BRVM Stock Market

1 February 2015 BRVM STOCK MARKET 2015 YEAR IN REVIEW

Cheikh Yakhoub Niang, CFA Tel: (+221) 33-869-3140 [email protected]

BRVM, the African Leader in 2015

In a year full of difficulties and general disappointment, the West African stock market posted the best yearly performance of the continent at 17.7%.

Over 2014 and 2015, the regional market two main indices, the BRVM 10 and the BRVM Composite, experienced cumulative increases of respectively 59% and 83%.

Performing as well as the Côte d’Ivoire economy, all but one sector of the BRVM market displayed positive performances during 2015.

Overall, it was a good year for the BRVM that enjoyed a significantly higher trading volume, with a far greater contribution of smaller cap stocks.

Another Bullish Year Ahead

Globally, the consensus is expecting another difficult year with low oil and commodities prices among other down trends. However, things are likely to stabilize towards the end of 2016.

The BRVM should be able to benefit from its low correlation with other global markets and enjoy the expected growth in the WAEMU zone.

Agriculture will still be enduring a down commodities market and make it hard for these companies to perform.

2015 Stock Performances

UNXC; 257.5% BNBC; 142.5% PRSC; 139.6% ABJC; 118.5% ONTBF; 114.3% TTLC; 109.5% NTLC; -9.1% SOGC; -19.7% SVOC; -25.5% PALC; -29.0% UNLC; -32.4% SPHC; -34.6%

Source: BRVM Data

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TABLE OF CONTENTS GLOSSARY ...... 3 WHAT HAPPENED ON THE BRVM MARKET DURING 2015 .. 4 Recent Bond Issues ...... 6 IPO’s and Capital Raise ...... 6 New Development Plan & New Logo ...... 6 BRVM , THE 2015 AFRICAN CHAMPION . 8 SECTOR AND STOCK RETURNS ...... 12 Industry sector 8,1% (2014: 9,3%; 2013: 55,7%; 2012: 22,1%) .... 15 Public Services sector 16,0% (2014: 15,7%; 2013: 33,9%; 2012: 24,5%) ...... 16 Finance sector 13,9% (2014: 13,9%; 2013: 43,1%; 2012: 10,7%) 17 Transport sector 25,7% (2014: 53,8%; 2013: 126,2%; 2012: 45,9%)18 Agriculture sector -27,7% (2014: -35,4% 2013: -6,5%; 2012: 8,3%)18 Distribution sector 95,1% (2014: 10,4%; 2013: 52,6%; 2012: 65,8%) ...... 19 CONCLUSION & 2016 OUTLOOKS ...... 20 SUMMARY OF BRVM RETURNS ...... 23

Disclosures Appendix

This report is distributed by First Frontier Capital Limited (“FFCL”) in association with Impaxis Securities (“Impaxis”). This report is classified as being a “marketing communication” for the purposes of the rules and guidance (FCA Rules) issued by The Financial Conduct Authority (FCA). This is principally because FFCL cannot verify that this report has been prepared in accordance with UK legal requirements designed to promote the independence of investment research. This report has been prepared by the research division of Impaxis and has been reviewed by FFCL, but no material changes have been made as a result. First Frontier Capital Limited is an Appointed Representative of Dinosaur Merchant Bank Limited, which is authorized and regulated by The Financial Conduct Authority, UK.

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GLOSSARY

Stock Code Company Name Sector ABJC Servair CI Distribution BICC BICI CI Finance BNBC Bernabé CI Distribution BOAB Bank of Africa Bénin Finance BOABF Bank of Africa Finance BOAC Bank of Africa Côte d'Ivoire Finance BOAN Bank of Africa Finance BOAS Bank of Africa Sénégal Finance CABC SICABLE CI Industry CFAC CFAO CI Distribution CIEC CIE CI Public Services ETIT TG Finance FTSC Filtisac CI Industry NEIC NEI-CEDA CI Industry NTLC Nestlé CI Industry ONTBF Onatel BF Public Services PALC PALM CI Agriculture PRSC Tractafric CI Distribution SAFC SAFCA CI Finance SDCC SODE CI Public Services SDSC Bolloré Logistics CI Transport SEMC Crown Siem CI Industry SGBC SGB CI Finance SHEC Vivo Energy CI Distribution SICC SICOR CI Agriculture SIVC Air Liquide CI Industry SLBC Solibra CI Industry SMBC SMB CI Industry SNTS Sonatel SN Public Services SOGC SOGC CI Agriculture SPHC SAPH CI Agriculture STBC SITAB CI Industry SVOC MOVIS CI Transport TTLC Total CI Distribution TTLS Total SN Distribution TTRC Trituraf CI Industry UNLC CI Industry UNXC Uniwax CI Industry

BRVM 2015 Year Review | GLOSSARY 3

WHAT HAPPENED ON THE BRVM MARKET DURING 2015

The BRVM Stock Exchange is in the WAEMU zone that includes 8 West African countries: (1 company listed), Burkina Faso (2), Côte d’Ivoire (31), Guinea Bissau (0), (0), Niger (1), (3) and (1).

