CONNECT.
HALF-YEAR REPORT 2015

SWISS FRANC SEVERELY IMPACTS SALESAND EARNINGS IN CORPORATE CURRENCYSALES IN LOCAL CURRENCIES SLIGHTLY HIGHERCURRENCY-ADJUSTED OPERATING PROFITABOVE PREVIOUS YEARGROUP PROFIT FOR 2015 IN SWISS FRANCS EXPECTEDTO BE SLIGHTLY LOWER THAN PREVIOUS YEAR2

FORBO HALF-YEAR REPORT 2015

The Forbo Group – a leading manufacturer of floor coverings, building and con­struction adhesives, as well as power transmission and conveyor belt solutions –reported net sales of CHF 554.8 million in the first half of 2015 (prior-year period:
CHF 603.0 million). In local currencies, this is equivalent to organic growth of 0.7%,
however, translated into Swiss francs it represents a decline of 8.0%. Negative cur­rency effects had a significant impact on both sales and earnings. Operating profit(EBIT) decreased by 11.3% to CHF 57.9 million (prior-year period: CHF 65.3 million).
Adjusted for currency effects, however, it rose by 3.7%. The EBIT margin came to
10.4% (prior-year period: 10.8%). Group profit from continuing operations amount­ed to CHF 45.8 million (prior-year period: CHF 53.6 million), which is equivalent toa decline of 14.6%. After adjustment for currency effects, it reached the previous
year’s level despite lower financial income.
Dear shareholders,
As expected, because of the strong Swiss franc, the first half of 2015 overall proved to be very challenging for
Forbo. In addition, the two divisions have shown very differing developments. Whereas Movement Systems chalked
up a record first half in local currency terms, Flooring Systems faced tough market conditions in certain markets
and could not quite reach the previous year’s performance in local currencies.
In the wake of the Swiss National Bank discontinuing its minimum euro exchange rate in January 2015, both sales
and earnings in the corporate currency were severely impacted by currency effects. The Swiss franc firmed signifi­
cantly against most of the currencies important for us such as the euro, the pound sterling and the Japanese yen,clearly leaving its mark when local currency results were translated into the corporate currency. Sales were down
by about CHF 50 million and operating profit (EBIT) was about CHF 10 million lower as a result of the strong Swiss
franc.
We continued to expand also in the period under review the attractive product portfolios of both divisions withnew, globally launched offerings, invested further in the development of high-quality products and continued tostrengthen our distribution channels, especially in growth markets. Owing to the ongoing situation on the foreignexchange markets, we initiated a series of additional cost optimization measures in order to offset the currency
effects as far as possible by an even better operating performance.
Sales in local currencies slightly higher
In the first half of 2015, Forbo generated net sales of CHF 554.8 million (prior-year period: CHF 603.0 million),
representing an increase of 0.7% in local currencies. Owing to the severely negative currency effects, this comesto minus 8.0% in the corporate currency. The sales of Flooring Systems declined by 2.1% in local currency terms(– 12.2% in the corporate currency). Movement Systems reported a significant increase in sales of 8.1% in local
currencies (+ 3.1% in the corporate currency).
Movement Systems increased sales strongly in both local currencies and Swiss francs thanks to its broader presencein growth markets and the lower exposure to exchange rate fluctuations owing to the geographic weighting of
its activities.

