taxes from the previous fi nancial year.
The gross dividend yield on Almancora shares amounted to 3.10% of the closing price of the
share of EUR 102 on 30 June 2006. The average gross dividend yield of BEL20 shares on the same
date stood at 2.93%. The weighted average gross dividend yield of the BEL20 shares (calculated
on the basis of the relative weight of each share in the BEL20 Index) amounted to 3.12%.
Chart 7 and Table 4 show the trend in dividend revenue, dividend payout, the fl ow-through
percentage and the dividend yield for the most recent fi nancial years.
Chart 7: Trend in dividend receipts versus dividend payout (x EUR million)
Table 4: Trend in dividend receipts versus dividend payout
Financial year
2005/2006
Financial year
2004/2005
Financial year
2003/2004
Financial year
2002/2003
Dividend receipts (EUR million) 190.5 139.5 84.1 77.3
Flow-through percentage (a) 92.78% 93.42% 93.73% 92.65%
Almancora dividend (EUR million) 176.7 (b) 130.3 78.9 71.6
Dividend per share (EUR) 3.16 2.33 1.41 1.28
Almancora share price (EUR) (c) 102 75.55 41.5 29
Almancora dividend yield (d) 3.10% 3.08% 3.40% 4.41%
(a) Flow-through percentage = dividend distributed by Almancora / dividend received from KBC Group
(b) Proposed by the statutory manager, subject to the approval of the General Meeting of Shareholders
(c) Closing price on 30 June
(d) Dividend yield = Almancora dividend / Almancora share price (on 30 June)
| 1 5 | A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6
0
50
100
150
200
E
U
R
O
2002/2003 2003/2004 2004/2005 2005/2006
77.3 84.1 139.5 190.5
71.6 78.9 130.3 176.7
Almancora dividend receipts
Almancora dividend payout
1.4 Distribution of Almancora shares
1.4.1 The road to the market
In accordance with the statutory rules governing cooperative societies in Belgium, Cera mem-
bers are permitted to withdraw voluntarily with their shares during the fi rst half of each fi nan-
cial year. Cera’s fi nancial year is concurrent with the calendar year.
Members withdrawing since 13 January 2001 with cooperative D-shares receive a special
‘reimbursement on withdrawal’, consisting primarily of three Almancora shares. In other words,
members receive three Almancora shares for each D-share with which they withdraw from
Cera. They can then choose between keeping the Almancora shares (in their securities account
or holding the ‘physical’ shares) and selling them on the stock market.
1.4.2 Almancora shareholdership
There is a statutory requirement to disclose participating interests in listed companies of
(multiples of) 5%. In addition, Almancora’s Articles of Association stipulate a disclosure thresh-
old of 3% (and multiples thereof).
Only one shareholder reported that they had exceeded the disclosure threshold in the year
under review. Deutsche Bank AG exceeded or undershot the 3% disclosure threshold on six
occasions. The most recent disclosure dates from 4 January 2006 and involved undershooting
the disclosure threshold to 1.6%.
As at the balance sheet date, Cera was the only shareholder to disclose a participating interest
of more than 3%. Its most recent disclosure report dates from the end of the previous fi nancial
year (30 June 2005). In that report, Cera stated that its stake in Almancora had fallen to 62.81%.
In its annual report on the fi nancial year 2005, Cera announced that as at 31 December 2005 its
stake in Almancora stood at 62.70%, 43.64% of which would be distributed in due course in the
form of ‘reimbursement on withdrawal’, and 19.06% as a long-term investment.
After the balance sheet date Fidelity International Limited and FMR Corp. and their direct and
indirect subsidiaries reported that they had exceeded the disclosure threshold of 3%. As at
7 August 2006 their stake in Almancora stood at 3.15%.
A complete list of the participating interest disclosures can be found on the Almancora
website.
A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6 | 1 6 |
| 1 7 | A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6
2 Group structure and effective corporate governance
2.1 Group structure
Chart 8 shows Almancora’s group structure within the KBC group. The dotted line contains the
companies that belong to the Cera/Almancora group.
Chart 8: Position of Almancora group structure within KBC Group6
2.1.1 Fondation Almancora ASBL The object of Fondation Almancora ASBL (‘Association sans but lucratif’) is to support the
stability and continuity of KBC Group. As controlling shareholder of Almancora Société de ges-
tion, it plays an important part in the appointment of the latter’s Board of Directors.
In the same capacity, Fondation Almancora has the casting vote at the General Meeting of
Shareholders of Almancora Société de gestion.
6 AVAs: Other Permanent Shareholders MRBB: Maatschappij voor Roerend Bezit van de Boerenbond These parties together with Cera constitute the core shareholders of KBC Group and entered into a shareholder agreement to this
end on 23 December 2004 with a view to supporting the general policy of KBC Group (see section 2.1.4 Almancora SCA).
Stock Market
Almancora
Foundation ASBL
AlmancoraSociété de gestion
SA
KBC Group SA
Ancora ASBL
Cera
SCRL
As of June 2006* approx. 3% is held by KBC Group companies.
AVA’sMRBBCVBA
StockMarket
Almancora
SCA
approx. 6%
approx. 63%
p.m.
ca. 21%
approx. 12%
100%
approx. 12%
approx. 37%
approx. 46%*
Central Europe Belgium Merchant BankingEuropean
Private BankingGroup Center
A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6 | 1 8 |
Fondation Almancora’s Board of Directors comprises fi ve representatives of Cera members and
the two managing directors of Almancora Société de gestion.
2.1.2 Almancora Société de gestion SA
Almancora does not have a Board of Directors of its own but is administered instead by a
statutory manager – Almancora Société de gestion SA – the duties of which include setting out
the policy to be pursued by Almancora.
Its Board of Directors (see section 2.2.2 Board of Directors of Almancora Société de gestion SA) is
made up of fi ve representatives of Cera members, two managing directors and four independ-
ent directors.
The member representatives and managing directors are directors of Fondation Almancora
ASBL.
The independent directors also sit on the Board of Directors of Ancora ASBL.
2.1.3 Ancora ASBL
Almancora’s Articles of Association include rules for dealing with confl icts of interest. Ancora
ASBL was created to act as ad hoc representative in the event that Almancora Société de gestion
has a confl ict of interest with regard to a decision it has to take as manager of Almancora, if
Almancora Société de gestion is prevented from fulfi lling its duties or if the statutory manager’s
mandate expires before Almancora’s General Meeting of Shareholders is able to appoint a
new statutory manager. In such an event, Ancora will temporarily assume the management of
Almancora Société de gestion.
The Board of Directors of Ancora ASBL consists of Almancora Société de gestion’s four
independent directors.
2.1.4 Almancora SCA
Almancora’s principal activity is the maintenance and management of its shareholding
in KBC Group, with a view to ensuring, in collaboration with Cera, MRBB and the Other
Permanent Shareholders (AVAs), the shareholder stability and continuity of KBC Group. To this
end, Almancora signed a shareholder agreement with these parties on 23 December 2004, cov-
ering 111,867,888 KBC Group shares, or 30.81% of the total number of KBC Group shares in
issue. Cera and Almancora are viewed as a single party for the purposes of the agreement.
Together, they committed 42,715,837 KBC Group shares, or 11.76% of the total number of KBC
| 1 9 | A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6
Group shares, with Almancora committing 8.99% of the total number of KBC Group shares and
Cera the rest.
2.2 Effective corporate governance
Guidelines came into force in Belgium on 1 January 2005 relating to corporate governance for
listed companies; these guidelines are summarised in the Belgian Corporate Governance Code.
Almancora complies fully with the principles from the Corporate Governance Code. It deviates
from the provisions of the Code where the specifi c characteristics of the company or specifi c
circumstances make this necessary. In such cases the deviation is explained in accordance with
the ‘comply or explain’ principle. In practice it deviates from the provisions on only one point.
Contrary to provisions 5.1. and 5.3./4. of the Corporate Governance Code, the Appointments
Committee of Almancora Société de gestion may submit proposals directly (i.e. without the
intervention of the Board of Directors) to the General Meeting of Shareholders of Almancora
Société de gestion as regards the appointment of A, B and C directors. This offers the best
guarantee of an independent nominations policy, in which the focus is exclusively on Almanco-
ra’s interests.
Almancora has drawn up a Corporate Governance Charter. The Charter has been available on
the Almancora website at www.almancora.be since January 2006, and is regularly updated.
During the last fi nancial year the Board of Directors of Almancora Société de gestion amended
the Corporate Governance Charter on two occasions, on 27 January 2006 and 23 June 2006.
The amendments related mainly to the new regulations on market abuse.
2.2.1 Management structure
As stated above, Almancora Société de gestion administers Almancora in the capacity of
statutory manager. The recommendations from the Corporate Governance Code are applied at
the level of the Board of Directors of Almancora Société de gestion.
The statutory manager bears unlimited liability vis-à-vis Almancora’s creditors. Almancora’s
other shareholders are only liable to the extent of their contribution.
Under the terms of the Belgian Commercial Code (Code des sociétés), the statutory manager’s
endorsement must be obtained before any decision of the General Meeting of Shareholders
affecting third parties (e.g. payment of a dividend) or any amendment to the Articles of Asso-
ciation can be ratifi ed or enacted.