Overall, the WAEMU region, home of the BRVM, experienced a strong growth in 2014, led by the continued economic expansion in Côte d’Ivoire, and limited impact of the consumer prices and underlying inflations. We also note that the rise in public infrastructure investment also stimulated economic activity.

Fortunately, the impact of the virus Ebola epidemic (particularly in Guinea, Liberia and Sierra Leone) on growth has not been impactful in the WAEMU. The and political situation in many countries do remain fragile, although the presidential elections went well in Côte d’Ivoire and Burkina Faso at the end of the year. Elsewhere, we note that the situation is still fragile in the North of Mali, with a terrorist attack in the capital of the country, Bamako, in last November. There was also a terrorist attack in Ouagadougou, capital of Burkina Faso on January 15th 2016, with a death toll of 30 victims.

Let’s dig deeper into the two main countries of the WAEMU zone and the ones with the most companies listed, even though Sénégal is a very distant number two to Côte d’Ivoire. In Sénégal, originally planned at 4.9% in 2014, the growth rate was revised down to 4.5% due to the negative impact of Ebola disease in the sector and delayed rains on the agricultural sector growth. GDP growth is projected at 4.6% in 2015, driven by the revival of the primary sector and the strength of activity in the secondary and tertiary sectors. This momentum, coupled with the beginning of implementation of the Plan Senegal Emergent (PSE), should continue and growth is projected to be at 5.0% in 2016. The PSE plans to make Senegal an emerging economy by 2035. In its first implementation period (2014-18), the PSE is structured around three areas: i) structural transformation of the economy and growth; ii) human capital, social protection and sustainable development; iii) governance, institutions, peace and security. The stated PSE’s ambition was to achieve, over this period, an average growth rate of 7%. The new development strategy should result in substantive structural reforms to raise growth potential and stimulate creativity and private initiative. This is primarily to meet the strong desire for well-being.

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The different projects include the sectors of energy, agriculture and tourism. Added to investment programs in the road sector, with further work of the highway and the airport, as well as those for opening up the South. The slowness with which these programs and reforms are applied, however, may negatively influence the growth projections. Household consumption is the main component of domestic demand, with a share of 77.5% of GDP in 2014. It increased by 3.2% in 2013 and 2014 is projected at 3.6% in 2015. It is also supported by the remittances of migrants, estimated at about 12.0% of GDP in 2014 by the International Monetary Fund.

But, Senegal remains exposed to the security situation in Mali, home of a recent terrorist attack, and possible spread of the Ebola outbreak.

Similar to recent years, Economic growth in Côte d’Ivoire is likely to remain strong in 2015 and 2016, with growth estimated at 7.9% and 8.5%, based on the same explanatory factors in 2014 according to the International Monetary Fund. This growth is supported by both domestic and external demand: Public and private investment in infrastructure and in household consumption supporting domestic demand; Foreign demand boosts his side's export commodities. Plus, the political situation improved slightly, with a slow pace of dialogue between political actors, despite some effective measures: release of proGbagbo prisoners, the return of high-level political refugees and the unfreezing of their assets in banks. From the supply side, the primary sector remains a key driver of growth, through investments in rural infrastructure, and reforms implemented to improve farmers’ earnings and other important projects for productivity. Private consumption remains a key factor of this growth, thanks to higher farm income, a low level of inflation, and a slight improvement in the formal and informal employment in urban centers. As for external demand, increases in exports in general and cocoa bean, seed cotton and rubber were on average slower than imports. These are composed mainly of capital goods and intermediate goods for post-conflict reconstruction. Moreover, the situation remains fragile in neighboring countries, especially those of the Mano River Union (MRU), Burkina Faso and Mali. The ADB Group recognizes three factors likely to reduce these risks: the will of the government, continued dialogue within the framework of national reconciliation, political and financial support of the entire international community to consolidate democracy and peace efforts in neighboring countries.

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Recent Bond Issues

The West African Economic and Monetary Union (WAEMU) recently set up a regional agency, UMOA Titres, to support the issuing and management of sovereign bonds. This is even more relevant given the fact that the USD will continue its rise in value in 2016.

Over the year, there were seven new bond issues made for a total amount of XOF 694 billion: four from the Côte d’Ivoire Treasury, one from the Sénégal Treasury, one from the BOAD (Banque Ouest Africaine de Développement) and one from the CCRH- UEMOA.

IPO’s and Capital Raise

There was one listing (Total SN) that was a huge success at the beginning of the year and a capital increase (BOA CI), combined both did rise XOF 51.23 billion. There were also two stock splits during the year: Uniwax CI for a ratio of 5 new shares for 1 existing share, on April 30th; and Total CI for a ratio of 20 for 1.