FORBO HALF-YEAR REPORT 20153

Earnings affected by the negative currency effects
Forbo has continued to invest in recent months in capacity expansion, the optimization of business processes
and growth projects. Despite these expenditures, which were higher than the previous year, we succeeded onbalance in raising profitability further in local currencies. The contributory factors were the ongoing optimizationof cost structures adjusted to current market conditions together with further specific productivity gains all along
the value chain.
Operating profit before depreciation and amortization (EBITDA) came to CHF 73.6 million (prior-year period:
CHF 83.2 million), corresponding to a decline of 11.5%. The EBITDA margin stood at 13.3% (prior-year period: 13.8%).
Operating profit (EBIT) came to CHF 57.9 million, compared with CHF 65.3 million in the comparable period of
2014, which equates to a decrease of 11.3%. The EBIT margin amounted to 10.4% (prior-year period: 10.8%). After
adjustment for currency effects, however, operating profit (EBIT) rose by 3.7%.
Group profit at prior-year level after currency-effect adjustment
Group profit from continuing operations amounted to CHF 45.8 million (prior-year period: CHF 53.6 million), whichreflects a decrease of 14.6%. After adjustment for currency effects, however, it reached the previous year’s level
despite lower financial income.
Earnings per share from continuing operations (undiluted) came to CHF 24.24 (prior-year period: CHF 26.36).
Equity ratio remains highCompared with the beginning of the year, shareholders’ equity decreased by CHF 50.5 million to CHF 688.3 million,
as a result of the payment of the dividend and negative currency translation effects. The equity ratio remained at
a high level and stood at 67.9% (year-end 2014: 67.4%).
Liquidity at a high level
Net cash came to CHF 176.6 million as at June 30, 2015. In addition, Forbo held treasury shares worth CHF 281.5
million, based on the share price at the end of June 2015. The strong balance sheet coupled with the high levelof cash enables Forbo not only to engage in the approved share buyback program but also to take advantage ofexternal growth opportunities provided they can generate value for our shareholders.
Performance of the divisions
The Forbo Flooring Systems division reported net sales of CHF 383.9 million in the first half of 2015 (prior-year
period: CHF 437.2 million), which is equivalent to a decrease of 2.1% in local currencies (– 12.2% in the corporate
currency). The division could not maintain the positive sales trend it has reported since mid-2013, owing toweaker demand in core markets such as France, the Netherlands, Great Britain and the USA. No real recovery is
yet in sight in various markets of key importance to Forbo. Compared with the prior-year period, the building
and construction adhesives activity managed to maintain its sales level amid unchanged challenging market
conditions.
Operating profit (EBIT) decreased by 17.6% to CHF 43.4 million (prior-year period: CHF 52.7 million) owing to thedecline in sales and the strongly negative currency effects. The EBIT margin amounted to 11.3% (prior-year period:
12.1%). In order to better offset the decrease in sales and the currency effects, the division initiated a series of
optimization projects and measures to adapt cost structures to current market conditions. The focus in the com­
ing months will be on further implementing the initiatives for profitable growth by intensive marketing of theextensive new collections and new launches introduced during 2014 as well as this year. At the same time we willconcentrate on the steady expansion of our distribution structures in growth markets.

4

FORBO HALF-YEAR REPORT 2015

The Forbo Movement Systems division reported net sales of CHF 170.9 million in the first half of 2015 (prior-year
period: CHF 165.8 million), which is equivalent to a significant increase of 8.1% in local currencies (+ 3.1% in thecorporate currency). All regions contributed to drive the substantial growth and the related gains in market share.
Although the business environment in Europe is still mixed, most companies performed better than in thecomparable period the previous year. Demand in America remained buoyant owing to successful projects withmajor accounts in various customer segments, while Asia/Pacific stayed on the growth path, even though thefirst signs of a market slowdown were seen in China.
The systematic implementation of the strategy with demanding targets in all parts of the business had a very
positive effect on operating profit (EBIT), which rose sharply by 20.0% to CHF 20.4 million (prior-year period:
CHF 17.0 million). The EBIT margin was increased to 11.9% (prior year period: 10.3%). In the second half of theyear, we will continue to systematically implement the strategic initiatives by extending our product portfolio in
specific areas and strengthening our distribution structures, especially in Asia/Pacific and the Americas, withadditional points of sale.
Outlook for 2015
Given the current currency situation and market volatility, it is very difficult to make a forecast for the full year at
this point.
For the year 2015 as a whole, we expect sales in local currencies to come in approximately at the previous year’slevel. However, sales and earnings in the corporate currency will be eroded substantially once the local results aretranslated into the strong Swiss franc. We will continue to further optimize our cost structures and offset thenegative currency effects as far as possible with innovative and high-quality products.
Barring any further deterioration in the current economic conditions, in particular the currency situation, we expect
Group profit from continuing operations in 2015 to be slightly lower than the previous year in Swiss francs.