The manager was appointed in the Articles of Association for an undefi ned period. Its mandate
may only be terminated under exceptional circumstances. The manager may, however, choose
to resign without having to seek the endorsement of the General Meeting of Shareholders.
A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6 | 2 0 |
Almancora Société de gestion is authorised as manager to do all that is necessary for or
conducive to the achievement of the company’s object, with the exception of powers that are
reserved by law for the General Meeting of Shareholders.
Almancora Société de gestion receives no remuneration for exercising its managerial mandate,
but costs incurred during the exercise of that mandate are reimbursed.
2.2.2 Board of Directors of Almancora Société de gestion SA
Table 5 sets out the composition of the Board of Directors of Almancora Société de gestion
and the committees set up under the Board’s aegis. The number of meetings attended by the
relevant Board member are reported for the Board of Directors and its committees. The Board
met 12 times in the fi nancial year 2005/2006; the Day-to-Day Management Committee met
11 times, the Appointments Committee four times, the Remuneration Committee twice and the
Audit Committee four times.
| 2 1 | A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6
Table 5: Composition of the Board of Directors of Almancora Société de gestion and overview
of individual attendeesN
ame
Prin
cip
al t
ask
End
of
curr
ent
term
A d
irec
tors
B d
irec
tors
C d
irec
tors
Day
-to
-Day
Man
agem
ent
Co
mm
itte
e
Au
dit
Co
mm
itte
e*
Ap
po
intm
ents
Co
mm
itte
e
Rem
un
erat
ion
Co
mm
itte
e
Rik Donckels Managing Director 2006 12 11 4
Germain Vantieghem Managing Director 2010 12 11
Georges Beerden Honorary Flemish MP 2009 12 3
Willy Danneels Agriculturalist 2009 12 2
Jean-Marie Géradin Attorney-at-law 2009 11 2
Herman Jacobs Federal offi cial 2007 12
Paul Peeters Director of Pfi zer 2007 11 4
Cynthia Van Hulle Professor at K.U.Leuven 2007 12 4 2
Léopold BragardAdministrator Université
de Liège**2007 11 4 4
Gilbert MarquenieHonorary Senior Lecturer
K.U.Leuven2008 11 2 4 2
Servus BVBA
(permanent
representative:
Ivo Verhaeghe)
Consulting 2007 12 4 3
* Willy Danneels and Gilbert Marquenie joined the Audit Committee on 23 December 2005. Since their appointment they have attended all meetings of the Audit Committee.
** Until 30 September 2005. From 1 October 2005: Honorary Administrator Université de Liège.
A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6 | 2 2 |
On 14 September 2006 Rik Donckels reaches the statutory age limit.
At its meeting of 16 May 2006 the Board of Directors appointed Mr Franky Depickere with
effect from 15 September 2006 as a new A director, managing director/member of the Day-to-
Day Management Committee and permanent representative of Almancora Société de gestion.
Franky Depickere had been managing director and Chairman of the Management Committee
of F. van Lanschot Bankiers België NV since 1999, as well as group director of F. van Lanschot
Bankiers Nederland. Since 2005 Franky Depickere had also been a member of the Strategic
Committee of F. van Lanschot Bankiers Nederland. Before that time he was an employee of the
former CERA Bank in various capacities.
Franky Depickere has a degree in commercial and fi nancial studies and a Master’s degree in
company fi nancial management. Following a short period at Gemeentekrediet bank, in 1982
Franky Depickere joined the CERA group, where he spent more than 17 years. Among oth-
er things he was an internal audit inspector at CERA Bank, fi nancial director of CERA Lease
Factors Autolease, chairman of the board of Nédée België-Luxemburg and member of the
Management Committee of CERA Investment Bank. Following the merger in 1998 he became a
managing director at KBC Securities.
2.2.2.1 Composition of the Board of Directors
The mandate of the statutory manager, Almancora Société de gestion, may only be terminated
with its agreement or by judicial ruling, if there are legal grounds for this. For that reason, a
great deal of attention has been paid to the way in which the Board of Directors of Alman-
cora Société de gestion itself is constituted. Account was taken when drafting the Articles of
Association of Almancora’s anchoring objective, the principles of effective corporate govern-
ance – more specifi cally recommendations regarding competent authorities – and of the legal
rules regarding confl icts of interest in listed companies.
The Board of Directors of Almancora Société de gestion consists of three types of directors, each
with its own specifi c conditions for appointment:
• A directors are those whose directorship forms part of their everyday professional activity.
The individuals in question are managing directors of Almancora Société de gestion, with
individual powers of representation. The two current A directors are also managing directors
of Cera Société de gestion, Cera’s statutory manager. This allows a personal link to be created
between Almancora and Cera.
• B directors are non-executive directors who are members of the consultative bodies that
operate within the Cera Foundation, as long as the Foundation does not oppose their can-
didacy. These directors personify the institutional link between Almancora and Cera, as also
enshrined in the description of Almancora’s object as set out in its Articles of Association.
• C directors are independent directors. They are appointed because of their independence vis-
à-vis the management of Almancora, Cera and KBC Group.
| 2 3 | A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6
Directors are appointed for a maximum term of four years7.
Directorships may be renewed. If a directorship is renewed within the same category, the direc-
tor concerned may be reappointed one or more times on expiry of each term of offi ce, though
only for immediately following terms. A directorship may not last for more than a total of
12 years.
B and C directorships terminate by law following the Annual General Meeting held in the
twelfth year of the directorship. A directorship also ends by law in any event following the
General Meeting of Shareholders held in the year following the year in which the director in
question has reached the age of 70 years. A directorships are renewable without limit and end
by law in any event at the moment that the director concerned reaches the age of 65 years.
In the event that there are one or more unfi lled directorships, the remaining directors of the
same category are authorised to fi ll the vacancy or vacancies on a temporary basis from candi-
dates proposed by the Appointments Committee until the next General meeting of Sharehold-
ers, which will make the defi nitive appointment.
The Board selects a Chairman from its B and C members.
The A and C directors together at all times constitute the majority; there must at all times be a
minimum of three C directors. Persons may only be appointed as A, B or C directors by the Gen-
eral Meeting of Shareholders at the nomination of the Appointments Committee of Almancora
Société de gestion. The C directors constitute the majority of the members of this Appointments
Committee at all times.
The company applies strict independence criteria, which are more stringent than those con-
tained in Section 524 of the Belgian Commercial Code (Code des sociétés). These independence
criteria are set out in Article 9 of the Articles of Association of Almancora Société de gestion.
7 The following transitional rules apply in relation to the length of directorships and their possible extension for directors who were incumbent as at 24 October 2003: directorships which were current on 24 October 2003 may be ended before the end of the period for which they (the directors) were appointed. After the ending of these directorships, the terms of offi ce of the directors concerned may be extended by periods of up to six years, until they have reached the age limit of seventy years or have completed three terms of six years.
A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6 | 2 4 |
2.2.2.2 Powers of the Board of Directors
The Board of Directors of Almancora Société de gestion is authorised to perform all acts which
are necessary for or conducive to the achievement of its object and, in the context of its man-
agership of Almancora, for the achievement of the object of Almancora.
In the exercise of its directorship mandate within Almancora, however, Almancora Société de
gestion must pay particular attention to the object of Almancora aimed at the maintenance and
management of a participating interest in KBC Group SA, or of every company and/or group of
companies which is a continuation thereof in order, together with Cera, to achieve and main-
tain the anchoring of KBC Group as described in the Almancora Articles of Association.
The Board of Directors carries out all tasks which are assigned to it by law and/or the Articles of
Association. Decisions on the strategy of the company, its values and the focus of its policy must
be taken in consultation between Almancora and Cera.
The Board of Directors exercises these powers with regard both to the management of
Almancora Société de gestion itself and in relation to the management of Almancora, given the
capacity of Almancora Société de gestion as statutory manager of Almancora, all in accordance
with the respective provisions of the Articles of Association. Where relevant, the Board of Direc-
tors also takes account of the cost-sharing association between Cera and Almancora.
The Board of Directors is also authorised, in view of the capacity of Almancora Société de ges-
tion as statutory manager of Almancora, to consult and collaborate with Cera in the light of
their parallel anchoring objective.
Almancora Société de gestion is bound to implement its mandate as statutory manager person-
ally. However, as permitted by the Almancora Articles of Association, the Board of Directors has
delegated the day-to-day management of Almancora and of Almancora Société de gestion, as
well as the implementation of the decisions taken by the statutory manager, to two A directors
who together constitute the Day-to-Day Management Committee.
2.2.2.3 Functioning of the Board of Directors
The functioning of the Board of Directors is governed by the Articles of Association, supple-
mented by the relevant provisions of the Belgian Commercial Code (Code des sociétés). Further
details are contained in the ‘Guidelines for Directors of Almancora Société de gestion for the
exercise of their directorships’, which form part of the ‘Internal Addendum to the Almancora
Corporate Governance Charter’, which was approved by the Board of Directors of Almancora
Société de gestion on 27 January 2006.