New Development Plan & New Logo

The Senegalese architect Pierre Goudiaby Atepa was elected new chairman of the boards of the Regional Stock Exchange (BRVM) and the Central Depository / Settlement Bank (DC / BR), since June 25th. He is replacing Gabriel Fal at these positions. The DC / BR is a financial institution and a separate limited institution from the BRVM. Its functions include empowering applicants to the account holder function, settlement negotiations and managing the financing of the securities, keeping current securities accounts opened by the broker in his books and e-payment in cash as a settlement bank, the balances of stock transactions. The new president of the boards of the BRVM and DC / BR intends to pursue the development policy of the two sub-regional institutions initiated under the leadership of his predecessor. There are also three new directors to the Board. They are Daouda Coulibaly, representing the broker Africaine de Bourse, Francis Padonou representing broker BIBE Finance & Securities, and Patrick Brochet, representing Impaxis Securities. In other news, The BRVM is now equipped with a more streamlined corporate identity, reflecting its modernization and its new ambitions, "a modern and dynamic exchange that supports the growth of the economies of the countries of the WAEMU and promotes

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savings," says the statement that accompanies the new logo unveiled on December 10th, 2015 at the headquarters of the BRVM in Abidjan, Côte d’Ivoire.

While it presented its new visual identity, the stock exchange also inaugurated its new market room. "The new visual identity will bring a lot to the BRVM. I hope this new visual identity will create adherence to the message it conveys and will attract many investors, many listed companies, and contribute to the growth of the BRVM, " dixit the Ivorian Minister in charge of Economy and Finance, Nialé Kaba.

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BRVM STOCK EXCHANGE, THE 2015 AFRICAN CHAMPION

2015 was a tale of two semesters on the BRVM: a slow first one with a trading volume of XOF 78.5 billion; and a second one with significantly higher trading volumes and a killer month of July. But overall, no other African Stock Exchanges did perform better this year, actually most of them posting negative

Market Index 1Y Local 1Y Eur Return Return BRVM BRVM Composite 17.8% 17.9% Botswana BSE DCI 11.6% 5.3% South Africa JSE ASI 1.9% -15.2% Tunisia TUNINDEX -0.9% 1.0% Morocco MASI -7.2% -5.6% Kenya NSE ASI -10.6% -11.8% Ghana GSE-CI -11.8% -17.0% Mauritius SEMDEX -12.7% -13.8% Nigeria NGSE ASI -17.4% -15.4% Egypt EGX 30 -21.5% -20.1%

Out of these 10 African stock exchanges, seven of them posted negative returns in 2015 in their local currencies, according to their main indexes, the worst outing being found in Egypt (-21.5%). In this down year, the JSE ASI (1.9%) from South Africa, the BSE DCI (11.6%) from Botswana and of course the BRVM Composite (17.8%) from the WAEMU zone were the only ones posting positive returns. For the BRVM market, a good chunk of this performance came from the second semester and particularly from the month of July. During the latter month, the BRVM10 index, including the most liquid stocks, gained 11.3% while the BRVM Composite index, all-inclusive, gained 8.2%.

BRVM10 Monthly BRVM Comp Monthly Total Market Index Level ∆ Index Level ∆ Trading, XOF Mn

30-Jan 260.5 -2.6% 253.0 -2.0% 8 190 27-Feb 270.3 3.8% 260.7 3.1% 9 436 31-Mar 269.0 -0.5% 262.6 0.7% 14 885 30-Apr 272.4 1.3% 264.7 0.8% 16 239 29-May 273.9 0.5% 268.0 1.2% 11 696 28-Jun 279.1 1.9% 278.4 3.9% 18 099 Mid-Year 4.3% 7.9% 78 544 31-Jul 310.5 11.3% 301.2 8.2% 30 766 31-Aug 298.0 -4.0% 296.3 -1.6% 24 235 30-Sep 299.0 0.3% 298.1 0.6% 30 147 31-Oct 301.5 0.8% 303.3 1.8% 30 732 30-Nov 297.3 -1.4% 305.4 0.7% 44 026 31-Dec-15 290.4 -2.3% 303.9 -0.5% 20 754 Full Year 8.5% 17.8% 259 204 Source: BRVM data & Impaxis Securities estimates

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The West African market gradually increased in intensity over the year, with a sharp acceleration in July.

