connect.
Half-Year Report 2012

Public sector cost-cutting measures plus
­persistently strong Swiss franc result ina slight decrease in sales
Strategic and structural adjustments
partly compensate for decline in earnings
Extraordinary income from the sale of­Industrial Adhesives lifts Group profit

flooring. bonding. movement.

2

Forbo Half-Year Report 2012

The Forbo Group – a leading manufacturer of floor coverings, building andconstruction adhesives, as well as power transmission and conveyor belt solutions – reported net sales of CHF 603.1 million in the first half of 2012, which
equates to a slight decline of 0.9% in local currencies (–2.7% in the corporate
currency) versus the prior-year period. Negative exchange rates again had an
impact on the Forbo Group’s results in this reporting period. The EBIT margin
stood at 9.2% (prior-year period: 10.9%). Operating profit (EBIT) came to
CHF 55.2 million (prior-year period: CHF 67.5 million), corresponding to a­decline of 18.2%. Net income from operations from continuing operations
amounted to CHF 40.3 million (prior-year period: CHF 44.7 million), equiv­
alent to a ­decrease of 9.8%. In addition, the Group posted extra­ordinary
net income of CHF 73.1 million in connection with the sale of the ­industrial
adhesives acti­vity, bringing Group profit up to CHF 113.4 million.

Dear shareholders,
The first half of 2012 was impacted by difficult market conditions, a persistently strong Swiss franc, and the effectsof cost-cutting measures in the public sector.
The Flooring Systems division was particularly hard hit by public-sector cost-cutting, since the bulk of its sales toschools, hospitals, old-age homes, and public buildings depend, either directly or indirectly, on public spending.
Whereas in the past Forbo was able to increase its margins and benefit from government stimulus programs byfocusing on the commercial market segment and the public sector, now spending is being significantly curtailed
not only for new buildings but also for renovations. However, the Group has been able to offset the impact tosome extent through moves it took in the past to fine-tune its strategy and also to focus on new market segments
outside the public sector.
The sale of the industrial adhesives activity, including synthetic polymers, was successfully closed and resulted in
an extra­ordinary income. The building and construction adhesives activity, the bulk of whose sales are in the
Benelux countries, reported a slight downturn in sales and earnings owing to the weakening of the building andconstruction industry in this region. After reviewing all strategic options, we decided to continue to develop thisbusiness within Flooring Systems in order to best maximize the potential of this activity.
The Movement Systems division reported a slight increase in sales. However, earnings fell marginally in the wakeof the ongoing projects and investments in growth markets that we continue despite the difficult economic
conditions.
Three factors helped the Group to largely offset the impact of the difficult economic situation in the first halfof 2012: the innovative product portfolio, the strategic, sustainable investments in growth markets as well as in
non-public-sector market segments made in the past, and systematic structural adjustments.