The former ‘Charter governing the exercise of directorships’ of Almancora Société de gestion
was partially incorporated in the Almancora Corporate Governance Charter, and partly in the
Internal Addendum to the Almancora Corporate Governance Charter.
| 2 5 | A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6
The Board of Directors met 12 times in the year under review. Each of these meetings was
attended by virtually all members. In addition to its traditional duties (adopting the annual
and interim results, proposal for result appropriation, monitoring the activities of the Audit
Committee, Appointments Committee and Remuneration Committee, approving the budgets,
etc.), the Board of Management also dealt with the following topics among others in the fi nan-
cial year 2005/2006:
• Cera/Almancora group strategy (two-day strategy meeting);
• Monitoring the strategy and results of the KBC group;
• Monitoring the arbitration procedure (see 3.4 Arbitration procedure)
• Risk management within the Cera/Almancora group;
• Market segment evaluation for the listing of Almancora shares;
• Approval of the Corporate Governance Charter;
• Remuneration policy and evaluation of managing directors;
• Monitoring procedure for the new managing director;
• Decision to distribute an interim dividend.
2.2.3 Committees appointed within the Board of Directors
2.2.3.1 Day-to-Day Management Committee
• Composition:
The Day-to-Day Management Committee comprises the two A directors.
The term of offi ce of the members of the Day-to-Day Management Committee ends on expiry
of their term of offi ce as A directors on the Board of Directors.
• Powers:
The Day-to-Day Management Committee prepares the meetings of the Board of Directors
and forwards proposals for decisions to the Board.
The Committee exercises its powers autonomously, but always within the framework of the
general strategy as adopted by the Board of Directors.
The Day-to-Day Management Committee is authorised to conduct the day-to-day manage-
ment of both Almancora Société de gestion and Almancora.
• Function:
The Day-to-Day Management Committee has been charged by the Board of Directors with
the day-to-day management of the company. In principle, the Day-to-Day Management
Committee meets once a month. The Committee met 11 times in the year under review. In
addition, there were of course the ongoing informal contacts between the managing direc-
tors.
A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6 | 2 6 |
2.2.3.2 Audit Committee
• Composition:
The Audit Committee comprises a minimum of three directors, other than A directors.
More than half the members of the Audit Committee must be C directors.
The Audit Committee elects a Chairman from among its members, who may not also be the
Chairman of the Board of Directors, and appoints a secretary.
• Powers:
The Audit Committee supports the Board of Directors in the performance of its supervisory
tasks in respect of auditing in the widest sense.
The Audit Committee’s tasks relate in particular to:
• Financial reporting and communication.
• Internal auditing and risk management;
• Overseeing the effective functioning of the company’s internal audit system.
• The external audit function performed by the auditor.
• Additional audit duties.
• Function:
The Audit Committee meets as often as necessary for its proper functioning, and at least
three times a year.
The Audit Committee’s activities are governed by the Internal Rules of the Audit Commit-
tee, which replace the earlier Audit Charter and have been incorporated in the Corporate
Governance Charter.
The Audit Committee met four times in the year under review.
At its meeting of 17 August 2005 the Audit Committee was concerned mainly with the
draft fi nancial statements and draft annual report of Almancora, as well as the proposal for
reappointment of the auditor.
The budgets for 2006 (both for Almancora and the cost-sharing association between Cera and
Almancora) were the subject of the meeting on 14 November 2005, which also discussed the
evaluation of the functioning of the Audit Committee.
The meeting of 13 February 2006 welcomed the two new members and appointed a vice-
chairman. The interim fi gures were also discussed and attention was devoted once again to
the evaluation of the functioning of the Audit Committee.
Finally, the meeting of 12 April 2006 discussed the proposal to distribute an interim dividend
and the request to ratify the additional auditor’s fee for the additional activities carried out.
2.2.3.3. Appointments Committee
• Composition:
The Appointments Committee comprises a minimum of three directors. The C directors
together constitute the majority of the Appointments Committee.
The Appointments Committee is chaired by the Chairman of the Board of Directors of Almancora
Société de gestion, except where the choice of his or her successor is being discussed.
| 2 7 | A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6
• Powers:
The Appointments Committee submits proposals directly (i.e. without the intervention of the
Board of Directors) to the General Meeting of Shareholders of Almancora Société de gestion
as regards the appointment of A, B and C directors. The Appointments Committee nominates
at least two candidates for each vacancy.
As the majority of the Appointments Committee consists of independent, non-executive
directors (C directors), this direct nomination of candidate directors offers the best guaran-
tee of an independent nominations policy, in which the focus is exclusively on Almancora’s
interests.
No directors may be appointed who have not been nominated by the Appointments
Committee.
• Function:
The Appointments Committee meets as often as necessary for its proper functioning, and at
least twice a year.
The Appointment Committee’s activities are governed by the Internal Rules of the
Appointment Committee, which are incorporated in the Corporate Governance Charter.
The Appointments Committee met four times during the year under review, on 6 September
2005 and on 6 February, 9 April and 2 May 2006. All four meetings were concerned with the
procedure for appointing a new A director.
Whenever it was necessary or appropriate, joint meetings were organised between the
Appointments Committee of Almancora Société de gestion and the Appointments and
Remuneration Committee of Cera Société de gestion.
2.2.3.4 Remuneration Committee
• Composition:
The Remuneration Committee comprises at least three directors, other than A directors, of
whom the majority are independent directors.
The Remuneration Committee is chaired by the Chairman of the Board of Directors of
Almancora Société de gestion.
• Powers:
The Remuneration Committee
• makes proposals to the Board of Directors regarding the remuneration policy for B and C
directors;
• makes proposals regarding the remuneration policy for members of the Day-to-Day
Management Committee (A directors);
• makes recommendations concerning the individual remuneration of B and C directors and
of members of the Day-to-Day Management Committee;
• makes proposals regarding the remuneration policy for members of the management other
than the members of the Day-to-Day Management Committee of Almancora Société de
gestion;
A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6 | 2 8 |
• makes proposals regarding the reimbursement of the external representatives and dele-
gates of the Cera group, where appropriate making a distinction between fi xed reimburse-
ment and a variable fee per session attended.
Where relevant, consultation takes place with the Appointments and Remuneration
Committee of Cera Société de gestion.
• Function:
The Remuneration Committee meets as often as necessary for its proper functioning, and at
least twice a year.
The Remuneration Committee’s activities are governed by the Internal Rules of the
Remuneration Committee, which are incorporated in the Corporate Governance Charter.
The Remuneration Committee was formed on 23 December 2005 and has met twice since
its formation, on 9 April and 2 May 2006. At these meetings the Remuneration Commit-
tee discussed the variable remuneration of the members of the Day-to-Day Management
Committee (A directors) and the draft employment contract for the new A director.
Whenever it was necessary or appropriate, joint meetings were organised between the Remu-
neration Committee of Almancora Société de gestion and the Appointments and Remunera-
tion Committee of Cera Société de gestion.
2.2.4 Auditor
The General Meeting of Shareholders of 28 October 2005 appointed KPMG Reviseurs
d’entreprises, represented by Theo Erauw, as auditor for a period of three years.
KPMG Reviseurs d’entreprises received an annual fee of EUR 14,157 in the fi nancial year
2005/2006 for the performance of its normal auditing duties. A fee of EUR 12,282 was charged
for additional activities. These activities related to:
• the merger of Almanij and KBC Bancassurance Holding to form KBC Group and the Extraordi-
nary General Meeting of Shareholders held on 1 March 2005 (as indicated in the last annual
report);
• the interim dividend;
• reporting to the regulator (BFIC).
2.3 Remuneration
2.3.1 General
The directors of Almancora Société de gestion received total gross remuneration of EUR 323,322
in respect of the exercise of their functions in the past fi nancial year. This total includes the
sum of EUR 114,025 that Almancora paid to Almancora Société de gestion, which the latter
used chiefl y to remunerate the B and C directors. Of this amount, EUR 101,625 relates to the
actual remuneration of the directors (fi xed and variable). And EUR 12,400 to reimbursement
| 2 9 | A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6
of expenses. A further EUR 209,297 was charged via the cost-sharing association in the form of
fi xed and variable remuneration for the A directors’, who are also members of the Day-to-Day
Management Committee.
2.3.2 Remuneration of B and C directors
The remuneration of B and C directors takes into account their responsibilities and time invest-
ment.
B and C directors receive a fi xed annual remuneration plus an attendance fee for each meeting
of the Board of Directors attended. The remuneration of B directors also takes into account the
remuneration they receive for their membership of the Board of Directors of Cera Société de
gestion.
Given the large amount of time he/she invests in Almancora, the Chairman of the Board of
Directors is subject to a deviating remuneration regime. He or she receives a higher fi xed
remuneration, but no attendance fees.
B and C directors who are members of the Audit Committee also receive an attendance fee for
each meeting of the Committee they attend. The Chairman of the Audit Committee receives a
fi xed remuneration. The members of the Appointments Committee do not receive attendance
fees, but merely a mileage allowance.
Finally, B and C directors are entitled to reimbursement of expenses incurred in exercising their
function as directors.
Table 6 presents a summary of the remuneration of B and C directors in the last fi nancial year.
