Ha lf-Yea r Repor t 2009Market position holds up well
Early triggered structural adjustments
generate positive impact
Higher operating profit anticipated for second half-year

flooring. bonding. movement.

2
Forbo Holds its Groundas Tough Economic Conditions Continue

The Forbo Group, a leading manufacturer of flooring systems,
adhesives as well as power transmission and conveyor belt
solutions, is standing up well to the challenging economic conditions currently being faced. With net sales down by 7.8 % to
CHF 886.1 million, the operating profit ( EBIT ) margin for the
first half of 2009 was 5.3 %. Despite the ongoing global economiccrisis, Forbo was able to achieve an operating profit (EBIT) of
CHF 46.7 million and a consolidated profit of CHF 28.5 million.

Dear shareholders,
Despite the extremely difficult global economic conditions, Forbo held its ground well in the first halfof 2009. As expected, the decline in sales which had begun in the last three months of 2008 continued
in the first half of 2009. Sales growth was nonetheless recorded in key market segments and in various
countries, further strengthening the company’s market shares in all three divisions. This is attributable,inter alia, to the investments of the last few years in innovative product lines and in the developmentof growth markets. The early and consistent implementation of restructuring measures from the third
quarter of 2008 onwards had a correspondingly positive impact on the Group’s results.
Sales trend continues to reflect world economic conditions
In the first half of 2009, Forbo generated net sales of CHF 886.1 million, 7.8 % lower than in the same
period of the previous year. Whereas currency effects had a negative impact on sales of 3.8 %, theacquisitions done in 2008 made a positive contribution of 9.7 %. The three divisions showed mixed
trends. While Flooring Systems generated a growth of 3.2 %, inter alia, due to the acquisition of
Bonar Floors, the two other divisions recorded a decrease in sales of 16.9 % (Bonding Systems) and17.3 % (Movement Systems) respectively.
Positive margin level thanks to structural adjustments and cost-cutting measures
The operating profit (EBIT ) margin amounted to 5.3 % in the first half-year of 2009, which represents a
decrease of 3.1 percentage points compared with the prior-year period (first half-year 2008: 8.4 %).
The measures adopted starting in the third quarter of 2008 with a view to securing earnings, optimizing
structures and processes, and consistently reducing costs have cushioned the margin contraction.
Early implemented measures generate positive impact on results
Thanks to the early implementation of measures in response to the economic crisis, the Group wasable to prevent a more significant impact on its results. At CHF 46.7 million, its operating profit (EBIT)
was 42.1 % lower than the previous year’s level. Compared to the prior-year period, Group profit was
reduced by 47.1 % to CHF 28.5 million.
Sound financing
At the end of June 2009, equity stood at CHF 644.1 million, corresponding to an equity ratio of
34.0 %. At June 30, 2009, Forbo held cash and cash equivalents as well as marketable securities worth
CHF 314.1 million. Net debt came to CHF 354.0 million.
Refinancing secured
In recent weeks and months, Forbo secured early refinancing as well as extensions of existing credit
lines, and on July 6, 2009 successfully launched a bond of CHF 150 million with a maturity of 4 years.
Together with its current credit facilities and private placements, this has considerably increased
Forbo’s financial flexibility and secured the Group’s financing for the years to come.