Forbo Half-Year Report 20123

Moderate sales performance
In the first half of 2012, Forbo generated net sales of CHF 603.1 million (prior-year period: CHF 619.9 million). In
local currencies this was just 0.9% lower than in the same period the previous year. However, the strong Swiss
franc reduced sales by a further 1.8%, so that the decline in the corporate currency was 2.7%. The moderate sales
trend, which began to take shape in the second half of 2011, intensified further. Movement Systems reported
modest growth of 1.3% in local currencies, while Flooring Systems and the building and construction adhesives
activity posted a slight decline in sales of 1.7% and 0.5% respectively.
Profitability impacted by difficult economic conditions
The minimal downturn in sales, combined with the strategic investments made in growth markets and in an­innovative product portfolio, resulted in lower earnings in all divisions than in the first half of 2011. Operating
profit before depreciations and amortizations (EBITDA) came to CHF 78.9 million (prior-year period: CHF 88.3 million), corresponding to a decline of 10.6%. Operating profit (EBIT), which includes an impairment of CHF 4.0 million
at Flooring Systems, came to CHF 55.2 million, compared to CHF 67.5 million in the same period the previous year.
This equates to a decline of 18.2%. The different divisions reported mixed trends. Movement Systems posted
only a small decline in earnings, whereas Flooring Systems and the building and construction adhesives activity
recorded a stronger decline in operating profit (EBIT). The main reason was the decline in sales stemming fromthe massive cuts in public spending and the downturn in the building and construction industry in many of
Forbo’s key markets.
Margins slightly eroded by the decline in sales
The minimal decline in sales plus the persistently strong Swiss franc had the effect of slightly eroding operating
margins in the first half of 2012. The EBITDA margin decreased from 14.2% in the prior-year period to 13.1%, while
the EBIT margin declined from 10.9% to 9.2%. Whereas margin erosion at Movement Systems was moderate, thedecline at Flooring Systems and building and construction adhesives was around two percentage points in bothcases.
Net income from operations declined
Due to a significantly lower tax rate of 18.0% (prior-year period: 24.9%), net income from operations from continuing operations came to CHF 40.3 million, a decrease of 9.8% versus the prior-year period, when it had stoodat CHF 44.7 million. In addition, the Group posted extraordinary net income of CHF 73.1 million stemming fromthe sale of the industrial adhesives activity. Overall, Group profit in the period under review amounted to
CHF 113.4 million. In the prior-year period, Forbo posted Group profit of CHF 74.6 million, a figure that included
extraordinary financial income of CHF 22.4 million after tax from the sale of Rieter shares. A year-on-year comparison of Group profit is therefore not meaningful.
Strong balance sheet drives value growth
Forbo will continue to systematically implement its strategy by intensifying its activities in growth markets,
strengthening its innovative product portfolio, and offering customer-specific services. With its market positions,strong balance sheet, and well-proven strategy, Forbo is able to step up expansion in growth markets and takeadvantage of external opportunities for growth in order to reinforce its position. However, we will not make­acquisitions unless they can create added value for our shareholders. Forbo will for the time being keep its liquidity as a strategic reserve.
Performance of the divisions
Forbo Flooring Systems reported net sales of CHF 401.9 million in the first half of 2012 (prior-year period:
CHF 418.3 million), equivalent to a slight decrease of 1.7% in local currencies versus the same period the previous
year (however, in Swiss franc terms, sales declined by 3.9%). Since Flooring Systems’ main customer segments areschools, hospitals, old-age homes, and public buildings, the division is highly dependent on public sector spending. Given the massive cuts to public spending in many of Forbo’s key markets, investment in new buildings aswell as in renovations are being postponed or even shelved completely. This restrictive spending policy is likely
to intensify. Forbo has adjusted to this changed environment by strengthening its distribution structures and4