A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6 | 3 0 |
Table 6: Remuneration of B and C directors, excluding reimbursement of expenses (in EUR)
Board ofDirectors
fi xed
Board ofDirectors
variable
Audit Committee
fi xed
Audit Committee
variable
Total
v
Georges Beerden 2,479 3,471 – – 5,949
Léopold Bragard 3,399 6,305 – 1,487 11,191
Willy Danneels 2,479 3,718 – 992 7,189
Jean-Marie Géradin 3,718 3,718 – – 7,437
Herman Jacobs 2,479 3,718 – – 6,197
Paul Peeters 2,479 3,471 4,958 – 10,907
Gilbert Marquenie 3,163 6,941 – 992 11,096
Servus BVBA 5,710 8,999 – 2,400 17,108
Cynthia Van Hulle 24,550 – – – 24,550
101,625
2.3.3 Remuneration of A directors
The day-to-day management of Almancora Société de gestion is in the hands of the Day-to-Day
Management Committee, which comprises two Managing Directors (the A directors). The A
directors of Almancora Société de gestion are currently also the A directors of Cera Société de
gestion, statutory manager of Cera.
The remuneration package of the managing directors is laid down contractually. They are paid
by Cera as joint employees of Cera and Almancora. 20% of their total remuneration is charged
on to Almancora in the context of the cost-sharing association between Cera and Almancora.
The remuneration of the managing directors consists of a fi xed portion, a variable portion, the
use of a company car and an insurance package.
The amount of the fi xed remuneration is determined on the basis of the individual
responsibilities and powers of the managing directors, taking into account the remuneration
paid for comparable functions in the marketplace.
The variable remuneration amounts to a maximum of 60% of the fi xed remuneration.
The amount of the variable remuneration is determined on the basis of the results of KBC
Group in the preceding fi nancial year and of the individual performance of the managing direc-
tors (Balanced Scorecard).
| 3 1 | A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6
Table 7 presents a global summary of the proportion of the variable remuneration of the A
directors in the last fi nancial year which was borne by Almancora via the cost-sharing associa-
tion (20% of their total remuneration).
Table 7: Fixed and variable remuneration of A directors (in EUR)
Fixed remuneration
Variable remuneration
Totalv
Managing directors (total) 144,248 65,049 209,297
A directors benefi t from a collective insurance package which consists of a retirement pension
plus a benefi t that is payable in the event of their early death. The premiums for this insur-
ance depend among other things on the age, career and remuneration of the policyholder.
As a result, these premiums can vary widely between policyholders and between years.
The A directors have a company car or receive an equivalent mobility allowance. They also
receive the additional benefi ts which are enjoyed by the other employees of Cera group (health
insurance, social assistance insurance, etc.). There are no special recruitment or departure
arrangements for the A directors.
2.4 Rotation system
Directors were appointed for a maximum six-year term on the foundation of Almancora Société
de gestion in 2001. To ensure the necessary continuity on the part of the Board, the Articles of
Association provide for a rotation system, under the terms of which a number of directorships
lapse every two years. The rotation system is an optional system, which Almancora Société de
gestion applies whenever it deems this necessary to ensure the continuity and proper function-
ing of the Board of Directors. The rotation system was applied for the fi rst time in 2003.
At its meeting of 24 June 2005 the Board of Directors of Almancora Société de gestion decided
not to apply the rotation system in 2005. Partly due to the application of the rotation system in
2003, a natural spread will be created in the expiry of the various directorships after 2007, so
that rotation in 2005 was not deemed necessary in order to ensure the continuity and proper
functioning of the Board of Directors.
A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6 | 3 2 |
2.5 Code of conduct in respect of confl icts of interest
The Board of Directors of Almancora Société de gestion has developed a code of conduct relat-
ing to transactions and other contractual ties between Almancora/Almancora Société de ges-
tion and the directors of Almancora Société de gestion. The code of conduct was incorporated
in the Almancora Corporate Governance Charter.
No incidents occurred in the year under review which warranted application of the code of
conduct in respect of confl icts of interest.
2.6 Code of conduct to prevent market abuse
The code of conduct to prevent market abuse was approved by the Board of Directors of
Almancora Société de gestion at its meeting on 23 December 2005. The principles of the code
of conduct were incorporated in the Almancora Corporate Governance Charter.
In the light of Directive 2003/6/EC on insider dealing and market manipulation, and after pub-
lication of the Belgian Royal Decree of 24 August 2005 amending the provisions on market
abuse as contained in the law of 2 August 2002 on the supervision of the fi nancial sector and
fi nancial services, and the Royal Decree of 5 March 2006 concerning market abuse, the code of
conduct was further amended by the Board of Directors of Almancora Société at its meeting on
23 June 2006.
The code of conduct to prevent market abuse provides among other things for the drawing up
of a list of insiders, the setting of annual prohibited periods, the reporting of trades by directors
and employees involved to the compliance offi cer, and the reporting of trades by management
to the Belgian Banking, Finance and Insurance Commission (BFIC).
2.7 Guidelines for the exercise of directorships
On 27 January 2006 the Board of Directors of Almancora Société de gestion approved the
‘Internal Addendum to the Almancora Corporate Governance Charter’. The Internal Addendum
replaces the ‘Charter on the Exercise of Directorships’ of Almancora Société de gestion.
The Internal Addendum is a collection of documents which among other things includes the
‘Guidelines for directors of Almancora Société de gestion for the exercise of their director-
ships’.
The Charter Committee, which was charged with overseeing compliance with the ‘Charter on
the exercise of directorships’, was wound up in the year under review. The non-executive direc-
tors who sat on the Committee joined the Audit Committee.
| 3 3 | A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6
2.8 Openness in investor communication
In fulfi lling its duty to inform, Almancora focuses on natural communication opportunities at
which it not only provides accurate information but also strives to convey that information in
a comprehensible manner. For that reason, Almancora communicates about its operations in
several ways, including:
• Providing access to its Articles of Association and prospectus;
• Publishing its six-monthly press release;
• Publishing its annual press release;
• Publishing the annual report;
• Its website www.almancora.be.
Since the Almancora share is a ‘repackaged’ KBC Group share, specifi c information – which
frequently relates to the underlying group results – can also be found in the KBC Group annual
report and website and those of its subsidiaries.
A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6 | 3 4 |
3 Statutory manager’s report
3.1 Balance sheet as at 30 June 2006
Almancora’s balance sheet total amounted to EUR 3,251.6 million on 30 June 2006.
3.1.1 Assets
Financial fi xed assets are prominent on the asset side, where they account for EUR 3,219.5 mil-
lion, or 99.01% of the balance sheet total.
Almancora purchased an additional 164,662 KBC Group shares during the fi nancial year
2005/2006, 77,000 in September 2005 and 87,662 in May 2006. Until such time as Almancora’s
legal reserve equals 10% of its authorised capital, it will continue to meet its legal duty, as
prescribed in Section 319 of the Belgian Commercial Code (Code des sociétés), to add 5% of its
annual net earnings to that reserve (see section 3.3 Result and proposed profi t appropriation).
Each year Almancora reinvests the funds which cannot be distributed in the form of dividend
owing to the mandatory requirement to form a statutory reserve. These funds are invested in
additional KBC Group shares.
As at the balance sheet date Almancora had a total of 75,980,000 KBC Group shares in portfolio.
This means that Almancora holds 1.358 KBC Group shares for each share that it has itself issued.
The average book value of the KBC Group shares was EUR 42.37 per share. The price of the KBC
Group share stood at EUR 83.90 on 30 June 2006.
The formation costs were fully amortised in the year under review.
Current assets totalled EUR 32.1 million, considerably lower than in the previous fi nancial year.
This was mainly due to the decision by the statutory manager to distribute an interim dividend
in May 2006 to an amount of EUR 176.7 million. Part of this (EUR 26.8 million out of the total of
EUR 176.7 million) had not yet been claimed by fi nancial intermediaries as at the balance sheet
date. Virtually all of this amount was claimed in early July 2006. The balance consists mainly of
short-term investments.
3.1.2 Liabilities
Capital and reserves amounted to EUR 3,224.4 million.
• The issued capital amounted to EUR 3,189.9 million.
• The statutory reserve will be further increased in accordance with the relevant legal require-
ments by EUR 9.3 million to EUR 33.9 million (i.e. an increase equal to 5% of the net profi t,
since the reserve does not yet amount to 10% of the authorised capital).
| 3 5 | A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6
• EUR 0.7 million (EUR 0.01 per share) has been carried forward to the next fi nancial year
(see section 3.3 Result and proposed profi t appropriation).
Almancora’s creditors stood at EUR 27.2 million.
• Miscellaneous creditors amounted to EUR 26.8 million and consisted largely of the unclaimed
portion of the interim dividend distributed in May 2006, (see section 3.3 Result and proposed
profi t appropriation).
• Trade creditors amounted to EUR 0.2 million.
• Outstanding tax payable amounted to EUR 0.1 million.