Indexes Level & Trading Volume, 2015 First Half

50 000 310 45 000 40 000 300 35 000 290 30 000 25 000 280 20 000 270 15 000 10 000 260 5 000 250 0 Jan Feb Mar Avr Ma1 Jui Juil Aou Sep Oct Nov Dec

Total Market Trading, XOF Mn BRVM10 BRVM Comp

Source: BRVM data & Impaxis Securities estimates

2015 Volume Trading share SNTS 80 484 521 465 31.1% ONTBF 34 863 371 270 13.5% FTSC 16 817 302 500 6.5% SGBC 14 803 763 945 5.7% TTLC 11 756 434 075 4.5% BRVM Total 259 204 456 002 100% Source: BRVM data & Impaxis Securities estimates

Telcos stocks were again the most traded ones in 2015, but with the sharp increase of the market total trading (66.0%) did reshuffle the cards with a greater emphasis on smaller market cap stocks.

Interest in and trading on the BRVM regional market keeps increasing year after year, and 2015 was another high with the total trading volume reaching XOF 259.2 billion. Every stocks of the market fueled this sharp increase, with a far greater contribution from the smaller cap shares than in previous years. Of course, we find the two usual suspects on top of the list but another trend is also confirmed. Sonatel SN remains the most traded stock, with a volume progressing from XOF 65.5 to 80.5 billion between 2014 and 2015. But its share from the total market decreased from 41.9% to 31.1%; trading on the market has experienced a faster progression. The other Telco from Burkina Faso, ONATEL BF also kept its rank of second most traded, with a volume doubling from XOF 17.5 to 34.9 billion

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between 2014 and 2015. But here, its market share lightly progressed from 11.2% to 13.5%.

In 2015, trading rankings are completed in the following way: Filtisac, FTSC, (XOF 16.8 bn; 6.5%), SGB CI, SGBC, Finance (XOF 14.8 bn; 5.7%) and Total CI, TTLC, Distribution (XOF 11.7 bn; 4.5%).

2015 BRVM Trading Volume

100% 80% 60% 49% 59% 58% 68% 66% 67% 74% 60% 75% 78% 79% 79% 40% 51% 20% 40% 32% 34% 41% 33% 42% 25% 22% 21% 21% 26% 0% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

SNTS Rest of the Market

2014 BRVM Trading Volume

100% 25% 25% 80% 52% 57% 53% 70% 70% 60% 65% 60% 76% 77% 75% 40% 75% 75% 48% 47% 20% 40% 35% 43% 30% 30% 24% 23% 25% 0% Jan Fev Mar Avr Mai Jui Juil Août Sept Oct Nov Dec

SNTS Rest of the Market

Source: BRVM data & Impaxis Securities estimates

Tables above demonstrate again the sliding in the importance of the Sonatel SN share. Until a couple of years ago, trading on the SNTS stock could represent more than three quarters of the market on a given month, and around half the market on average. Last year, on a monthly basis, trading on SNTS averaged 41.9% of the total market. In 2015, this average dropped even further at 31.1%. Nevertheless, the share of the Senegalese giant Telco remains the blue chip of the BRVM.

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The admirable progression of the BRVM market is shown by it’s the continuing increase of their market capitalization over the recent years.

In 2008, the total stock market capitalization leveled at XOF 3.34 trillion. A few years later started the terrific ascent: the XOF 4 trillion mark on December 31st, 2012; the XOF 5 trillion mark on May 27th, 2013; the XOF 6 trillion mark on January 29th, 2014 and the XOF 7 trillion mark on July 9th, 2015. At the end of 2015, the BRVM stock market cap reached XOF 7 500 billion.

Market Cap, XOF Bn, as of Dec 31st 2015 SONATEL SN 2 500.0 ECOBANK TRANS. INCORP. TG 865.6 ONATEL BF 510.0 SGB CI 416.9 BOLLORE AFRICA LOGISTICS CI 343.5 SOLIBRA CI 312.7 TOTAL CI 263.8 CIE CI 196.0 BICI CI 168.3 CFAO CI 165.0 Source: BRVM data & Impaxis Securities estimates

The top 10 biggest market caps Ranking has not changed a lot from the previous years. The Senegalese Telco Sonatel SN remains the real blue chip, weighting one third of the market with a market cap of XOF 2.5 trillion. From this top, only CFAO CI and Total CI are newcomers, replacing PALM CI and SITAB CI.

Stocks Top 10 P/E Ratios, as of Dec 31st 2015 SETAO CI, STAC 3 ECOBANK TRANS. INCORP. TG, ETIT 4 SAFCA CI 5 PALM CI, PALC 9 BANK OF AFRICA BN, BOAB 11 SONATEL SN, SNTS 11 SOGB CI, SOGC 12 BANK OF AFRICA BF, BOABF 13 BANK OF AFRICA CI, BOAC 13 SGB CI, SGBC 15 Source: BRVM data & Impaxis Securities estimates

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SECTOR AND STOCK RETURNS

As foreseen in our previous Annual Review, our bullish view has been confirmed for 2015, including our worries for the Agriculture sector. The latter posted the only negative return of all sectors. The renewed economic activity in Côte d’Ivoire has been particularly beneficial to the Distribution sector.