This E. Schneider
Executive Chairman

Forbo Holding Ltd
Baar, August 18, 2015

Stephan Bauer
CEOFORBO HALF-YEAR REPORT 20155

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

30.6.201531.12.2014

386.7
345.8
40.9
627.5
226.1
223.3
36.2
141.9
1,014.2

418.5
381.0
37.5
677.1
230.6
191.9
49.5
205.1
1,095.6

688.3
111.8
1.2
110.6
214.1
57.2
0.3
156.6
325.9
1,014.2

738.8
112.6
1.4
111.2
244.2
86.5
0.6
157.1
356.8
1,095.6

First half 2015

First half 2014554.8
– 338.2
216.6– 158.7
57.9
– 0.6
57.3
– 11.5
45.8
0.0
45.8

603.0
– 372.8
230.2– 164.9
65.3
2.1
67.4
– 13.8
53.6
0.2
53.8

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

24.24
24.23

26.47
26.44

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

24.24
24.23

26.36
26.33

–
–

0.11
0.11

Shareholders’ equity and liabilities
Shareholders’ equity
Non-current liabilities
Non-current financial debt
Employee benefit obligations, non-current provisions and deferred tax liabilities
Current liabilities
Trade payables
Current financial debt
Current provisions, accrued expenses, current tax and other liabilities
Total liabilities
Total shareholders’ equity and liabilities

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

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

The accompanying notes are an integral part of the Half-Year Report.

6

FORBO HALF-YEAR REPORT 2015

Consolidated comprehensive income
statement and shareholders’ equity
Consolidated comprehensive income statement
Unaudited, CHF m
Group profit
Items that will not be reclassified to the income statement
Remeasurements of employee benefit obligations, net of taxes
Items that may be subsequently reclassified to the income statement
Translation differences
Other comprehensive income, net of tax
Consolidated comprehensive income

First half 2015
45.8

First half 2014
53.8

– 3.4

– 4.6

– 67.4– 70.8– 25.0

3.4
– 1.2
52.6

Consolidated shareholders’ equity
first half 2015
Unaudited, CHF m
January 1, 2015
Group profit
Other comprehensive income, net of tax
Total comprehensive income
Share-based payments
Treasury shares
Dividend payment
June 30, 2015

SharecapitalTreasuryshares0.2– 0.1

Reserves

0.2

– 0.1

982.9
45.8
– 3.4
42.4
2.2
2.6
– 30.3999.8

SharecapitalTreasurysharesReserves

0.2

– 0.1

0.0

Translationdifferences– 244.2– 67.4– 67.4– 311.6

Translationdifferences

Total

738.8
45.8
– 70.8– 25.02.2
2.6– 30.3688.3

Consolidated shareholders’ equity
first half 2014
Unaudited, CHF m
January 1, 2014
Group profit
Other comprehensive income, net of tax
Total comprehensive income
Share-based payments
Treasury shares
Dividend payment
June 30, 2014

The accompanying notes are an integral part of the Half-Year Report.

– 0.0
0.2

– 0.1

1,031.5
53.8
– 4.6
49.2
1.2
– 13.8– 28.6
1,039.5– 244.8
3.4
3.4– 241.4

Total

786.8
53.8
– 1.2
52.6
1.2
– 13.8– 28.6
798.2

FORBO HALF-YEAR REPORT 20157

Consolidated cash flow statement

Condensed consolidated cash flow statement
Unaudited, CHF m
Group profit
Depreciation of property, plant and equipment and intangible assets
Increase in operating working capital1)
Other adjustments for non-cash items
Cash flow from operating activities
Purchase of property, plant and equipment and intangible assets
Cash inflow from current financial instruments
Other cash inflow from investing activities, net
Cash flow from investing activities
Dividend payment
Cash outflow from transactions with treasury shares, net
Other cash outflow (–)/-inflow from investing activities, net
Cash flow from financing activities
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
1) Net operating working capital includes the items ‘trade receivables’, ‘inventories’ and ‘trade payables’.

The accompanying notes are an integral part of the Half-Year Report.

First half 2015
45.8
15.7
– 83.05.6– 15.9– 14.1
12.7
0.2
– 1.2
– 30.3– 2.6– 0.5– 33.4– 50.5– 12.7205.1
141.9

First half 2014
53.8
17.9
– 86.4
16.4
1.7
– 9.7
2.9
2.1
– 4.7
– 28.6– 20.1
0.2– 48.5– 51.5
0.6
241.0
190.1