3.2 Profi t and loss account for the fi nancial year 2005/2006
Given the nature of Almancora’s operations, the same profi t and loss account scheme has been
used as was customary for portfolio companies.8
Almancora’s profi t and loss account for the fi nancial year 2005/2006 shows a profi t of EUR 185.8
million or EUR 3.32 per share – an increase of 36.4% on the previous fi nancial year.
3.2.1 Income
Almancora’s total income amounted to EUR 192.0 million or EUR 3.43 per share, an increase of
36.5% on the previous fi nancial year.
This increase was due primarily to the sharp rise in income from fi nancial fi xed assets.
The increase in the KBC Group dividend from EUR 1.84 to EUR 2.51 gross per share boosted
Almancora’s dividend income by 36.6%, from EUR 139.5 million to EUR 190.5 million.
Other income was generated by current assets and amounted to EUR 1.5 million. This income
consists mainly (EUR 1.2 million) of interest income from short-term investments in the period
July-October 2005. In the period between the collection of the dividend on its participating
interest in KBC Group and the payment of the Almancora dividend for the preceding fi nancial
year in November 2005, Almancora temporarily held a substantial amount in cash for short-
term investment.
An amount of EUR 34.9 million was invested after the Almancora dividend payment date
(2 November 2005), equivalent to 25% of the gross total dividend paid to Almancora by KBC
8 On 29 October 2004 Almancora received ministerial permission to continue using the annual account scheme as previously set out as an annex to the Royal Decree of 1 September 1986 on Portfolio Companies.
A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6 | 3 6 |
Group on 2 May 2005. As Almancora has a stake of more than 20% in KBC Group, it was
eligible for exemption from withholding tax on the dividend distributed by KBC Group, but
only if this participating interest was held for an uninterrupted period of at least one year. As
the date of the merger between Almanij and KBC Bancassurance Holding to form KBC Group
(2 March 2005) served as the starting date of this period of at least one year, it was necessary to
demonstrate that the KBC Group shares were still in Almancora’s possession on 2 March 2006.
The relevant amount was accordingly frozen in a special account until that date. Once defi ni-
tive exemption from the withholding tax had been obtained, on 2 March 2006, the amount in
question was unfrozen. Almancora received a market rate of interest on the amount placed on
deposit, which in the additional period (2 November 2005 – 2 March 2006) amounted to EUR
0.3 million.
Table 8 summarises the movements in the various cost categories within Almancora in recent
fi nancial years.
Table 8: Trend in Almancora income
(x EUR million)Financial
year2005/2006
Financial year
2004/2005
Financial year
2003/2004
Financial year
2002/2003
Income from fi nancial fi xed assets 190,5 139,5 84,1 77,3
Income from current assets 1,5 1,2 0,7 1,0
Total 192,0 140,7 84,8 78,3
3.2.2 Expenses
Almancora’s total costs amounted to EUR 6.2 million, or EUR 0.11 per share, an increase of EUR
1.8 million (40.7%) compared with the previous fi nancial year. This was attributable chiefl y to
the increase of EUR 1.9 million in corporation tax (see below).
The amortisation of formation costs fell by 50.0% to EUR 0.5 million. Capitalised registration
fees relating to the restructuring in 2001 were therefore amortised completely in the year
under review.
Almancora’s operating costs consist of expenses relating exclusively to Almancora itself and
to costs relating to the cost-sharing association. Almancora and Cera have set up a cost-shar-
ing association in order to enhance the cost-effi ciency of both parties’ operations. A budg-
et is drawn up annually, setting out the different costs within the cost-sharing association.
Almancora reimburses Cera for part of these costs every six months on a pro rata basis. Settle-
ment then occurs at the end of each calendar year based on the actual costs.
| 3 7 | A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6
In line with this practice, settlement for the period January-December 2005 took place in early
2006. The total costs for the calendar year 2005 amounted to EUR 1.9 million. This meant that
the actual costs were EUR 0.1 million below budget.
The following cost-billing percentages have been applied since 1 January 2006:
• Costs of management/advice: 20%;
• Support charges (not including the items ‘Art Collection’, ‘Foreign Taxes’ and ‘Central Data
Management’): 20%;
• ‘Financial Unit’ expenses: 50%;
• ‘Member and Capital Administration’ expenses: 10%;
• Communication (not including items relating specifi cally to Cera): 20%.
An amount of EUR 1.8 million has been budgeted for the current year with respect to the
cost-sharing association. In the fi rst half of 2006 Almancora paid a pro rata proportion of this.
Total costs in the context of the cost-sharing association amounted to EUR 1.8 million in the
year under review, 8.0% more than in the previous fi nancial year.
Other operating costs, which relate exclusively to Almancora, rose by EUR 0.6 million (+71,1%)
to EUR 1.4 million. This increase was chiefl y the result of:
• Costs of debt (EUR 0.3 million). At the beginning of November 2005 Almancora drew down
EUR 34.9 million in order to ensure it had suffi cient cash reserves to pay its dividend on
3 November 2005. This debt was repaid in early March 2006 when defi nitive exemption was
obtained from withholding tax, as described above (see section 3.2.1 Income).
• Increased consultancy costs (up EUR 0.2 million to EUR 0.4 million), mainly due to the ongoing
arbitration procedure (see section 3.4 Arbitration procedure).
• Increased costs of fi nancial services (up EUR 0.2 million to EUR 0.3 million). This increase was
due on the one hand to the increased dividend distribution and on the other to the fact that
Almancora made use of fi nancial services on two occasions in the year under review, specifi -
cally in respect of the interim dividend that was distributed in May 2006.
• Reduction in costs in respect of the stock market listing and the costs of the services of the
auditor (combined fall of EUR 0.1 million to a combined total of EUR 0.2 million).
Almancora has a corporation tax liability of EUR 2.5 million in respect of the year under review,
as taxable income increased sharply mainly due to the rise in dividend income (see section 3.2.1
Income).By contrast, the deductible costs remained stable.
Table 9 summarises the movements in the various cost categories in recent fi nancial years.
A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6 | 3 8 |
Table 9: Trend in Almancora’s costs
(x EUR million)Financial
year2005/2006
Financial year
2004/2005
Financial year
2003/2004
Financial year
2002/2003
Amortisation of formation expenses 0.5 1.0 2.1 3.2
Costs of cost-sharing association 1.8 2.0 1.9 2.3
Taxes 2.5 0.6 0.0 0.0
Other costs 1.4 0.8 0.2 0.6
Total 6.2 4.4 4.2 6.1
3.3 Result and proposed profi t appropriation
The profi t to be appropriated for the year under review amounts to EUR 185.8 million.
Article 319 of the Belgian Commercial Code (Code des sociétés) requires that 5% of net earn-
ings in each fi nancial year be set aside in a statutory reserve until such time as that reserve
reaches 10% of the authorised capital. The sum of EUR 9.3 million will thus be added to the
statutory reserve in respect of the year under review. The formation of a statutory reserve does
not entail any economic cost on the part of Almancora’s shareholders. The funds in question
remain within the company and may be used for such purposes as reinvestment in KBC Group
shares. In the future, the associated income will be added to the profi t to be appropriated and
the distributable profi t.
Profi t to an amount of EUR 0.9 million was brought forward from the previous fi nancial year,
which means that a maximum of EUR 177.4 million was available for profi t distribution for the
fi nancial year 2005/2006.
Almancora distributed a total of EUR 176.7 million in the form of interim dividend on 5 May
2006.
Almancora Société de gestion SA, statutory manager of Almancora, proposes that EUR 0.7 mil-
lion (EUR 0.01 per share) be carried forward to the next fi nancial year.
This means that the fl ow-through percentage in the year under review was 92.78%, a reduc-
tion compared with the 93.42% in the previous fi nancial year. This limited reduction was due
primarily to the increase in the corporation tax liability.
| 3 9 | A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6
3.4 Arbitration procedure
On 12 July 2005 Cera and Almancora, and their respective statutory managers, were notifi ed
of a request for arbitration fi led by four Cera members. They are principally demanding that
an Extraordinary General Meeting of Almancora be convened to debate a motion for it to be
dissolved. Cera and Almancora are convinced that there are no legal grounds for such request
and look forward to the outcome of the arbitration process with the greatest confi dence.
3.5 No consolidated fi nancial statements for Almancora SCA
Almancora has only one equity holding in another company, namely its participating interest in
KBC Group. Almancora has no control over that company, either legally or in practice. Conse-
quently, Almancora is not obliged to produce consolidated fi nancial statements.
Given that each Almancora share corresponded with 1.358 ‘repackaged’ KBC Group shares
on the balance sheet date, Almancora shareholders who are interested can however fi nd
additional useful information in KBC Group’s consolidated annual report, which can be con-
sulted on the KBC Group website at www.kbc.com. The annual report may also be requested
from: KBC Group SA, Investor Relations, Havenlaan 2 SEE, 1080 Brussels, or by e-mail from inves-
3.6 Most recent fi nancial year and available information for 2006 on KBC Group
3.6.1 Past fi nancial year of KBC Group
KBC Group’s most recent fi nancial year (2005) was discussed in its last annual report. The main
company developments and fi nancial highlights are set out below.