Forbo Half-Year Report 2012

entering new customer segments such as shopfitting, offices, hotels, and gastronomy. These measures, however,will only bear fruit in the medium term. Operating profit (EBIT), which contains an impairment of CHF 4.0 million,
declined by 19.3% to CHF 40.5 million compared with CHF 50.2 million in the same period the previous year. The
EBIT margin declined from 12.0% in the prior-year period to 10.1%. The focus in the coming months will be on
targeted marketing and distribution activities, developing new customer segments outside the public sector, andintensified efforts to expand in growth markets.
Given the ongoing downturn in construction activity in the Benelux countries, net sales of the building andconstruction adhesives activity (the continuing operation of Forbo Bonding Systems) declined from CHF 41.9
million in the first half of 2011 to CHF 39.5 million in the first half of 2012. In local currencies, this comes to aminimal decline of 0.5% versus the prior year (in Swiss francs, the decline was 5.7%). The sales downturn in the
Benelux countries was offset in part by strong growth in the Russian market, where Forbo tapped the private
residential market. Operating profit (EBIT) fell by 14.7% to CHF 8.1 million (prior-year period: CHF 9.5 million). The
EBIT margin contracted from 22.7% to 20.5%. In the second half of 2012, the building and construction adhesives
activity will focus its efforts on further developing the Russian market and its business in Eastern Europe.
Forbo Movement Systems reported net sales of CHF 161.7 million in the first half of 2012 (prior-year period:
CHF 159.7 million), equivalent to an increase of 1.3% in both local currencies and Swiss francs versus the same
period the previous year. The demand trend in the second half of 2011 continued into the first half of 2012. Whiledemand in Europe remained very muted, some countries in the Asia-Pacific region reported double-digit growth
rates. In China and Japan, Forbo’s largest markets, however, demand weakened slightly. The positive sales uptrend
continued in North America. Operating profit (EBIT) declined slightly by 3.3% to CHF 14.7 million compared with
CHF 15.2 million in the same period the previous year. The EBIT margin contracted slightly from 9.5% to 9.1%. Alsoin the second half, the division will keep its focus on expanding its activities in the growth markets and on worldwide marketing of its range of plastic modular belts.
Outlook for 2012
We expect that public-sector cost-cutting will continue and that the impact on our business, especially for newbuildings and renovations, will intensify slightly. The measures Forbo launched some time back to reduce its­dependence on the public sector by developing new market segments are currently being implemented and will
have the medium-term effect of offsetting the decline in demand from the public sector.
Assuming no major changes in other relevant conditions, Forbo expects to post somewhat higher net income
from operations from continuing operations in the second half of 2012 than it did in the first six months ofthe year.

Dr. Albert Gnägi
Chairman of the Board of Directors

Forbo Holding Ltd
Baar, August 14, 2012

This E. Schneider
Delegate of the Board of Directors and CEO

Forbo Half-Year Report 20125

Consolidated balance sheet
and income statement
Condensed consolidated balance sheet
Unaudited, CHF m
AssetsNon-current assets
Property, plant, and equipment, and intangible assets
Deferred income tax assets, investments in associates, and other non-current assets
Current assets
Assets held for sale
Inventories
Trade and other receivables, prepaid charges, and deferred income
Marketable securities
Cash and cash equivalents
Total assets

30.6.201231.12.2011

529.2
501.1
28.1
956.8

536.4
513.3
23.1
965.5
361.4
219.6
192.0
0.1
192.4
1,501.9

244.6
226.9
118.4
366.9
1,486.0

Shareholders’ equity and liabilities
Shareholders’ equity
Non-current liabilities
Non-current financial debt
Employee benefit obligations, provisions, and deferred tax liabilities
Current liabilities
Trade payables
Current financial debt
Provisions and accrued expenses, tax, and other liabilities
Liabilities directly associated with assets held for sale
Total liabilities
Total shareholders’ equity and liabilities

888.5
280.9
133.5
147.4
316.6
81.6
49.8
185.2
597.5
1,486.0

815.3
276.2
144.5
131.7
410.4
86.1
47.5
179.2
97.6
686.6
1,501.9First half 2012

First half 2011

Condensed consolidated income statement
Unaudited, CHF mContinuing operations
Net sales
Cost of goods sold
Gross profit
Operating expenses
Operating profit
Financial result
Group profit before taxes
Income taxes
Group profit from continuing operations
Group profit from discontinued operations after taxes
Group profit

Restated

603.1– 378.5
224.6– 169.4
55.2
– 6.0
49.2
– 8.9
40.3
73.1
113.4

619.9
– 384.0
235.9– 168.4
67.5
21.8
89.3
– 22.2
67.1
7.5
74.6

Earnings per share total
Basic earnings per share in CHF
Diluted earnings per share in CHF

49.68
49.65

31.72
31.62

Earnings per share from continuing operations
Basic earnings per share in CHF
Diluted earnings per share in CHF

17.65
17.64

28.53
28.44

Earnings per share from discontinued operations
Basic earnings per share in CHF
Diluted earnings per share in CHF

32.03
32.01

3.19
3.18

The accompanying notes are an integral part of the half-year report.

