CONNECT.
HALF-YEAR REPORT 2016

SALES:+ 6.5%OPERATING PROFIT:+ 11.1%GROUP PROFIT:+ 12.9%OUTLOOK FOR 2016 BUSINESS YEAR:CONFIRMED

2FORBO HALF-YEAR REPORT 2016

The Forbo Group – a leading manufacturer of floor coverings, building and construction adhesives, as well as power transmission and conveyor belt solutions –increased its net sales by 6.5% to CHF 590.9 million in the first half of 2016 (prior-year
period: CHF 554.8 million). Operating profit (EBIT) rose by 11.1% to CHF 64.3 million(prior-year period: CHF 57.9 million). The EBIT margin improved to 10.9% (prior-year
period: 10.4%). Group profit from continuing operations rose by 12.9% to CHF 51.7
million (prior-year period: CHF 45.8 million).
Dear shareholders,
The Forbo Group can look back on a successful first half of 2016 on the whole. Both divisions – but in particular
the positive development of Flooring Systems – contributed to this success. The ongoing expansion of the product portfolio coupled with targeted optimization measures along the value chain is paying off. Driven by thesteady expansion of its distribution and sales structure, Movement Systems again increased sales, which haverisen continuously in recent years, and improved earnings.
When the results in local currency were translated into the corporate currency, the currency exchange situation
produced a slightly positive currency effect compared with the first half of 2015.
Healthy organic sales growth
In the first half of 2016, Forbo generated higher net sales of CHF 590.9 million (prior-year period: CHF 554.8 million),reflecting an increase of 6.5% (+ 4.5% in local currencies). Both divisions contributed to this encouraging growth.
Flooring Systems reported growth in the corporate currency of 6.5% (+ 4.8% in local currencies), while Movement
Systems recorded an increase of 6.5% (+ 3.8% in local currencies). All regions contributed to this increase.
Profitability continues to growIn the period under review, both divisions again expanded capacity, broadened their attractive product portfolios by adding new innovations, invested further in the development of high-end products, and continued tostrengthen its distribution and service structures. Despite a sizeable increase in investment in recent years, we
succeeded in further increasing profitability. The contributory factors were optimization measures along thevalue chain and additional productivity gains in both divisions.
Operating profit before depreciation and amortization (EBITDA) came to CHF 82.8 million (prior-year period:
CHF 73.6 million), corresponding to a significant increase of 12.5%. The EBITDA margin improved to 14.0%(prior-year period: 13.3%). Operating profit (EBIT) was lifted by 11.1% from CHF 57.9 million to CHF 64.3 million.
The EBIT margin improved to 10.9% (prior-year period: 10.4%).

FORBO HALF-YEAR REPORT 20163

Double-digit growth in Group profit
Group profit from continuing operations amounted to CHF 51.7 million (prior-year period: CHF 45.8 million). Thisequates to a significant increase of 12.9%.
The higher Group profit plus buybacks of Forbo’s own shares in the second half of 2015 resulted in earnings accretion. Earnings per share from continuing operations (undiluted) therefore increased by 24.9% to CHF 30.28(prior-year period: CHF 24.24).
Equity ratio remains highEquity decreased slightly by CHF 16.3 million to CHF 542.9 million compared with the start of the year despite thegratifying profit reported. This was due in particular to the payment of the dividend, negative currency exchange
effects (by the cutoff date), and higher pension liabilities owing to the interest rate environment. The equity ratio
remains very high at 58.8% (year-end 2015: 61.3%).
Liquidity solid
Net cash came to CHF 92.3 million as at June 30, 2016. In addition, Forbo held treasury shares worth CHF 324.5
million, based on the share price at end of June 2016. Owing to the cancelation of shares repurchased as part ofthe share buyback program, this amount has been reduced by CHF 219.8 million in July 2016. The strong balance
sheet coupled with the high level of net cash enables Forbo to take advantage of external growth opportunities
whenever they can generate value for our shareholders.
Performance of the divisions
The Forbo Flooring Systems division reported sales of CHF 408.9 million in the first half of 2016 (prior-year
period: CHF 383.9 million), which is equivalent to a gratifying sales increase of 6.5% (+ 4.8% in local currencies).
All regions contributed to this growth. The positive sales trend was driven especially by the firming of our coremarkets in France and the USA and by the incipient recovery in the Netherlands. After a number of difficult years
during the down cycle, the building and construction adhesives activity recovered and slightly increased sales
compared with the comparable period the previous year. The construction of a production plant for high-end
homogeneous vinyl floor coverings is progressing according to plan, so that we will be able to add an attractive
product group to our product portfolio in 2017.
Operating profit (EBIT) rose by 15.9% to CHF 50.3 million (prior-year period: CHF 43.4 million) on the back of higher sales and optimization measures along the value chain and as a result of positive currency effects. The EBIT
margin was increased significantly to 12.3% (prior-year period: 11.3%). In the coming months we will continue tofocus on the systematic implementation of our strategy on a number of aspects by developing our attractive
product portfolio specifically for customers in all the relevant target segments, adapting the portfolio to meet theneeds of various application areas, and selectively expanding distribution structures in growth markets.