3

Performance of the three divisions
Forbo Flooring Systems reported net sales of CHF 451.9 million in the first semester of 2009, corresponding to a growth of 3.2 % versus the same period of the previous year. The acquisition of Bonar
Floors made a positive contribution of 21.3 %, while the impact of currency effects was negative at 6.2 %.
After adjustment for acquisitions and in local currencies, this corresponds to a decline in sales of 11.9 %compared with the prior-year period. In markets such as North America and France, the sales trend was
positive and relatively stable; in other countries, however, the trend was negative as for example inEastern Europe and Spain. Due to the strategic focus on the commercial market, the various benefits
resulting from economic stimulus packages and the rapid and successful integration of Bonar Floors,
the decrease in operating profit (EBIT ) to CHF 43.5 million, or 19.7 % compared to the prior-year period,
was kept within limits. The EBIT margin came to a gratifying 9.6 %. Activities in the second half of theyear are set to focus on completing the integration of Bonar Floors and on the joint and intensified
marketing of the division’s expanded product portfolio.
Forbo Bonding Systems reported net sales of CHF 281.5 million in the first half-year of 2009, corresponding to a decrease of 16.9 % versus the prior-year period. The drop in sales came to 14.3 % in
local currencies. Sales of synthetic polymers and industrial adhesives in North America remain unsatisfactory. During the last few months, the impact of the economic crisis has also spread to the division’s
other countries, especially in key customer segments such as consumer durables (automobiles, motor
homes, textiles, and furniture). Except in Eastern Europe, the building and construction adhesives
business activity continues to hold its ground. Operating profit (EBIT) for the division as a whole came to
CHF 14.3 million, which represents a decrease of 36.7 % versus the prior-year period, but a significant
improvement on the second half of 2008. This is primarily attributable to the measures adopted to
improve efficiency. These, in conjunction with enhanced key account activities in segments with ahigher added value and an easing in raw material prices, led to an increase of the EBIT margin to 5.1 %.
Bonding Systems will continue to focus on strengthening profitable market segments in the second
half of the year.
Forbo Movement Systems generated net sales of CHF 152.7 million in the first half of 2009, corresponding to a decline of 17.3 % versus the prior-year period (17.1 % in local currencies). While theweakening of sales in North America dates back to the second half-year of 2008, the downturn in
Europe began to make itself felt in early 2009. Sales in the European engineering industries, a
key customer segment, have been particularly hard hit. The exporting engineering and automotive
industries in Japan, a key market for Movement Systems, are also experiencing a serious downturn.
Worldwide, a large number of logistics projects have been either halted or postponed. This trend
among Forbo customers is reflected in the significant drop in sales in some of Movement Systems’
key markets. The slump in sales could only be partially offset by the new distribution channels andmarkets developed over the last few years. Movement Systems therefore reported a negative
operating profit (EBIT ) of CHF – 2.8 million for the first half-year of 2009 (CHF + 11.5 million in theprior-year period). This means that in the second half of the year the division will accelerate therestructuring measures already in progress and adjust current structures to the changed conditions.
Outlook for 2009
Provided that the economic conditions do not deteriorate any further, Forbo expects net sales in thesecond half to be on par with the first six months and forecasts a slightly higher operating profit due
to the implemented restructuring measures, albeit with considerably higher financing costs.

Dr. Albert Gnägi
Chairman of the Board of Directors
Forbo Holding AG
Baar, August 18, 2009This E. Schneider
Delegate of the Board of Directors and CEO

4Consolidated Balance Sheet andConsolidated Income Statement

30.06.2009

31.12.2008

Unaudited, CHF m
Non-current assets

936.0

928.7

Property, plant and equipment and intangible assets

898.3

898.0

Employee benefit assets, deferred income tax assets,
investments in associates and other non-current assets

37.7

30.7

957.4

909.1

Condensed consolidated balance sheet

Current assets
Inventories

293.5

298.3

Trade and other receivables, prepaid expenses and deferred charges

349.8

321.6

Marketable securities

78.2

73.6

Cash and cash equivalents

235.9

215.6

1,893.4

1,837.8

Shareholders’ equity

644.1

584.4

Total assets
Non-current liabilities

667.3

676.6

Non-current financial debt

486.9

512.4

Employee benefit obligations, non-current provisions
and deferred income tax liabilities

180.4

164.2

Current liabilities

582.0

576.8

Trade payables

136.5

144.5

Current financial debt

181.2

181.3

Current provisions and accrued expenses, current tax
and other current liabilities

264.3

251.0

Total liabilities

1,249.3

1,253.4

Total shareholders’ equity and liabilities

1,893.4

1,837.8

First half
2009

First half
2008

Condensed consolidated income statement
Unaudited, CHF m
Net sales

886.1

961.2

Cost of goods sold– 598.3– 650.2

Gross profit

287.8

311.0

Operating expenses– 241.1– 230.3

Operating profit

46.7

80.7

Financial result

– 8.7

– 4.9

Group profit before taxes

38.0

75.8

Income taxes– 9.5– 21.9Group profit

28.5

53.9

Basic earnings per share in CHF

12.62

22.04

Diluted earnings per share in CHF

12.62

21.98

5
Shareholders’ Equity

First half
2009

First half
2008

28.5

53.9

Currency translation differences

40.5– 52.3

Fair value adjustments on available for sale financial assets

4.9– 13.1

Actuarial loss on defined benefit plans, net– 12.1– 12.3

Fair value adjustments on cash flow hedges

– 0.5

– 0.3

Statement of comprehensive income
Unaudited, CHF m
Group profit
Other comprehensive income:

– 2.4

9.0

Other comprehensive income

Fair value adjustments on net investment hedges

30.4– 69.0Total comprehensive income

58.9– 15.1

Consolidated statement of changes in equity

Unaudited, CHF m
At January 1, 2009

Share
capitalTreasurysharesReserves

Revaluation
reserves

10.9

– 2.0

696.9

143.3

Group profit

28.5

Other comprehensive
income– 12.1

Share-based compensation

0.0

Treasury shares
At June 30, 2009

Unaudited, CHF m
At January 1, 2008

AvailableNet
for sale Cash flow investment Currency
financialhedge
hedge translation
assetsreserves
reserves differences

– 7.0

0.4

– 258.1

584.4

4.9

– 0.5

– 2.4

40.5

30.4

28.5

0.3

0.3

0.0

0.5

10.9

– 2.0

714.1

143.3

Share
capitalTreasurysharesReserves

Revaluation
reserves

38.0

– 4.0

821.3

0.0

Group profit

53.9

Other comprehensive
income– 12.3

Total

0.0

0.5
4.9

– 7.5

– 2.0

– 217.6

AvailableNet
for sale Cash flow investment Currency
hedge
financialhedge translation
reserves
assetsreserves differences

0.0

– 5.9

– 7.7

– 128.6

644.1

Total

713.1
53.9

– 13.1– 0.3

9.0– 52.3– 69.0Share-based compensation

0.1

– 0.1

0.0

Treasury shares

– 0.2

– 6.5

– 6.7

– 4.1

856.3

At June 30, 2008

38.0

0.0

– 13.1– 6.2

1.3– 180.9

691.3

6
Cash Flow Statement

First half
2009

First half
2008

Condensed consolidated cash flow statement
Unaudited, CHF m
Cash flow from operating activities

59.9– 10.7

Cash flow from investing activities– 4.1– 177.8

Cash flow from financing activities– 41.7

165.7

14.1

– 22.8

Increase / (decrease) in cash and cash equivalents

6.2

– 4.1

Cash and cash equivalents at January 1

215.6

177.5

Cash and cash equivalents at June 30

235.9

150.6

Exchange difference on cash and cash equivalents

7
Notes to the Condensed Consolidated
Half-Year Financial Statements (unaudited)

01

General information
This condensed consolidated interim financial statement covers the six-month period from January 1,
2009 to June 30, 2009 (hereinafter 'reporting period') and was drawn up in accordance with theInternational 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
per December 31, 2008.
The consolidated half-year financial statements have not been audited by the statutory auditor. They
were approved for publication by the Board of Directors on August 12, 2009.

02

Group accounting policies
The accounting policies applied in the consolidated half-year financial statements are in line with theaccounting policies set out in the Annual Report 2008 with the following exceptions:
The following new and revised standards and interpretations, which have an impact on these half-year
financial statements, came into force as of January 1, 2009:– IAS 1 (revised) 'Presentation of Financial Statements'. The Forbo Group presents changes in share­
holders’ equity not arising from ownership separately in the statement of comprehensive income.
– IFRS 8 'Operating Segments'. IFRS 8 replaces IAS 14 'Segment Reporting'. Internal reporting to the
Executive Board and the Board of Directors is based on the three divisions and Corporate and on
the same accounting and valuation principles as those used for the consolidated financial statements.
The application of IFRS 8 does not entail any material adjustments in this reporting, except that
additional disclosures will be required for the full year and the fact that Corporate is now defined as
an independent segment for the first time.
The following new and revised standards and interpretations came into force as of January 1, 2009, butcurrently do not have any material effect on the Forbo Group:– IAS 23 (revised) 'Borrowing Costs'– Amendments to IFRS 2 'Share-based Payment'– Amendments to IAS 32 'Financial Instruments: Presentation'– IFRIC 13 'Customer Loyalty Programs'– IFRIC 15 'Agreements for the Construction of Real Estate'– IFRIC 16 'Hedges of a Net Investment in a Foreign Operation'– IAS 39 (amended) / IFRIC 9 'Embedded Derivatives'– Amendments to IFRS 7 'Financial Instruments: Disclosures'