6

Forbo Half-Year Report 2012

Comprehensive income statement
and consolidated shareholders’ equity
Comprehensive income statement
Unaudited, CHF m
Group profit
Components of other comprehensive income:Translation differences
Translation differences reclassified in the income statement
Changes in fair value of financial instruments available-for-sale
Proceeds from the sale of financial instruments available-for-sale; transfer to income statement
Actuarial losses (–)/gains on pension liabilities
Fair value adjustments of cash flow hedges
Fair value adjustments of net investment hedges
Other comprehensive income, net of tax
Total comprehensive income

First half 2012
113.4

First half 2011
74.6

– 0.7
41.2

– 66.1––– 18,614.8
1.2
5.1– 63.611.0– 12.6
1.0
0.0
28.9
142.3

Consolidated shareholders’ equity
first half 2012

Unaudited, CHF m
As at January 1, 2012
Group profit
Other comprehensive income, net of tax
Total comprehensive income
Change in scope of consolidation
Share-based payments
Treasury shares
Dividend
As at June 30, 2012

Share
capitalTreasuryshares

0.3

– 0.1

0.3

– 0.1

Share
capitalTreasuryshares0.3– 0.1

Reserves

Revaluation
reserves

Assetsavailablefor-saleReserves
fromcash flow
hedgesTranslationdifferences

128.0

0.0

– 1.7

– 289.4

1.0
1.0

40.5
40.5
2.7

978.2
113.4
– 12.6
100.8
14.3
2.1
– 43.7– 27.5
1,024.2

111.0

Reserves

Revaluation
reserves129.2– 17.0– 0.7– 246.2

Assetsavailablefor-saleReserves
fromcash flow
hedgesTranslationdifferences

18.6

0.0

– 283.2– 18.6– 18.6

1.2
1.2– 61.0– 61.00.0

1.2– 344.2

Total

815.3
113.4
28.9
142.3
2.1
– 43.7– 27.5888.5

Consolidated shareholders’ equity
first half 2011

Unaudited, CHF m
As at January 1, 2011
Group profit
Other comprehensive income, net of tax
Total comprehensive income
Share-based payments
Treasury shares
Dividend
As at June 30, 2011

0.3

– 0.1

The accompanying notes are an integral part of the half-year report.

864.9
74.6
14.8
89.4
3.9
8.1
– 28.3
938.0

129.2

Total

729.7
74.6
– 63.6
11.0
3.9
8.1– 28.3724.4

Forbo Half-Year Report 20127

Consolidated cash flow statement

Condensed consolidated cash flow statement
Unaudited, CHF m
Cash flow from operating activities
Cash flow from investing activities
Cash flow from financing activities
Increase/decrease (–) in cash and cash equivalents
Translation differences on cash and cash equivalents
Cash and cash equivalents at beginning of year
Total cash and cash equivalents as at June 30

First half 2012
4.2
240.5
– 83.4
161.3
0.3
205.3
366.9

Cash and cash equivalents as at January 1, 2012 stoodat CHF 205.3 million and can be broken down as follows:
Continuing operations:
Discontinued operations: 

CHF 192.4 million
CHF 12.9 million

First half 2011
2.4
41.3
– 85.3– 41.6
– 9.8
171.4
120.0

The cash flow from investing activities contains the cash
flow from the sale of the industrial adhesives activity,
including synthetic polymers. From this divestment,
there resulted a positive cash flow of CHF 368.0 million,
which was the difference between the cash inflow from
H.B. Fuller Company (CHF 383.2 million) and the outflow
of the cash and cash equivalents of the divested subsidiaries (CHF 15.2 million) on March 5, 2012.

The accompanying notes are an integral part of the half-year report.