KBC Group closed the fi nancial year 2005 with a profi t of EUR 2.25 billion, an increase of 39%
compared with 2004. This growth in profi t refl ected a solid income structure, improved effi -
ciency and limited impairments on loans and investments.
A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6 | 4 0 |
Key developments at KBC Group in 2005 were as follows:
• Strengthening of the existing corporate strategy and announcement of the creation of a new
management structure.
• Announcement of the repurchase of KBC Group shares in 2006 to an amount of EUR 1 bil-
lion.
• Harmonisation of the company logos and strengthening of the cross-border asset manage-
ment and merchant banking activities in Central Europe, as well as extension of the strategic
distribution agreement with the Czech postal service. Buying out of the minority interests in
the Hungarian K&H Bank and a study of expansion opportunities in Romania and the Balkan
region.
• Launch of a collaborative arrangement with other international banking groups (Rabobank,
DZ Bank) for the processing of international payment transactions (Fin-Force).
• Implementation of synergy projects in the European private banking business. A number
of acquisitions in Belgium and the neighbouring countries (including HSBC Dewaay and
Effectenbank Stroeve) to strengthen this activity.
• Scaling down of non-core activities of Gevaert and placing other activities with other parts of
the Group.
The fi nancial highlights of KBC Group in the fi nancial year 2005 can be summarised as follows:
• Profi t amounted to EUR 2.25 billion, generating a return on equity of 18%.
• Client deposits grew by EUR 14 billion on the year (an increase of 8% excluding
professional counterparties), while the credit portfolio grew by EUR 8 billion (up 12% exclud-
ing professional counterparties) and life reserves increased by EUR 5 billion (+38%). As a
result, net interest income increased to EUR 4.3 billion (this increase was also partly due to the
introduction of the new IFRS valuation rules).
• The premium income from insurance activities cannot be compared with that in 2004 due to
the changed accounting treatment. On a comparable basis, premium income increased by
56% to EUR 8.0 billion.
• Commission income increased by EUR 415 million, chiefl y due to the successful sale of invest-
ment funds and life insurance and the provision of asset management services. Assets under
management increased by EUR 40 billion compared with year-end 2004 (+25%).
• Capital gains on the investment portfolio (EUR 458 million) were slightly more limited than in
2004.
• Costs were down 1% at EUR 4.9 billion, while the costs/income ratio in the banking activities
fell to 60%.
• The provisions for bad debt were limited to EUR 35 million (credit loss ratio 0.01%). In
contrast to 2004, there were no signifi cant impairments on the investment portfolio.
The combined ratio for non-life insurance amounted to 96%.
The profi t fi gures and key ratios presented in Table 10 give an impression of the result of KBC
Group in the fi nancial year 2005 and a comparison with the fi nancial year 2004. In the past
(up to and including the fi nancial year 2005) the segmentation of the Group has been based
| 4 1 | A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6
on entities (banking, insurance, asset management, European private banking, Gevaert and
holding company). At the end of 2005 KBC Group introduced a more internationally focused
management structure which refl ects the strengthening of the Group's international dimen-
sion; the new structure became operational on 1 May 2006. Since then, KBC Group reports on
the results of fi ve Business Units, each falling under the responsibility of a CEO (Belgium, Cen-
tral Europe, European Private Banking (KBL EPB), Merchant Banking and Group Centre (central
services and product factories)). The fi gures for 2005 have been adjusted for comparison pur-
poses. A report based on the Business Units is not available for the fi nancial year 2004.
Table 10: Profi t fi gures and key ratios of KBC Group for the fi nancial years 2004 and 2005
(x EUR million)Financial year
2005
Financial year
2004*
Net group profi t 2,249 1,615
Belgium Business Unit 1,003
Central Europe Business Unit 409
Merchant Banking Business Unit 789
European Private Banking Business Unit 192
Group Centre -144
Net earnings per share 6.26 4.48
Dividend per share 2.51 1.84
Capital and reserves per share 43.8 37.0
Costs/income ratio, banking activities 60% 65%
Combined ratio, non-life insurance 96% 95%
Solvency (Tier 1) of KBC Bank and KBL EPB 9.4% 10.1%
Solvency of KBC Assurances 385% 347%
Return on equity 17.6% 13.7%
* Figures for 2004 are pro forma, i.e. based on the combined fi gures of KBC Bancassurance and Almanij.
A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6 | 4 2 |
With net profi t of EUR 2.25 billion, KBC Group exceeded the excellent pro forma results in 2004
by more than 39%. The return on equity was 18%, the costs/income ratio for the banking activi-
ties fell to 60% and the combined ratio for the non-life insurance activities stood at 96%. In
addition to these excellent fi nancial results, KBC Group maintained its solid capital base, with
a Tier 1 ratio of 9.4% for the banking activities and a capital ratio of 385% for the insurance
activities.
Chart 9 shows the trend in profi t of KBC Group in recent fi nancial years. The profi t fi gures
for the period 2001 to 2003 inclusive are based on Belgian accounting standards; from 2004
onwards they are based on IFRS.
Chart 9: Trend in KBC Group profi t (x EUR million)
Together with the new management structure (see above), the long-term strategy was also
determined at the end of 2005; the main effect was a reaffi rmation of the focus on activities,
clients and geographical target areas. This means that:
• The KBC group will continue to focus its activities on bancassurance and asset management
for retail clients, private banking clients and SME/midcap businesses, and will also remain
active in providing services for larger businesses and market activities;
• Geographically, the Group will concentrate on Belgium and Central Europe for its retail bank-
ing and insurance activities and its services to businesses (supplemented by a selective pres-
ence in a number of other European countries), and on the whole of Europe for its private
banking activities.
At the same time, the Group examined which initiatives are needed in order to provide fur-
ther support for the present strong stand-alone strategy and enable the Group to achieve its
2,500
2,000
1,500
1,000
500
02001 2002 2003 2004 2005
KBC Group profit 1,022 1,034 1,119 1,615 2,249
| 4 3 | A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6
fi nancial objectives. As KBC has more than adequate resources to fund the renewed strategy,
the Group decided to launch a share buy-back programme in 2006 to a value of EUR 1 billion.
3.6.2 First half of KBC Group’s fi nancial year 2006
KBC Group published its results for the fi rst half of 2006 on 31 August 2006. Net profi t in the
fi rst half of the year totalled EUR 1.72 billion, an improvement of 41% compared with the
previous year. Leaving aside a number of non-recurring factors and changes in the fair value
of balance sheet hedging instruments, the result came in at EUR 1.41 billion, an increase on a
comparable basis of EUR 246 million or 21% compared with the fi rst half of 2005.
Key developments at KBC Group in the fi rst half of 2006 were as follows:
• The equity participations in the Belgian industrial company Agfa-Gevaert and the Spanish
bank Banco Urquijo were sold.
• The stake in the Polish insurance company WARTA was increased to 100%. In addition, the
new management organisation was introduced in the second quarter; this will further opti-
mise the control of the Group.
• The share buy-back continued, with a total of 8,584,477 shares being repurchased for an
amount of EUR 729 million (position as at 24 August 2006). The plan is to repurchase shares
to an amount of EUR 1 billion by year-end.
• The presence in Slovenia via Nova Ljubljanska banka is being reassessed and new expansion
opportunities are being explored, with a focus on (candidate) EU member states.
The fi nancial highlights of KBC Group in the fi rst half of the fi nancial year 2006 can be
summarised as follows:
• The underlying profi t contribution from the Business Units was as follows: Belgium EUR 597
million; Central Europe EUR 260 million; Merchant Banking EUR 482 million; European Private
Banking EUR 99 million; and Group Centre EUR -28 million.
• Total gross income amounted to EUR 6.2 billion. The fi rst half of the year was characterised
by strong sales results, with client deposits, the credit portfolio, assets under management
and Life reserves increasing (on a comparable basis) by 8%, 12%, 19% and 33%, respectively,
compared with a year earlier. Developments on the interest and capital markets also had a
positive net effect.
• Costs stood at EUR 2.4 billion, 4% higher than in the fi rst half of 2005. The increase was due
largely to a rise in profi t-related costs of the capital market activities, which generated a high
level of income. The costs/income ratio of the banking activities, a measure of effi ciency,
improved further to 51% (55% excluding the non-recurring income).
• The provisions for bad debt amounted to only EUR 57 million, limiting the credit loss ratio to
0.08%. The technical result in the non-life insurance activities remained very solid (combined
ratio 91%).
• Taxes amounted to EUR 658 million, compared with EUR 448 million in the fi rst half of 2005.
Table 11 compares the profi t trend in the various KBC Group Business Units in the fi rst half of
2006 with the fi rst half of 2005, and also shows the trend in the key ratios.
Table 11: Profi t fi gures and key ratios of KBC Group for the fi rst half of the fi nancial years 2006
and 2005
(x EUR million) 1H 2006 1H 2005
Net group profi t 1,715 1,213
Underlying group profi t* 1,410 1,165
Belgium Business Unit 597 499
Central Europe Business Unit 260 216
Merchant Banking Business Unit 482 369
European Private Banking Business Unit 99 100
Group Centre -28 -19
Net earnings per share 4.81 3.39
Capital and reserves per share 42.9 40.0
Costs/income ratio, banking activities 51% 58%
Combined ratio, non-life insurance 91% 94%
Solvency (Tier 1) of KBC Bank and KBL EPB 9.1% 9.6%
Solvency of KBC Assurances 343% 397%
Return on equity 25% 20%
A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6 | 4 4 |
* Underlying group profi t means profi t excluding fair value changes of balance sheet hedging instruments and non-recurring factors.
| 4 5 | A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6
3.7 Outlook
Almancora’s principal income source comprises the dividends it receives from its participation
in KBC Group.