8

The following new and revised standards and interpretations have been adopted but will not comeinto force until a later date and have not been applied early to these financial statements. The impactof these changes on the financial statements has not yet been systematically analyzed.
– IFRS 3 (revised) 'Business Combinations' and related amendments to IAS 27 'Consolidated andSeparate Financial Statements', IAS 28 'Investments in Associates', and IAS 31 'Interests in Joint
Ventures'. Effective as of July 1, 2009.
– IFRIC 17 'Distributions of Non-cash Assets to Owners'. Effective as of July 1, 2009.
– IFRIC 18 'Transfers of Assets from Customers'. Effective as of July 1, 2009.
– Amendments to IAS 39 'Financial Instruments: Recognition and Measurement'.
Effective as of July 1, 2009.
– IFRS 5 (revised) 'Non-current Assets Held for Sale'. Effective as of July 1, 2009.
The preparation of the consolidated half-year financial statements requires management to makeestimates and assumptions that can affect reported revenues, expenses, assets, liabilities and contingent
liabilities at the date of the financial statements. If the estimates and assumptions made to the bestof their knowledge by management at the date of the financial statements differ from the actual facts,
the original estimates and assumptions will be adjusted in the reporting period in which the facts
have changed.
The consolidated half-year financial statements do not contain any new estimates and assumptions bymanagement compared with the consolidated financial statements as at December 31, 2008. 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 scope of consolidation
There were no significant changes in the scope of consolidation in the reporting period.

04

Segment information
Forbo is a global producer of Flooring Systems, Bonding Systems and Movement Systems. The
divisions have their own management structure and are run separately because the products thatthey manufacture, distribute and sell differ in terms of production, distribution and marketing.
Flooring Systems develops, produces and sells linoleum, vinyl floor coverings, entrance matting
systems and carpet tiles as well as the various accessory products required for the installing, processing,cleaning, and care of flooring systems. Bonding Systems develops, manufactures and distributes
adhesives for industrial applications and the building and construction industry as well as synthetic
polymers. Movement Systems develops, produces and sells high quality process and conveyor belts
made of synthetics as well as power transmission belts. Corporate includes the costs of Group headquarters and certain items of income and expenses which are not directly attributable to a specificdivision.
The divisions Flooring Systems, Movement Systems, Bonding Systems and Corporate each constitute a
separate reportable segment. Reportable segments are identified based on internal management
reporting to the Chief Executive Officer of the Forbo Group and thus on the financial information used
to review the operational performance of the segments with a view to resource allocation decisionmaking.

9

The following table provides the reportable segment information for the current reporting period:
Flooring
Systems
452.1

Bonding
Systems
291.4

Movement
Systems
152.7

Corporate
0.0

Elimination– 10.1

Total
886.1

Intersegment sales

– 0.2

– 9.9

0.0

0.0

10.1

0.0

Sales to third parties

451.9

281.5

152.7

0.0

0.0

886.1

EBIT

43.5

14.3

– 2.8

– 8.3

0.0

46.7

Total net sales

Operating assets

807.8

407.5

275.0

50.4

0.0

1,540.7

Number of employees

2,828

1,327

1,891

41

0

6,087

The following table provides the reportable segment information for the prior-year period:
Flooring
Systems
438.0

Bonding
Systems
352.1

Movement
Systems
184.6

Corporate
0.0

Elimination– 13.5

Total
961.2

Intersegment sales– 0.2– 13.3

0.0

0.0

13.5

0.0

Sales to third parties

437.8

338.8

184.6

0.0

0.0

961.2

EBIT

54.2

22.6

11.5

– 7.6

0.0

80.7

Total net sales

Operating assets

779.1

403.6

290.1

43.4

0.0

1,516.2

Number of employees

2,483

1,438

2,097

41

0

6,059

The internal management reporting and the control system are based on the same accounting principles
as those applied to external reporting.
The Chief Executive Officer assesses the performance of the segments based on their operating profit(EBIT ). The net financial result is not allocated to the reportable segments, as the management of thefinancial result is primarily done centrally by Group Treasury.
Sales between the divisions are effected at market prices. The divisions apply the same accounting
principles as the Group. The figures on sales to third parties reported to the Chief Executive Officer are
identical to the sales reported in the income statement.
The reconciliation of the segment results to the income statement and balance sheet is as follows:

Total segment profit (EBIT)First half
2009
46.7

First half
2008
80.7

Financial result

– 8.7

– 4.9

Group profit before taxes

38.0

75.8

30.06.2009
1,540.7

31.12.2008
1,516.2

352.7

321.6

1,893.4

1,837.8

Total operating assets
Non-operating assets
Total assets

10

05

Balance sheet
Compared to the previous year-end, the balance sheet total rose by CHF 55.6 million to CHF 1,893.4 million as per June 30, 2009. CHF 49 million of this is attributable to the change in exchange rates compared to December 31, 2008. The currency adjusted increase in the balance sheet total came to around
CHF 7 million. The decline of approximately CHF 25 million in the non-current assets figure was morethan offset by rises in cash and cash equivalents as well as marketable securities (by around CHF 18 million) and other current assets (by around CHF 14 million). 'Marketable securities' includes registeredshares in Rieter Holding AG , valued at the closing price on June 30, 2009. Due to Forbo’s participation in
Rieter and the fact that This E. Schneider became a member of the Board of Directors of Rieter Holding
AG in May 2009, in accordance with IFRS Rieter must now be treated as a related party. At CHF 13.5 million,
investments in plant, property and equipment were markedly lower than the depreciations of
CHF 29.9 mil­lion. Most of the investments were channeled into replacements and projects aimed atachieving further efficiency gains.
Shareholders’ equity increased to CHF 644.1 million, which represents an increase of CHF 59.7 million
compared with December 31, 2008. This raise in equity is primarily made up of the Group profit for
the first half-year of 2009 (CHF + 28.5 million), the actuarial losses recognized in equity in connection
with defined benefit pension plans (CHF – 12.1 million) and profits arising from the translation of thesubsidiaries’ half-year financial statements into the Group accounting currency (CHF + 40.5 million).
In addition, changes in fair value of the shares of Rieter Holding AG , classified as financial assets'available for sale' (CHF + 4.9 million) were recognized directly in equity. As per June 30, 2009, the equity
ratio stood at 34.0 %. Net debt at June 30, 2009 came to CHF 354.0 million, representing a reductionof CHF 50.5 million versus the year-end 2008. This positive development can be attributed to the strong
operating cash flow in the first half of 2009. Gearing (net debt / equity) stood at 55.0 % as per theend of June 2009.

06

Income statement
The financial result in the reporting period was CHF 8.7 million. This includes, inter alia, CHF 2.8 million
in earnings from the allocation and the sale of shareholder options of Rieter Holding AG . Income tax
came to CHF 9.5 million, corresponding to a tax rate of 25 %. Profits from structural measures tooptimize taxes were offset by market-related profit shifting in high-tax countries in the reporting period.
Group profit fell by 47.1 % versus the prior-year period, reaching CHF 28.5 million for the first halfof 2009. The basic earnings per share for the reporting period came to CHF 12.62. As all outstanding
options are 'out of the money', there was no dilution effect in the reporting period.

07

Free cash f low
Free cash flow for the reporting period amounts to CHF 55.8 million.
In comparison to the prior-year period, operating cash flow rose by CHF 70.6 million. There was asignificant reduction in net working capital, primarily due to a decrease in accounts receivable
and a reduction in inventories. The improvement in accounts receivable was due not only to lower
sales, but also to the recently initiated reduction program; the seasonal rise in inventories wasmore than offset by the implementation of special measures. Cash flow from investing activities was
up by CHF 173.7 million compared to the prior-year figure, which had included a cash outflow
relating to marketable securities purchases totaling around CHF 165 million. There were also selective
cutbacks in investment spending during the reporting period due to the current economic
conditions.

11

08

Main exchange rates applied
The following exchange rates have been applied for the most important currencies concerned:
Income statement
Average rate, 6 months

CHF

09

Balance sheet
Rate on balance-sheet date

2009

2008

30.06.2009

31.12.2008

Euro countries

EUR 1

1.51

1.61

1.53

1.50

United Kingdom

GBP 1

1.69

2.07

1.80

1.57

USA

USD 1

1.13

1.05

1.09

1.07

Japan

JPY 100

1.18

1.00

1.14

1.19

Events after the balance sheet date
At the Annual General Meeting of April 24, 2009, the shareholders of Forbo Holding Ltd approved the
proposal by the Board of Directors to lower the par value of all registered shares from CHF 4.00 to
CHF 0.10 by means of a repayment. This par value repayment will reduce the capital of Forbo Holding
Ltd from CHF 10.9 million to CHF 0.3 million. The share capital entered in the Commercial Register
after this transaction consists of 2,713,152 registered shares with a par value of CHF 0.10 each. The parvalue repayment of CHF 3.90 per share was effected on July 20, 2009.
On July 6, 2009, Forbo Holding Ltd placed a bond of CHF 150 million with a maturity of 4 years. The
bond has a coupon of 4 1/8 % and was launched under the lead management of Credit Suisse. It has
been traded on the SIX Swiss Exchange since July 20, 2009. The proceeds of this bond will be used forthe early refinancing of existing credit facilities as well as for general financing purposes.

DatesMedia and financial analysts’ conference: March 15, 2010
Annual General Meeting: April 23, 2010
Forbo Holding Ltd
Lindenstrasse 8
CH-6340 Baar

Forbo International SA
Lindenstrasse 8
CH-6340 Baar

Phone + 41 58 787 25 25
Fax + 41 58 787 20 25
www.forbo.com

flooring. bonding. movement.