4

FORBO HALF-YEAR REPORT 2016

The Forbo Movement Systems division reported sales of CHF 182.0 million in the first half of 2016 (prior-year
period: CHF 170.9 million), which is equivalent to a gratifying sales increase of 6.5% (+ 3.8% in local currencies).
While all regions contributed to these gains, most European markets performed better than average. Sales growthin the USA weakened slightly, while demand in China, our largest market in Asia/Pacific, slowed down somewhat
compared with previous years.
Operating profit (EBIT) rose marginally by 1.5% to CHF 20.7 million (prior-year period: CHF 20.4 million). The EBIT
margin came to 11.4% (prior-year period: 11.9%). In the second half, we will continue to systematically executethe strategic initiatives in all business areas by adapting our product range specifically to the needs of our customer segments and targeting expansion of our distribution and service organizations.
Outlook for 2016
Our forecast for the full year 2016 has not changed. Despite the encouraging performance in the first half, theoverall environment remains challenging because the currency exchange situation and the trends on individual
markets are still volatile.
As announced in springtime, barring any change in the foreign exchange situation, we anticipate a slight increasein sales and Group profit from continuing operations for the full year 2016.

This E. Schneider
Executive Chairman

Forbo Holding Ltd
Baar, August 16, 2016

Stephan Bauer
CEOFORBO HALF-YEAR REPORT 20165

Consolidated balance sheet
and income statement
Condensed consolidated balance sheet
Unaudited, CHF m
AssetsNon-current assets
Property, plant and equipment, intangible assets and goodwill
Deferred tax assets and other non-current assets
Current assets
Inventories
Trade and other receivables and accrued income and deferred expenses
Cash and cash equivalents
Total assets

30.6.201631.12.2015

392.4
341.0
51.4
530.6
212.3
225.2
93.1
923.0

402.8
363.0
39.8
509.3
214.5
178.5
116.3
912.1

542.9
152.1
0.5
151.6
228.0
67.4
0.3
160.3
380.1
923.0

559.2
120.7
0.9
119.8
232.2
77.4
0.1
154.7
352.9
912.1

First half 2016

First half 2015

590.9
– 357.8
233.1– 168.8
64.3
0.8
65.1
– 13.4
51.7
0.0
51.7
51.7

554.8
– 338.2
216.6– 158.7
57.9
– 0.6
57.3
– 11.5
45.8
0.0
45.8
45.8

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

30.28
30.27

24.24
24.23

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

30.28
30.27

24.24
24.23

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 and deferred income, 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
Group profit attributable to shareholders of Forbo Holding Ltd

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

6

FORBO HALF-YEAR REPORT 2016

Consolidated comprehensive income
statement and statement of changes in 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 are or may be subsequently reclassified to the income statement:
Translation differences
Other comprehensive income, net of tax
Total comprehensive income
Total comprehensive income attributable to shareholders of Forbo Holding Ltd