8

Forbo Half-Year Report 2012

Notes to the condensed consolidated
half-year financial statements(unaudited)
01 General information
This condensed consolidated interim report covers the
six-month period from January 1, 2012 to June 30, 2012
(hereinafter ‘reporting period’) and was drawn up in­accordance with the International Accounting Standard
34 (IAS 34) ‘Interim Financial Reporting’. The consolidated half-year financial statements do not include all
information reported in the consolidated full-year financial statements and should therefore be read in conjunction with the consolidated financial statements as
at December 31, 2011.

With the exception of the impairments mentioned in
section ‘04 Segment information’, the consolidated
half-year financial statements do not contain any new
estimates and assumptions by management compared with the consolidated financial statements as at
December 31, 2011. Earnings and expenses which are
not incurred on a straight-line basis during the business year are only deferred if such deferral was justified
at year-end. Income tax expenditure is estimated on
the basis of average actual tax rates during the current
business year.
03 Changes in the scope of consolidation

The consolidated half-year financial statements havenot been audited by the auditors. They were approvedfor publication by the Board of Directors on August 7,
2012.
02 Group accounting policies
The accounting policies applied in the consolidated
half-year report are in line with the accounting policies
set out in the 2011 Annual Report with the following
exceptions:
The following new and revised standards and interpretations were applied by the Forbo Group for the firsttime as at January 1, 2012:– IFRS 1 (revised), ‘First-time Adoption of International
Financial Reporting Standards’– IFRS 7 (revised), ‘Financial instruments: Disclosures’– IAS 12 (revised), ‘Income taxes’
The application of these revised standards has no effecton the Half-Year Report presented here.
The Forbo Group has not prematurely applied standards, interpretations or amendments that have been
published but are not yet mandatory.
The preparation of the consolidated half-year financial
statements requires management to make estimatesand assumptions that may affect reported revenues,
expenses, assets, liabilities, and contingent liabilities atthe date of the financial statements. If the estimatesand assumptions made by management to the best of
its knowledge at the date of the financial statements
differ from the actual facts, the original ­estimates andassumptions will be adjusted in the reporting period
in which the facts have changed.

Forbo signed a contract with H.B. Fuller Company on
December 21, 2011 on the sale of its industrial adhesives and synthetic polymers activities, which were partof the Bonding Systems division. On fulfillment of allconditions, the transaction was closed on March 5,
2012. All companies active in the businesses affected
left the scope of consolidation as of March 5, 2012. The
information on the prior-year period in the income
statement and segment reporting has been restatedaccordingly.
04 Segment information
Forbo is a global producer of Flooring Systems, Bonding
Systems, and Movement Systems. The divisions reflect
the internal management structure and are run separately because the products that they manufacture,
distribute, and sell differ fundamentally in terms of production, distribution, and marketing.
Flooring Systems develops, produces, and sells lino­
leum, vinyl floorings, entrance matting systems, carpet
tiles, and needlefelt floor coverings as well as the ­various
accessory products required for installing, processing,cleaning, and care of flooring. Following the sale ofthe industrial adhesives activity, including synthetic
polymers, the Bonding Systems division now consists
solely of development, manufacture and distribution ofadhesives for the building and construction industry.
Movement Systems develops, produces, and sells highquality power transmission belts, conveyor and processing belts, as well as plastic modular, timing and flat belts
made of synthetic materials. Corporate encompasses
the costs of the Group headquarters and certain items
of income and expenses that are not directly attributable to a specific division.