Looking at the BRVM sector returns, we see an almost exact picture than the one last year, only the Distribution sector (95.1% in 2015) taking the leader spot, replacing the Transport sector (53.8% in 2014). And again, the Agriculture sector still in hot water (-35.4% in 2014 and -27.7% in 2015).

2015 Sector Returns

95.1% 100%

80%

60%

40% 25.7% 16.0% 8.1% 13.9% 20%

0% Industry Public Finance Transport Agriculture Distribuon -20% Services -27.7% -40%

2014 Sector Returns

53.8%

42%

15.7% 13.9% 22% 9.3% 10.4%

2% INDUSTRY PUBLIC FINANCE TRANSPORT AGRICULTURE DISTRIBUTION -18% SERVICES -35.4%

-38%

Source: BRVM data & Impaxis Securities estimates

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BRVM 2015 Stock Performances

UNXC. 257.5% BNBC. 142.5% PRSC. 139.6% ABJC. 118.5% ONTBF. 114.3% TTLC. 109.5% NTLC. -9.1% SOGC. -19.7% SVOC. -25.5% PALC. -29.0% UNLC. -32.4% SPHC. -34.6%

Source: BRVM data & Impaxis Securities estimates

THE 6 BIGGEST LOSING STOCKS

With continuing falling prices of rubber and palm oil on global market, the agriculture sector is on a downtrend for the last few years. Thus, the sector includes three of the five biggest losses during the year.

6.Nestlé CI, NTLC, Industry, -9.1% Nestlé CI, NTLC the products manufacturer subsidiary based in Côte d’Ivoire lost XOF 5 000 over the year.

4. Movis CI, SVOC, Transport, -25.5% Despite the renewed economic activity in Côte d’Ivoire, Movis CI, SVOC, the port handling and logging company did not perform well in 2015 with a loss of XOF 1 745; The stock closed the year at XOF 5 100 with a limited activity, a trading volume of just XOF 57.5 million over the year.

2. Unilever CI, UNLC, Industry, -32.4% Specialized in oil processing, soap manufacturing and lipochemistry, Unilever CI, UNLC faced an increased competition on the local market during 2015.

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1, 3 & 5. SAPH CI, SPHC (-34.6%), PALM CI, PALC (-29.0%) & SOGB CI, SOGC (-19.7%), Agriculture

Following the global commodities market fall, the Agriculture sector endured losses for the third consecutive year on the BRVM market. With falling rubber selling prices, the two Ivoirian rubber producers displayed negative stock performances. SPHC is the worst performer of the year and SOGC is the fifth worst with respective loss of XOF 6 075 and 6 300. Palm oil prices follow the same down trend on global market, and PALC posted the third worst performance of the year, losing XOF 4 900.

THE 6 BIGGEST WINNING STOCKS: The Distribution sector is the big winner this year on the regional market, translating in posting four of the best stock performances. In a great year for the regional market, there are plenty of triple digits stock performances, much for the delight of investors who did look into the smaller caps:

6. Total CI, TTLC, Distribution, 109.5% Indeed, it is a good year when an annual return of 109.5% only gives you the sixth best rank of the market. The Ivorian gas and oil products distributor experienced a great year with a total trading volume of XOF 11.7 billion and closed the year at XOF 20 950 for a yearly gain of XOF 10 950.

5. Onatel BF, ONTBF, Public Services, 114.3% Following the footsteps of their Senegalese peer, Onatel from Burkina Faso, gives more weight to the importance of Telecom operators on the regional market. This stock is one of the new blue chips of the BRVM, with another strong annual outing, gaining XOF 8 000 and representing 13.5% of the market trading with a volume of XOF 34.9 billion.

4. Abidjan Servair CI, ABJC, Distribution, 118.5% The company is specialized in onboard food, police (cleaning, reconditioning, loading and unloading equipment cabin) and management of equipment stocks for airlines. It has been able to benefit from the increased activity in aviation in Côte d’Ivoire. Last year, it already posted the fifth best return of the year with 69.1%. In 2015, the share experienced an impressive gain of XOF 46 100 and closed the year at XOF 85 000 for a trading volume of XOF 4.3 billion.

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3. SDA CI, PRSC, Distribution, 139.6% The cars dealer Tractafric Motors CI, PRSC did post the third best stock performance with a gain of XOF 236 000. The stock was trading for XOF 405 000 at the end of the year but its low trading volume (XOF 660.8 million) could be a turn off for investors.

2. Bernabé CI, BNBC, Distribution, 142.5% Bernabé CI, BNBC is hardware, building materials and industrial equipment provider based in Côte d’Ivoire. The stock offers a better liquidity with a trading volume of XOF 1.3 billion over the year. With a gain of XOF 105 700, the company stock closed the year at XOF 179 900.