Forecasts of KBC Group’s future dividend rely heavily on factors such as the projection of KBC
Group’s future earnings.
When presenting its results for the fi rst half of 2006, KBC Group made the following statement:
“There was a particularly strong increase in business performance over the period under review
thanks to the strategic position the KBC group has acquired and the predominantly favourable
fi nancial and economic climate. KBC remains confi dent of the earnings potential of its strategy,
but is also alert to the signs of a weakening environment. Taking into account the gain of EUR
0.5 billion on the disposal of Banco Urquijo in Q3, and assuming that the fi nancial and economic
conditions remain unchanged, KBC expects 2006 net profi t to be at least EUR 3.2 billion.”
The number of KBC Group shares held by Almancora may be expected to increase slightly year-
on-year due to reinvestment of the funds which may not be distributed as dividend owing to
the mandatory formation of the statutory reserve.
The pattern of cost development can be summarised as follows:
• Costs within the cost-sharing association are expected to be in line with those in the year
under review.
• Other operating costs will consist on the one hand of the usual costs, which can be estimated
at approximately EUR 0.5 million, and costs in connection with the proposed arbitration pro-
cedure (see section 3.4 Arbitration procedure)
• There will be no further amortisation of formation expenses.
• The development of the corporation tax liability will largely depend on the trend in dividend
income.
A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6 | 4 6 |
| 4 7 | A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6
FINANCIAL REPORT
A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6 | 4 8 |
4 Financial report
4.1 Balance sheet
Balance sheet after profi t distribution
(in EUR) 30 June 2006 30 June 2005
ASSETS 3,251,648,377 3,346,596,802
Fixed assets 3,219,531,754 3,206,966,157
I. Formation expenses 0 505,177
IV. Financial fi xed assets 3,219,531,754 3,206,460,980
B. Companies with which there is
a participatory relationship3,219,531,754 3,206,460,980
1. Participating interests 3,219,531,754 3,206,460,980
Current assets 32,116,623 139,630,645
VIII. Investments 5,009,923 139,125,055
B. Other investments 5,009,923 139,125,055
IX. Liquid assets 27,100,930 112,018
X. Accruals and deferrals 5,771 393,571
| 4 9 | A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6
30 June 2006 30 June 2005
LIABILITIES 3,251,648,377 3,346,596,802
Capital and reserves 3,224,443,527 3,215,359,576
I. Capital 3,189,854,003 3,189,854,003
A. Issued capital 3,189,854,003 3,189,854,003
IV. Reserves 33,865,989 24,574,929
A. Statutory reserves 33,865,989 24,574,929
V. Earnings carried forward 723,535 930,643
Creditors 27,204,850 131,237,226
IX. Creditors up to one year 27,204,850 131,237,226
C. Trade creditors 197,883 210,577
1. Suppliers 197,883 210,577
E. Taxes, remuneration and social security costs 142,560 628,417
1. Taxes 142,560 628,417
F. Other creditors 26,864,406 130,398,233
A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6 | 5 0 |
4.2 Profi t and loss account
(in EUR) 30 June 2006 30 June 2005
RESULTS 185,821,203 136,264,909
Expenses 6,183,152 4,393,254
A. Cost of creditors 282,483 62
B. Other fi nancial expenses 16,765 74
C. Services and sundry goods 2,864,772 2,751,330
E. Sundry current costs 1,395 3,017
F. Amortisation of formation expenses 505,177 1,010,355
L. Taxes 2,512,560 628,417
Income 192,004,355 140,658,163
A. Income from fi nancial fi xed assets 190,489,768 139,500,255
1. Dividend 190,489,768 139,500,255
B. Income from current assets 1,499,725 1,157,908
E. Other current incom 14,862 0
Treatment of results
A. Profi t balance to be appropriated 186,751,846 138,059,647
1. Profi t to be appropriated for the fi nancial year 185,821,203 136,264,909
2. Earnings brought forward from previous
fi nancial year930,643 1,794,738
C. Addition to capital and reserves 9,291,060 6,813,245
2. Addition to statutory reserve 9,291,060 6,813,245
D. Result to be carried forward 723,535 930,643
1. Earnings to be carried forward 723,535 930,643
F. Earnings to be paid out 176,737,252 130,315,758
1. Capital remuneration 176,737,252 130,315,758
| 5 1 | A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6
4.3 Notes
I Statement of formation expenses (item 20, Assets)
Net book value at end of previous fi nancial year 505,177
Movements during the year
- Amortisation (505,177)
Net book value at end of fi nancial year 0
Of which: - costs of formation or capital increase,
costs on issue of loans and other
formation expenses 0
IV Statement of fi nancial fi xed assets (item 28, Assets)
2. Companies
with a participatory
relationship (item 282)
1 Participating interests and shares
a) Acquisition value
At end of previous fi nancial year 3,206,460,980
Movements during fi nancial year: acquisitions 13.070,774
At end of fi nancial year 3,219,531,754
Net book value at end of fi nancial year 3,219,531,754
V.A. Participating interests and ownership rights in other companies
Hereafter are the businesses in which the company has a shareholding (included in items
280 and 282, Assets) and the other businesses in which the company holds ownership rights
(included in items 284 and 51/53, Assets) to the amount of at least 10% of the issued capital.
A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6 | 5 2 |
Name, complete
address of the
registered offi ce
and, in the case
of companies
under Belgian
law, the
Company
Number
Ownership rights held byData drawn from most recently available fi nancial statements
The company (directly)
Subsid-iaries
Fin
anci
al
stat
emen
ts a
s at
Cu
rren
cy b
y co
de Capital
and reserves
Net result
Number % %(+) or (-)
(in currency units x 1,000)
KBC Group SA
consolidated
Havenlaan 2
1080 Brussel 8,
Belgium
BE 0403.227.515
31.1
2.20
05
EUR
15,7
51,0
00
2,24
9,00
0
Ordinary shares 75,980,000 20.93
VI Investments: other investments (item 51/53, Assets) Previous
Financial year fi nancial
year
Time-deposit accounts at credit institutions 5,009,923 139,125,055
with a remaining term or notice period of:
- less than one month 5,009,923 22,350,000
- More than one month and no more than one year 116,775,055
| 5 3 | A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6
VIII Statement of capital
Amount Number of shares
A. Authorised capital
1. Issued capital (item 100, Liabilities)
- at end of previous fi nancial year 3,189,854,003
- at end of fi nancial year 3,189,854,003
2. Capital composition
2.1. Types of shares
Ordinary shares 3,189,854,003 55,929,510
2.2. Registered or bearer shares
Registered 28,429,628
Bearer 27,499,882
X Statement of liabilities
C. Liabilities in respect of taxes, remuneration and social security costs
Financial year
1. Taxes
c. Estimated tax liability 142,560
XII Operating results Previous
Financial year fi nancial
year
F. Other operating charges (item 640/8)
Other 1,395 3,017
XV Tax on the result Financial year
A. Analysis of item 670/3
1. Tax on the result for the fi nancial year 2,512,560
a. Taxes and advance levies
payable or paid 2,370,000
c. Estimated tax supplements
(included under item 450/3, Liabilities) 142,560
B. Main causes of the differences between the profi t before tax,
as per the fi nancial statements, and the estimated taxable profi t
Financial year
Defi nitive taxed income on dividends received 180,965,280
A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6 | 5 4 |
XVI Value added tax and taxes in respect of third parties Previous
Financial year Financial year
B. Amounts withheld in respect of third
parties in the form of:
2. Withholding tax 20,517,621 3,899,516
XVIII Relationships with associated companies and companies with which there is a
participatory relationship
1. Associated companies 2. Companies with which there
is a participatory relationship
Previous Previous
Financial year Financial year Financial year Financial year
1. Financial fi xed assets 3,219,531,754 3,206,460,980
Participating interests 3,219,531,754 3,206,460,980
7. Financial results
Income from
current assets 242,883
| 5 5 | A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6
4.4 Valuation principles
The fi nancial year ran from 1 July 2005 to 30 June 2006. The balance sheet and profi t and loss
account were prepared on a quarterly basis.
Formation expenses
Formation expenses are stated at acquisition value and are amortised on a straight-line basis at
a rate of 20% a year.
Intangible fi xed assets
Intangible fi xed assets are stated at acquisition value and are amortised on a straight-line basis
at a rate of 20% a year.
Tangible fi xed assets
Tangible fi xed assets are stated at acquisition value.
Financial fi xed assets
Financial fi xed assets consist of ownership rights (shares) held in other businesses with a view to
creating lasting and specifi c ties with those businesses, so as to enable the company to infl uence
their orientation and policy.