Forbo Half-Year Report 2012

The four segments Flooring Systems, Movement Systems, Bonding Systems, and Corporate are reportablesegments. The identification of reportable divisions isbased on internal management reporting to the Chief
Executive Officer of the Forbo Group and hence on thefinancial information used to check the performanceof the operational units in order to reach a decision on
the allocation of resources. Whereas the segment information for the Bonding Systems division still included
industrial adhesives, including synthetic polymers, inthe 2011 consolidated financial statements, the segment information below for the Bonding Systems division shows only the building and construction ad­
hesives activity, the only activity that has remained in
the Forbo Group. The information for the prior-year­period has been restated accordingly. As already announced, Forbo has decided to integrate the building
and construction adhesives activity into the Flooring
Systems division in the second half of 2012. It may

9therefore be assumed that building and construction
adhesives will no longer be a reportable segment in the2012 consolidated financial statements.
Management reporting is based on the same accounting principles as external reporting.
The Chief Executive Officer assesses the performanceof the divisions based on their operating result (EBIT).
The net financial result is not allocated to the divisions
since it is Corporate Treasury that in the main exercises
central control over the financial result.
Inter-segment sales are effected at arm’s length. The
divisions apply the same accounting principles as theGroup. Sales to third parties, as they are reported to
the Chief Executive Officer, are identical with the sales
reported in the income statement.

Segment information on the reportable segments for the reporting period:First half 2012
Unaudited, CHF m
Total net sales
Inter-segment sales
Net sales to third parties
Operating profit (EBIT)
Operating assets
Number of employees (June 30)

Flooring
Systems
402.1
– 0.2
401.9
40.5
657.5
2,780

Bonding
Systems
48.2
– 8.7
39.5
8.1
46.0
276

Movement
Systems
161.7
–
161.7
14.7
248.6
1,891

Corporate
–
–
–
– 8.1
20.2
43

Elimination
– 8.9
8.9
–
–
–
–

Total
603.1
–
603.1
55.2
972.3
4,990

Movement
Systems
159.7
– 0.0
159.7
15.2
228.3
1,830

Corporate
–
–
–
– 7.4
23.8
41

Elimination– 11.4
11.4
–
–
–
–

Total
619.9
–
619.9
67.5
933.3
4,898

Segment information on the reportable segments for the prior-year period:First half 2011 (restated)
Unaudited, CHF m
Total net sales
Inter-segment sales
Net sales to third parties
Operating profit (EBIT)
Operating assets
Number of employees (June 30)

Flooring
Systems
419.3
– 1.0
418.3
50.2
637.0
2,771

Bonding
Systems
52.3– 10.4
41.9
9.5
44.2
256

The EBIT of the Flooring Systems division contains impairments of intangible assets totaling CHF 4.0 million.
For one thing, an impairment of CHF 1.8 million had tobe taken for the goodwill that had been capitalized
when a production site was acquired in Russia. As expectations regarding future sales and margins at thissite had been revised downwards, we conducted an
impairment test at the end of the first half. Furthermore,

an impairment of CHF 2.2 million was taken for thebrand name Westbond capitalized on the acquisitionof Bonar Floors and for the related bonding technology.
In this case, lower expectations regarding future sales
achievable with this brand name were the reason for
conducting an impairment test at the end of the first
half.

10

Forbo Half-Year Report 2012

In comparison with the prior-year period, the EBIT of
Corporate contains exceptional charges in the area of
personnel and one-off charges in connection with theevaluations conducted for the sale of the building andconstruction adhesives activity of the Bonding Systems
division.

Reconciliation of division results to the income statement and balance sheet:First half 2012
Unaudited, CHF m

Restated

Operating profit (EBIT)
Financial result
Group profit before taxes

Unaudited, CHF m
Total operating assets, continuing operations
Total operating assets, discontinued operations
Total operating assets
Non-operating assets
Total assets

05 Balance sheet
Total assets as at June 30, 2012 decreased by CHF 15.9
million versus the end of the previous year to CHF
1,486.0 million. The sale of the industrial adhesives activity, including synthetic polymers, had a major impact
on the balance sheet structure. This resulted in the outflow of assets and liabilities classified as held for sale atthe end of the previous year but on the other handbrought in net cash and cash equivalents of CHF 368.0
million. Since cash and cash equivalents had increased
substantially, CHF 116.4 million was invested in marketable securities.
The increase in inventories and in trade receivables­totaling CHF 57.5 million was mainly contingent on theclosing date. Another reason for the increase in inventories is that the adjustment of output to the lowerthan-expected sales took place with a certain time lag.
Since investments in fixed assets amounting to about
CHF 10.2 million were lower than the depreciationsof CHF 17.9 million, fixed assets decreased by CHF 9.0
million. The investments were made mainly for replacements and projects to boost efficiency.