1. Uniwax CI, UNXC, Industry, 257.5% Uniwax CI is a wax print fabrics Ivorian maker. Their products have been soaring in the fashion world for the last years, in the Western world as well as in Africa. Thus the stock is becoming the ultimate stock performer on the BRVM. Blessed is the , who saw this pick a year ago when the stock had already soared in a big way. This is a stunning year performance, opening the year at XOF 8 000 (adjusted for the stock split), reached XOF 28 600 at the end of the year.

Industry sector 8.1% (2014: 9.3%; 2013: 55.7%; 2012: 22.1%)

Industry

176.4 174.1

165.2 164.3 162.9 163.4 161.9 162.4 161.1 161.0 159.0 158.2

Jan Fev Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Source: BRVM data & Impaxis Securities estimates

Another decent performance sector with many good stock performances: Air Liquide CI, SIVC specialized in gas production for industrial or medical purposes, and survey equipment went up 17.6% (XOF 3 000); the bitumen producer and marketer SMB CI, SMBC gained 35.8% (XOF 5

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010) and the low voltage cables company Sicable CI, CABC increased its value by 21.1% (XOF 21 500).

Going the other way, the company specialized in the production and sale of cigarettes SITAB CI, STBC lost 1.9% (XOF -2 990).

Public Services sector 16.0% (2014: 15.7%; 2013: 33.9%; 2012: 24.5%)

Public Services

872.1

834.0 836.2 826.4 818.0 806.4

741.4 742.2 731.7 718.8 722.8 693.2

Jan Fev Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Source: BRVM data & Impaxis Securities estimates

Year in, year out, this sector is performing pretty well, with no negative returns over the last four year. This performance is really helped by Telecommunication providers that are included in the sector, due to the fact that they were initially national companies. Thus the blue chip of the market, the Senegalese giant Sonatel SN, SNTS, has been contributing to the good health of this BRVM sector for quite some time now. Even with losing significant relative weight, SNTS remained by far the most traded stock on the regional market with an annual volume of XOF 80.5 billion in 2015. The Telco share also performed decently at 10.6% and closed the year at XOF 25 000. In Côte d’Ivoire, other former national companies went in opposite ways: electric energy provider CIE CI, CIEC went down 8.3% (XOF -6 325), while the public water provider SODE CI, SDCC gained 15.6% (XOF 13 995).

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Finance sector 13.9% (2014: 13.9%; 2013: 43.1%; 2012: 10.7%)

Finance 109.6 109.3 108.1 105.8 106.5 103.7 103.7 102.6 101.8

94.3 93.5 91.9

Jan Fev Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Source: BRVM data & Impaxis Securities estimates

Again, the Bank of Africa subsidiaries did well this year with only one single negative stock performance, the Niger one with an annual return of -2.3% (against 101.4% the previous year). After an IPO and a Capital increases in 2014 that were huge successes on the market, this year we saw a capital increase of a new subsidiary, from Mali, that saw another huge demand with subscriptions closed almost immediately after opening. In decreasing order, there are the following subsidiaries’ performances: Benin, BOAB (58.5%; XOF 47 995); Côte d’Ivoire, BOAC (38.9%; XOF 35 000); and Burkina Faso, BOABF (33.3%; XOF 30 000). In Senegal, BOAS gained 17.2% (XOF 11 600). During the third quarter 2015, the bank reported a net profit of XOF 2 billion, down 27.6%, despite a banking net income up by 12.4%. This decrease is famously partly linked to the XOF 6 billion downgrade from probable scam from businessman Zoheir Wazni. Thus, an exceptional provisioning effort has been made, shrinking by 40% the estimated annual result. French bank subsidiaries SGB CI, SGBC and BICI CI, BICC were also participating to the Finance party with respective stock performances of 41.0% (XOF 38 995) and 20.5% (XOF 17 150). Pan African Group Ecobank TG, ETIT, the second largest market capitalization, set back 4.0% during the year, negatively impacting the sector return.

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Transport sector 25.7% (2014: 53.8%; 2013: 126.2%; 2012: 45.9%)

Transport 1524.7

1235.8

1056.1 948.5 892.4 899.6 903.7 855.5 842.0 820.5 784.6 685.8

Jan Fev Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Source: BRVM data & Impaxis Securities estimates

The transit (marine and aviation), handling, logging, grouping, rail, heavy transport company, Bolloré Africa Logistics CI, SDSC value has significantly increased by 26.7% (XOF 66 550).

Agriculture sector -27.7% (2014: -35.4% 2013: -6.5%; 2012: 8.3%)

Agriculture 239.0

228.0 220.6 220.5 216.9 215.4

200.7 196.7 192.6 189.4

174.2 174.3

Jan Fev Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Source: BRVM data & Impaxis Securities estimates

Again this year, little known SICOR CI, SICC posted the only positive stock performance of the sector, closing at XOF 8 270, for a gain of 65.4%. But again, the trading volume on the stock is very low at XOF 55.3 million over the year.