8

FORBO HALF-YEAR REPORT 2015

Notes to the condensed consolidated
half-year financial statements (unaudited)
01 General information
This condensed consolidated interim report of Forbo
Holding Ltd and its subsidiaries (hereinafter ‘the Group’)
covers the six-month period from January 1, 2015, toJune 30, 2015 (hereinafter ‘reporting period’) and was
drawn up in accordance with International AccountingStandard 34 (IAS 34) ‘Interim Financial Reporting’. The
consolidated half-year financial statements do not in­clude all information reported in the consolidated fullyear financial statements and should therefore be readin conjunction with the consolidated financial state­ments as at December 31, 2014.
The consolidated half-year financial statements havenot been audited by the auditors. They were approvedfor publication by the Board of Directors on August 17,
2015.
02 Group accounting principles
The accounting principles applied in the consolidated
half-year report are in line with the accounting prin­ciples set out in the 2014 Annual Report. As of Janu­ary 1, 2015, the Group applies various amendments
to the existing International Financial Reporting Stan­d­ards (IFRS) and interpretations that do not have any
significant impact on the present Half-Year Report.
Standards, interpretations or amendments that havebeen published but are not yet mandatory have notbeen adopted early.

The preparation of the consolidated half-year financial
statements requires management to use estimatesand assumptions that may affect reported revenues,
expenses, assets, liabilities, and contingent liabilities atthe date of the financial statements. If the estimates andassumptions used by management to the best of its
knowledge at the date of the financial statements hap­
pen to differ from subsequent 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 significant new estimates and assumptions
used by management compared with the consolidated
financial statements as at December 31, 2014. Income
tax expenditure is estimated on the basis of average
actual tax rates during the current business year.

FORBO HALF-YEAR REPORT 2015

03 Segment information
The Group is a global producer of Flooring Systems andMovement Systems. The divisions correspond to theinternal management structure and are run separately
because the products that they manufacture, distributeand sell differ fundamentally in terms of production,
distribution and marketing.
Flooring Systems develops, produces and sells lino­
leum, vinyl floorings, entrance flooring systems, carpet
tiles, needle felt floor coverings, Flotex (washable textile
flooring) and building and construction adhesives aswell as the various accessory products required for in­stalling, processing, cleaning and care of flooring. In the
Movement Systems division, the Group develops, pro­duces and sells high-quality conveyor and processing
belts, as well as plastic modular belts, and drive, timing
and flat belts made of synthetic materials. Corporate

9

includes the costs of the Group headquarters and cer­tain items of income and expenses which are not di­
rectly attributable to a specific business.
The Flooring Systems and Movement Systems divisions
are reportable segments. The identification of report­
able segments is based on internal management re­
porting to the Group’s Executive Chairman and its Chief
Executive Officer and hence on the financial informa­tion used to review the performance of the operation­
al units in order to reach a decision on the allocation of
resources.
The Executive Chairman and the Chief Executive Officer
assess the performance of the segments based on theiroperating result (EBIT). The net financial result is notallocated to the divisions since it is Corporate Treasurythat in the main exercises central control over the finan­cial result.

First half 2015

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
384.1
– 0.2
383.9
43.4
561.7
3,092

Movement
Systems
170.9
–
170.9
20.4
217.2
2,106

Corporate/
Elimination
– 0.2
0.2
–
– 5.9
16.2
42

Total
554.8
0.0
554.8
57.9
795.1
5,240

Flooring
Systems
437.2
–
437.2
52.7
603.5
3,127

Movement
Systems
165.8
–
165.8
17.0
220.4
2,000

Corporate/
Elimination
–
–
–
– 4.4
22.5
41

Total
603.0
–
603.0
65.3
846.4
5,168

First half 2014

Unaudited, CHF m
Total net sales
Inter-segment sales
Net sales to third parties
Operating profit (EBIT)
Operating assets
Number of employees (June 30)

10

FORBO HALF-YEAR REPORT 2015

Reconciliation of division results to the income statement and balance sheet:First half 2015

First half 2014

57.9
– 0.6
57.3

65.3
2.1
67.4

30.6.201531.12.2014

795.1
219.1
1,014.2

803.5
292.1
1,095.6

Unaudited, CHF m
Segment result (EBIT)
Financial result
Group profit before taxes

Unaudited, CHF m
Total operating assets
Non-operating assets
Total assets

04 Balance sheet
Total assets as at June 30, 2015, decreased by CHF 81.4
million to CHF 1,014.2 million versus the end of the pre­vious year mainly because of currency effects.
Property, plant and equipment declined by CHF 23.8
million to CHF 211.0 million. Investments in property,
plant and equipment amounted to CHF 14.0 million in
the first half and were slightly lower than depreciationof CHF 14.4 million. Intangible assets stood at CHF 134.8
million as at June 30, 2015.
Inventories in the first half declined by CHF 4.5 million
versus year-end 2014. The increase in trade and otherreceivables totaling CHF 31.4 million was mainly tim­
ing-related.
Current financial instruments, compared with the bal­ance-sheet date as at December 31, 2014, remain the
only essential financial instruments valued at recurringfair value. These are listed securities that are allocatedto the first fair-value hierarchy level.