First half 2011

55.2
– 6.0
49.2

67.5
21.8
89.3

30.6.2012
972.3

31.12.2011
961.6
305.9
1,267.5
234.4
1,501.9

972.3
513.7
1,486.0

The balance sheet item ‘Employee benefit obligations,provisions and deferred tax liabilities’ increased by
CHF 15.7 million to CHF 147.4 million compared withthe end of the previous year. This increase was due
mainly to the actuarial calculation of employee benefit
obligations. The decline of CHF 11.0 million in noncurrent financial debt was achieved primarily by buying
back the Group’s own bonds on the market.
Compared with December 31, 2011, shareholders’­equity increased by CHF 73.2 million to CHF 888.5 million. The increase is due primarily to the sale of the industrial adhesives activity, including synthetic polymers,
which increased shareholders’ equity by CHF 114.3 million. Furthermore, shareholders’ equity increased by
CHF 40.3 million, which is the Group profit from continuing operations. Various factors reduced shareholders’ equity: these were the dividend of CHF 27.5 million
paid out to shareholders of Forbo Holding Ltd, the­impact of treasury shares (CHF 43.7 million), and theactuarial losses on pension liabilities (CHF 12.6 million).
The equity ratio increased further in the first half of 2012and stood at 59.8% as at June 30, 2012.
Net cash came to CHF 302.0 million as at June 30, 2012.

Forbo Half-Year Report 201206 Income statement
Operating profit (EBIT) in the reporting period came to
CHF 55.2 million, which was CHF 12.3 million lower thanin the prior-year period. The impact of the currency­effects stemming from the translation of the half-year
reports of subsidiaries into the corporate currency cameto CHF 2.7 million at the EBIT level. As a result, operating
profit (EBIT) in the reporting period decreased, after currency adjustment, by CHF 9.6 million in comparison
with the prior-year period. The main reasons for thisdevelopment are, for one thing, slightly lower sales thanin the prior-year period, even after adjustment for currency effects and, for another, the lower EBIT margin,
which was due to higher operating expenditures andto the CHF 4.0 million impairment on intangible assetsof the Flooring Systems division.
Financial result (net financial expenses) came to CHF 6.0
million in the reporting period. The financial result of
the prior-year period (net financial income of CHF 21.8
million) contains in particular the proceeds from thesale of securities. Without this income, the result in theprior-year period would have been net ­financial expenses of CHF 7.3 million. Consequently, the comparable net financial expenses declined by CHF 1.3 million
versus the same period the previous year.
Income tax amounted to CHF 8.9 million, corresponding to a tax rate of 18.0%.
Group profit came to CHF 113.4 million and consists ofGroup profit from continuing operations amounting to
CHF 40.3 million and Group profit from discontinued
operations amounting to CHF 73.1 million. Group profit from discontinued operations is related solely to thesale of the industrial adhesives activity, including synthetic polymers, on March 5, 2012. The sum includes the
profit generated by this activity in the period fromJanuary 1 to March 5, 2012 of CHF 5.0 million, the profit from the sale of this business amounting to CHF 110.5
million, and transaction costs of CHF 1.2 million connected with the sale. Currency translation losses of
CHF 41.2 million not recognized in income in the past
were also deducted from the profit from the sale. These
had to be transferred from shareholders’ equity to theincome statement at the date of the sale.