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Distribution sector 95.1% (2014: 10.4%; 2013: 52.6%; 2012: 65.8%)

Distribuon 603.2 583.6 579.5 556.3 541.9 549.9

480.6

389.2 399.1 368.0

320.5 305.9

Jan Fev Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Source: BRVM data & Impaxis Securities estimates

The Distribution sector did post their best performance of the last four years, amidst the greater consumption of the increasing and empowered Ivorian middle class. The sector posted the best return of the market with an impressive 95.1%; putting many of their stocks on the top rankings including the best performer one. Overall, 5 stocks out of 7 in this sector progressed by more than 100% over 2015. Thus, those who had invested in the distribution sector did fare well. All stocks in this sector ended the year in green. Shell products distributor Vivo Energy CI, SHEC posted the smallest performance at 15.6% (XOF 9 375), while CFAO CI, CFAC, specialized in the commercialization of products for transport markets and cars dealership returned 83.7% (XOF 41 450).

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CONCLUSION & 2016 OUTLOOKS

Comparing BRVM Performance To Other African Stock Exchanges

African Stock Market Performance USD-Adjusted Total Return as of Dec. 31 2015 STOCK MARKET 1Y 3Y 5Y Botswana Stock Exchange -5.9% -2.1% -3.5% BRVM 6.0% 50.3% 54.9% Dar es Salaam Stock Exchange -25.5% 15.4% 41.0% -26.9% -18.3% -29.8% Johannesburg Stock Exchange -27.9% -34.3% -36.3% -46.1% -27.5% -21.6% Malawi Stock Exchange -25.1% 32.0% -28.7% Nairobi Securities Exchange -21.5% 28.1% 20.2% -4.3% -0.5% 25.6% Nigerian Stock Exchange -23.8% -19.4% -11.0% Rwanda Stock Exchange -43.2% N/A N/A Stock Exchange of Mauritius -22.2% -10.6% -18.3% Uganda Securities Exchange -22.2% 16.6% 2.1% Zimbabwe Stock Exchange -29.4% -24.6% -24.1% S&P500 -0.7% 43.3% 62.5% Source: Investing in Africa

The USD currency kept increasing in value over the year, and many African countries did lose value when performance is translated in USD. As seen above, the BRVM posted the best African stock exchange return of the year in local currency. Despite the USD appreciation, the BRVM is still posting a positive return and the only one indeed of all stock markets on the continent.

Commodities Markets

2016 will likely be another tough year for commodity markets and a sustained recovery will not happen in the short term. Many research organizations come out with a bearish outlook for commodities in the near-term. As world growth slows, commodities have come into sharp focus. After rising for the major part of the previous decade, commodity prices have been in a slump for the last four years and Energy prices crashed last year This aligns with the 'lost decade' anticipated for prices, made by many analysts, which started in 2011 and will last into the medium term.

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But While prices will remain low, 2016 should not be as bad as 2015 and we expect broad price stabilization due to a peak in US dollar strength and ongoing production cutbacks by commodities producers. Commodities markets have always been subject to phases of rapid growth and decline depending on the world growth situation. For example, according to an NBER (National Bureau of Economic Research) paper, three major super cycles started in the 1890s, 1930s, and 1960s and ended in the 1930s, 1960s, and 1990s. The paper states that a new supercycle began in the late 1990s, which is still continuing to the present day. It coincides with the emergence of a new developmental paradigm signified by the BRIC countries (Brazil, Russia, India, and China) that have mostly driven demand in commodities. Overall, there are three major factors affecting current commodity prices: the plunge in oil prices in 2014, U.S. dollar appreciation, and China's attempts to transition its economy from manufacturing to services. Even as a revolution in U.S. shale manufacturing capacity has led to a glut of oil in the international markets, consequently, a reduction in prices. Also, Saudi Arabia, the world's largest producer of oil, has kept its production capacity intact. As one knows, most commodities are denominated in US dollars. But, the USD's value has risen this year, making it more expensive to sell and buy commodities with respect to local currencies. As a result, emerging markets, which typically maintain competitive exchange rates with respect to the USD, have been hit by the dollar appreciation. The result is a decline in overall commodity sales. But perhaps the most important single factor affecting commodity prices right now is China. For much of the last two decades, growth in demand from China sustained commodity producers as a slew of infrastructure and manufacturing projects drove demand.

Global Oil Market

We see any disruption to oil supply from either Iran or Saudi resulting from the ongoing dispute as extremely unlikely. An arguably more significant result of the confrontation will be to exacerbate discord at the next June OPEC meeting and diminish the already slim chance of cooperation over voluntary output restrictions. Although the idling capacity of U.S. oil wells has increased, there are no signs of a slowdown in oil production in Saudi Arabia. The entry of Iran, which has a substantial oil capacity, into the global oil market, is further expected to complicate matters in the market. The overall effect of demand growth will be a marginal to moderate increase in prices.