Liquidity holdings came to CHF 141.9 million as at June30, 2015.
Compared with December 31, 2014, shareholders’equity decreased by CHF 50.5 million to CHF 688.3 mil­lion. The increase in shareholders’ equity by the amountof Group profit of CHF 45.8 million was offset mainlyby the dividend in the form of a repayment from cap­
ital contribution reserves of CHF 30.3 million, and inparticular by translation differences amounting to CHF– 67.4 million. The equity ratio rose marginally to 67.9%
as at June 30, 2015.
Liabilities from current and non-current financing com­prise leasing liabilities carried in the balance sheet.

FORBO HALF-YEAR REPORT 201511

05 Income statement

06 Cash flow statement

While net sales were 0.7% higher in local currencies,
they fell by 8.0% to CHF 554.8 million owing to thetranslation into Swiss francs.

Cash flow from operating activities was negative in thereporting period at CHF – 15.9 million owing to the in­crease in net operating working capital.

Operating profit (EBIT) in the reporting period came to
CHF 57.9 million, which was CHF 7.4 million lower thanin the prior-year period.

Cash flow from investing activities comprises mainly
the cash outflow of CHF 14.1 million for investments inproperty, plant and equipment and intangible assets
and the cash inflow of CHF 12.7 million from divest­
ments of financial instruments.

Whereas in the prior-year period the Group reported apositive financial result of CHF 2.1 million, due in par­ticular to capital gains and income from securities, inthe first half of 2015 the financial result was minus
CHF 0.6 million owing to losses on securities.
Income tax amounted to CHF 11.5 million, correspond­
ing to a tax rate of 20.0%. In the prior-year period, thetax rate had been 20.5%.
The resulting Group profit from continuing operations
came to CHF 45.8 million, which is CHF 7.8 million or
14.6% lower than the prior-year period.
Undiluted earnings per share on the basis of the aver­
age number of shares in circulation amounted to CHF
24.24 in the reporting period. Diluted earnings per share(adjusted for the dilution effect of outstanding options)came to CHF 24.23.

Cash flow from financing activities reflects primarily thedividend in the form of a repayment from capital con­tribution reserves of CHF 30.3 million and a net cash
outflow totaling CHF 2.6 million from treasury shares.

07 Main exchange rates applied
The following exchange rates against the Swiss franc
have been applied for the most important currencies
concerned:
Income statement
Average exchange rate, 6 months
Exchange rates
Euro zone
USA
Great Britain
Japan

EUR
USD
GBP
JPY

1
1
1
100

2015
1.05780.94751.44300.78822014
1.22140.89091.48650.8692

Balance sheet
On balance-sheet date
30.6.2015
1.04320.9333
1.46910.753408 Contingent liabilities

09 Events after the balance sheet date

The Group’s contingent liabilities have not changed
significantly compared with December 31, 2014. As
announced in the media release on July 3, 2013, theactivity of Forbo Flooring Systems in France is being
investigated by the French competition authorities. The
investigation affects the market for floor coverings inFrance and was initiated on suspicions that leading
manufacturers may have engaged in anticompetitive
practices. As the investigation is ongoing, the Group isunable to provide any further information at present or
estimate the possible repercussions.

At the Ordinary General Meeting on April 24, 2015, theshareholders of Forbo Holding Ltd voted to reduce theshare capital of CHF 215,000 to CHF 199,000 by can­celation of the 160,000 registered shares repurchased
through the fixed-price share buyback program as well
as via the second trading line of the SIX Swiss Exchange,
approved at the Ordinary General Meeting of April 25,
2014. The capital reduction was completed with theentry in the Commercial Register of the Canton of Zug
on July 10, 2015, and was published in the SHAB on July
15, 2015. The exchange adjustment took place on thesame day.

CalendarMedia and financial analysts’ conference for the 2015 business year:
Ordinary General Meeting:
Report on the 2016 half year:

Tuesday, March 15, 2016
Friday, April 29, 2016
Tuesday, August 16, 2016

Our Half-Year Report is published in German language and in English translation.

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

info@forbo.com
www.forbo.com

31.12.2014
1.20300.9943
1.54860.8308