11

The CHF 26.8 million decline in profit from continuing
operations compared with the prior-year period ismainly attributable to the financial income of CHF 22.4
million after tax from the sale of securities contained in
the profit of the prior-year period. The negative currency effects stemming from translation of the half-year
statements of subsidiaries into the corporate currency
caused Group profit in the first half of 2012 to contract
by CHF 2.2 million. The comparable and currency-­
adjusted Group profit from continuing operations
therefore declined by CHF 2.2 million compared to thesame period the previous year.
Basic earnings per share in the period under review
amounted to CHF 49.68. Diluted earnings per share(adjusted for the dilution effect of outstanding options)came to CHF 49.65.
07 Cash flow statement
The free cash flow generated in the period under review
came to CHF 244.7 million.
Operating cash flow increased slightly in comparison
with the prior-year period and came to CHF 4.2 million.
As in the prior-year period, the build-up of net working
capital versus the end of the previous year prevented
Forbo from achieving a better operating cash flow. In
particular, the increase in inventories resulting fromlower-than-expected sales contributed to this.
The cash inflow from investing activities, amounting to
CHF 240.5 million, was greatly influenced by the sale ofindustrial adhesives and synthetic polymers activities.
This divestment generated a cash flow of CHF 368.0
million, of which CHF 116.4 million had been invested
in marketable securities by June 30, 2012. Investments
in property, plant, and equipment in the first half of2012 came to CHF 10.2 million.
In the reporting period, liquidity of CHF 83.4 million wasused for financing. Of this amount, CHF 27.5 million
went to pay out the dividend to Forbo shareholders.
The high level of liquidity was also used to buy backsome Group’s own financing instruments. Via the market, Forbo spent CHF 44.1 million to buy back own
shares and CHF 12.4 million for own bonds.

12

Forbo Half-Year Report 201208 Main exchange rates applied
The following exchange rates have been applied for themost important currencies concerned:
Income statement
Average exchange rate, 6 months
Currency
CHF
Euro countries
USA
United Kingdom
Japan

EUR 1
USD 1
GBP 1
JPY 100

09 Events after the balance sheet date
On July 13, 2012, the Board of Trustees of our main pension fund in the Netherlands agreed to a change in thepension plan, involving a switchover from a defined
benefit to a defined contribution plan. As part of thischange in plan, Forbo agreed to make a one-off con­tribution of EUR 15 million. Since the new plan qualifies
as a defined contribution plan under IFRS as well, theemployee benefit obligations existing as at year-end
2012 will in all likelihood be eliminated at that time. Thechange in plan is likely to have a significant impact on
the income statement for 2012, though the precise

2012
1.20
0.93
1.46
1.17

2011
1.27
0.91
1.47
1.11

Balance sheet
Exchange rate on balance-sheet date
30.6.2012
1.20
0.97
1.50
1.22

­effects cannot yet be determined reliably since they
depend to a large extent on the actuarial assumptions
that will be made in the second half of 2012. On thepremise – which is unlikely – that the actuarial assumptions for calculating the employee benefit obligationsas at December 31, 2012 are identical with those as atJune 30, 2012, the change in plan would create a profit
of around CHF 22 million, which would be recognizedin the income statement. Taking into ­account the oneoff payment to be made by Forbo, a net profit of CHF 4
million would be recognized in the income statementon the basis of the above-mentioned assumptions.

CalendarMedia and financial analysts’ conference for the 2012 business year:
Ordinary General Meeting:

Tuesday, March 19, 2013
Friday, April 26, 2013

Our half-year report appears in German language and in English translation.

Forbo Holding Ltd
Lindenstrasse 8
CH-6340 Baar

Forbo International SA
Lindenstrasse 8
CH-6340 Baarflooring. bonding. movement.

Phone + 41 58 787 25 25
Fax + 41 58 787 20 25

info@forbo.com
www. forbo. com

31.12.2011
1.22
0.94
1.46
1.22