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Bottom Line ! The 2016 outlook is for further strong growth, but subject to a range of downward risks, including security issues in Niger and Mali, where the security situation remained volatile in the North of the country. While Niger is suffering from spillovers from neighboring countries. Following the terrorist attacks in Bamako and Ouagadougou, Dakar and Abidjan are now facing the same threats. ! Indeed, The WAEMU zone will still be facing some downside risks in 2016. Namely, a decrease in non-oil commodity prices as a result of a slowdown of growth in advanced and emerging market countries would negatively impact the external accounts of commodity exporters such as Burkina Faso, Mali and Niger. Plus, according to the International Monetary Fund, tighter external financing conditions due to the normalization of advanced countries’ monetary policy could increase the cost of financing for countries with access to international markets like Côte d’Ivoire and Senegal. ! Commodity prices have been on a rollercoaster ride for the past four years due to economic uncertainty. The year 2016 should see marginal increases in the prices of some commodities before bottoming towards the end of the year. ! The Director General of the BRVM, Mr. Kossi Edoh Amenounve announced that six companies to enter the stock exchange by the end of 2016. One of them, including Bank of Africa (BOA) Mali has made its initial public offering on December 17 last one. BOA Mali thus became the sixth subsidiary of the group to be publicly traded after those of Benin, Niger, Côte d’Ivoire, Burkina Faso and Senegal. Note that BOA Mali is the first bank created in the African banking group, the one through which the Bank of Africa's history began in 1982. NSIA Banque, former BIAO Côte d'Ivoire is expected to join the stock market of the countries of the UEMOA the first quarter of 2016. Besides that, Mr Amenounve also announced four other companies controlled by investment funds: 2 from Côte d’Ivoire, one from Burkina Faso and one from Mali.

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SUMMARY OF BRVM RETURNS

Sector Stock Code Company 31/12/14 31/12/15 Variation BRVM 10 267.53 290.38 8.5% BRVM Composite 258 304 17.8% INDUSTRIE 161.13 174.11 8.1% CABC Sicable CI 102 000 123 500 21.1% FTSC Filtisac 29 500 29 995 1.7% NEIC NEI-CEDA CI 4 000 4 200 5.0% NTLC Nestle CI 55 000 50 000 -9.1% SEMC Crown Siem CI 23 010 44 995 95.5% SIVC Air Lquide CI 17 000 20 000 17.6% SLBC Solibra CI 200 000 189 995 -5.0% SMBC SMB CI 13 990 19 000 35.8% STBC SITAB CI 158 990 156 000 -1.9% UNLC Unilever CI 37 000 25 000 -32.4% UNXC Uniwax CI 40 000 28 600 -28.5% SERVICES PUBLICS 705.25 818.00 16.0% CIEC CIE CI 82 500 69 995 -15.2% ONTBF Onatel BF 7 400 15 000 102.7% SDCC SODE CI 91 300 103 995 13.9% SNTS Sonatel SN 22 800 25 000 9.6% FINANCE 93.48 106.50 13.9% BICC BICI CI 78 000 101 000 29.5% BOAB Bank of Africa Benin 82 005 130 000 58.5% BOABF Bank of Africa BF 90 000 120 000 33.3% BOAC Bank of Africa CI 90 000 125 000 38.9% BOAN Bank of Africa Niger 87 000 85 000 -2.3% BOAS Bank of Africa Sénégal 64 500 79 000 22.5% ETIT Ecobank TG 50 48 -4.0% SAFC SAFCA CI 23 835 33 000 38.5% SGBC SGB CI 96 795 133 995 38.4% TRANSPORT 1213.38 1524.65 25.7% SDSC Bollore CI 248 955 315 505 26.7% SVOC Movis CI 6 845 5 100 -25.5% AGRICULTURE 240.92 174.26 -27.7% PALC PALM CI 16 950 12 000 -29.2% SICC SICOR CI 5 090 8 270 62.5% SOGC SOGB CI 31 900 25 600 -19.7% SPHC SAPH CI 17 575 11 500 -34.6% DISTRIBUTION 296.96 579.46 95.1% ABJC Servair CI 38 900 85 000 118.5% BNBC Bernabe CI 74 200 179 900 142.5% CFAC CFAO CI 46 105 91 000 97.4% PRSC SDA CI 169 000 405 000 139.6% SHEC VIVO ENERGY CI 60 000 69 375 15.6% TTLC Total CI 10 000 20 950 109.5% TTLS Total SN 12 000 26 200 118.3% Source: BRVM data & Impaxis Securities estimates

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Impaxis Securities S.A.

Sacré Cœur 3 extension VDN Managing Director Head of Research N° 10 077 – B.P. 45545 Patrick Brochet Cheikh Yakhoub Niang, CFA [email protected] [email protected] Dakar Fann Sénégal Tél.: +221 33 869 31 40 Fax: +221 33 864 53 41

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