Financial fi xed assets are stated at acquisition value, applying the individualisation method.
In accordance with the principle of continuity in accounting, historical book values have been
retained for participating interests obtained through the contribution of sectors/the general-
ity.
Financial fi xed assets may be revalued in the event that their value, determined in accordance
with their utility to the company, comes to exceed their book value in a clear and lasting man-
ner.
Downward adjustments in value may be effected in the event of a lasting decrease in value or
depreciation, justifi ed by the circumstances, profi tability or prospects of the company in which
the shares are held.
Additional acquisition costs are charged immediately to the results.
Amounts receivable and creditors
Amounts receivable and creditors are stated at nominal value.
Downward adjustments in value are performed if uncertainty exists as to the payment of all or
part of an amount receivable at due date.
A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6 | 5 6 |
Investments
Investments are stated at nominal value where they comprise a positive balance at a fi nancial
institution and at their acquisition value in the case of securities.
Acquisition value is determined using the individualisation method.
Additional acquisition costs in the case of securities are charged immediately to the result.
In the case of fi xed-income securities, where the acquisition value differs from the redemption
value, the difference between the two is included in the result in proportion to the securities’
remaining term to maturity as an element of the interest income on the securities in ques-
tion and is added to or deducted from the acquisition value of the securities, as the case may
be. Inclusion in the results occurs on an up-to-date basis, refl ecting the actuarial return on
purchase.
In the case of non-fi xed-income securities (primarily equities), downward adjustments in value
are performed if the sale value as at balance sheet date is lower than the acquisition value.
Liquid assets
Cash at bank and in hand is stated at nominal value.
Capital, revaluation gains and reserves
Capital, revaluation gains and reserves are stated at nominal value.
Revaluation gains are transferred to taxed reserves in the event that the asset in question is
realised.
Provisions and deferred taxes
The purpose of provisions is to cover, according to their specifi c character, clearly defi ned losses
or costs which, as at the balance sheet, are likely or certain to be incurred but the amount of
which has yet to be determined. Provisions are withdrawn if they cease to be fully or partially
necessary.
Other asset or liability elements are stated at acquisition value.
| 5 7 | A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6
4.5 Auditors’ Reports
4.5.1 Report on the fi nancial year
Auditors’ report to the General Meeting of Shareholders of Almancora SCA on the fi nancial
statements for the year ended 30 June 2006
We hereby report, as required by law and the Articles of Association, on the performance of the
audit assignment with which we have been entrusted.
We have audited the fi nancial statements for the fi nancial year ended 30 June 2006, prepared
in accordance with the statutory and administrative rules applying in Belgium, with a balance
sheet total of EUR 3,251,648,377 and a profi t and loss account showing a profi t in the fi nancial
year of EUR 185,821,203. We have performed the additional, specifi c audit checks required by
law.
The preparation of the fi nancial statements, the assessment of the information which must
be included in the annual report, and the compliance by the company with the Belgian
Commercial Code (Code des Sociétés) and the Articles of Association, are the responsibility of
management.
Our responsibility as auditors is to examine the fi nancial statements on the basis of the
statutory rules and general audit standards applying in Belgium.
Unqualifi ed report on the fi nancial statements
Our audits were performed in accordance with the audit standards of the Belgian Institut des
Reviseurs d’Entreprises. Under the terms of these audit standards, our audit was organised and
carried out in such a way as to obtain a reasonable degree of certainty that the annual accounts
do not contain any inaccuracies of material importance.
In accordance with these standards, we have taken account of the administrative and account-
ing organisation of the company and of its internal audit procedures. Those responsible within
the company provided such information and clarifi cation as we requested. We performed ran-
dom checks on the reporting of the amounts included in the fi nancial statements. We assessed
the valuation principles, signifi cant accounting projections made by the company and the over-
all presentation of the fi nancial statements. We consider that these activities provide a reason-
able basis for our opinion.
A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6 | 5 8 |
In our judgement, taking account of the prevailing statutory and administrative rules, the fi nan-
cial statements for the period ended 30 June 2006 present a true and fair view of the company’s
assets, fi nancial situation and results.
Additional statements
We supplement our report with the following additional statements and information,
the nature of which is not such as to alter the scope of our opinion on the fi nancial state-
ments:
• The annual report contains the information required by law and corresponds with the fi nan-
cial statements. However, we are unable to make any pronouncement on the description of
the chief risks and uncertainties confronting the company, nor about its position, its foresee-
able development or the material infl uence of certain facts on its future development. We are
however able to confi rm that the information provided contains no obvious contradictions
compared with the information in our possession in connection with our audit assignment.
• The treatment of the result proposed to the General Meeting of Shareholders corresponds
with the provisions of the law and the Articles of Association.
• No actions or decisions were taken in respect of which we are required to inform you that they
contravene the Articles of Association or the Belgian Commercial Code (Code des sociétés).
• Without prejudice to formal aspects of subordinate importance, the accounting records have
been kept in accordance with the statutory and administrative rules applying in Belgium.
• An interim dividend was distributed during the fi nancial year, about which we have compiled
a separate report below, as required by law.
Leuven, 22 September 2006
B.C.V.B.A. Klynveld Peat Marwick Goerdeler
Reviseurs d’entreprises
Auditor
Represented by
Theo Erauw
Partner
| 5 9 | A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6
4.5.2 Report concerning interim dividend
Auditors’ report concerning the limited review of the statement of assets and liabilities as at
27 April 2006, prepared for the proposal for the distribution of an interim dividend by Alman-
cora SCA
Introduction
In the context of the proposal to distribute an interim dividend, we were requested by
Almancora SCA (the Company) to issue a report on the statement of assets and liabilities as
at 27 April 2006, pursuant to Section 657 and within the limits specifi ed by Section 618 of the
Belgian Commercial Code (Code des sociétés).
Findings
The statement of assets and liabilities as at 27 April 2006 shows a profi t of EUR 186.25 million
for the period from 1 July 2005 to 27 April 2006 inclusive. This amount, less the anticipated
negative result during the period from 28 April 2006 to 30 June 2006, augmented by the results
carried forward from 30 June 2005 and taking into account the statutory reserve that must be
formed pursuant to the law and the Articles of Association, results in a balance of EUR 177.32
million that is eligible for distribution.
Based on our limited review we established that:
• The Articles of Association permit the statutory manager to distribute an interim dividend;
• The decision to distribute an interim dividend was taken more than six months after the end
of the preceding fi nancial year which ended on 30 June 2005 and after the fi nancial state-
ments for the fi nancial year ending on 30 June 2005 had been approved;
• The decision to distribute an interim dividend was taken within two months of the prepara-
tion of the statement of assets and liabilities;
• Without prejudice to formal aspects of subordinate importance, the accounting records have
been kept in accordance with the statutory rules applying in Belgium and the valuation prin-
ciples have been applied consistently;
• Based on information available at the date of this report, the management of the Company
believes that the anticipated result as at 30 June 2006 will amount to approximately EUR
185.68 million.
Conclusion
In conclusion, we declare that we have carried out a limited review of the statement of assets
and liabilities of Almancora SCA as at 27 April 2006, with a balance sheet total of EUR 3,403.17
million and profi t for the period from 1 July 2005 to 27 April 2006 inclusive amounting to EUR
186.25 million. The management of the Company estimates that the result for the fi nancial year
ending on 30 June 2006 will amount to approximately EUR 185.68 million.
Our assignment was carried out in the context of the proposed decision to distribute an interim
dividend. As a result, this assignment consisted chiefl y in the analysis, comparison and discussion
of the fi nancial information and was carried out in accordance with the audit recommendations
A N N U A L R E P O R T 2 0 0 5 / 2 0 0 6 | 6 0 |
of the Belgian Institut des Reviseurs d’Entreprises in respect of limited reviews. Our review was
therefore less far-reaching than a full audit of the fi nancial statements.
Whilst carrying out our activities no information came to light which was of such a nature as to
lead to material changes to the statement of assets and liabilities as at 27 April 2006.
Brussels, 28 April 2006
B.C.V.B.A. Klynveld Peat Marwick Goerdeler
Reviseurs d’entreprises
Auditor
Represented by
Theo Erauw
Partner
Almancora SCA
Registered offi ce
Philipssite 5 bus 10
B-3001 Leuven
Belgium
Tel.: +32 (0)16 279672
Fax: +32 (0)16 279694
Website: www.almancora.be
Editorial staff
Jan Bergmans
Luc De Bolle
Rik Donckels
Kristof Van Gestel
Cynthia Van Hulle
Germain Vantieghem
Coordination of fi gures:
Ann Thoelen and Els Lefèvre
Design, printing and fi nishing
Lannoo Drukkerij, Tielt
Cover photo
Raf Berckmans
Translation
Julian Ross
Coordination
Jan Bergmans and Franciska De Cock
Final editing
Greet Leynen
Responsible publisher
Hilde Talloen
Almancora’s annual report is available in Dutch, French and English from the company’s
registered offi ce or on its website www.almancora.be. Conformity between the translations
and the original annual report has been checked by Almancora, which assumes responsibility
in this regard. In the event of discrepancies or differences of interpretation, the Dutch version
alone shall be legally binding.