First half 2016
51.7

First half 2015
45.8

– 25.3– 3.4– 17.3– 42.6
9.1
9.1– 67.4– 70.8– 25.0– 25.0Consolidated statement of changes in equity
first half 2016
Unaudited, CHF m
January 1, 2016
Group profit
Other comprehensive income, net of tax
Total comprehensive income
Share-based payments
Treasury shares
Dividend payment
June 30, 2016

Share capital

Treasuryshares0.2– 0.1

Reserves

0.2

– 0.1

852.0
51.7
– 25.326.4
2.4
1.3– 29.1853.0

Share capital

TreasurysharesReserves

0.2

– 0.1

0.0

Translationdifferences– 292.9– 17.3– 17.3– 310.2

Translationdifferences

Total

559.2
51.7
– 42.6
9.1
2.4
1.3– 29.1542.9

Consolidated statement of changes in 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

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

0.0
0.2

– 0.1

982.9
45.8
– 3.4
42.4
2.2
2.6
– 30.3999.8– 244.2– 67.4– 67.4

311.6

Total

738.8
45.8
– 70.8– 25.02.2
2.6– 30.3688.3

FORBO HALF-YEAR REPORT 20167

Consolidated cash flow statement

Condensed consolidated cash flow statement
Unaudited, CHF m
Group profit
Depreciation of property, plant and equipment, and amortization of intangible assets
Increase in net operating working capital
Other adjustments for non-cash items
Net cash flow from operating activities
Purchase/sale of property, plant and equipment, and intangible assets
Purchase of business operations, less acquired cash and cash equivalents
Proceeds from other current financial assets
Other cash inflow from investing activities, net
Net cash flow from investing activities
Dividend payment
Cash outflow from transactions with treasury shares, net
Other cash outflow from financing activities, net
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

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

First half 2016
51.7
18.4
– 47.1
– 5.8
17.2
– 8.9
– 0.7
0.3
– 9.3
– 29.1– 29.1– 21.2
– 2.0
116.3
93.1

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– 12.7
205.1
141.9

8

FORBO HALF-YEAR REPORT 2016

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, 2016, toJune 30, 2016 (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, 2015.
The consolidated half-year financial statements havenot been audited by the auditors. They were approvedfor publication by the Board of Directors on August 15,
2016.
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 2015 Annual Report. As of January 1,
2016, the Group applies various amendments to theexisting International Financial Reporting Standards(IFRS) and interpretations that do not have any appreciable 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 estimates andassumptions that may affect reported revenues, expenses, assets, liabilities, and contingent liabilities at thedate of the financial statements. If the estimates andassumptions used by management to the best of its
knowledge at the date of the financial statements happen 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, 2015. Income
tax expenditure is estimated on the basis of actual aver­age actual tax rates during the current business year.

FORBO HALF-YEAR REPORT 201603 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, distribute,and sell differ fundamentally in terms of production,
distribution, and marketing.
In the Flooring Systems division, the Group develops,
produces, and sells linoleum, vinyl floorings, entrance
flooring systems, carpet tiles, needle felt, Flotex, thewashable textile flooring, and building and construction adhesives as well as various accessory products
required for laying, processing, cleaning, and care offlooring. In the Movement Systems division, the Groupdevelops, produces, and sells high-quality conveyor
and processing belts, as well as plastic modular belts,
and drive, timing and flat belts made of synthetic ma-

9terials. Corporate includes the costs of the Group headquarters and certain items of income and expenses
which are not directly 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 reporting to the Group’s Executive Chairman and its Chief
Executive Officer and hence on the financial information used to review the performance of the operational 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 2016

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

Flooring
Systems
409.2
– 0.3
408.9
50.3
64.2
537.0
7.0
3,125

Movement
Systems
182.0

Flooring
Systems
384.1
– 0.2
383.9
43.4
54.7
561.7
11.7
3,092

Movement
Systems
170.9

182.0
20.7
25.1
225.4
2.3
2,194

Corporate/
Elimination
– 0.3
0.3
– 6.7
– 6.5
16.3
0.0
41

Total
590.9
590.9
64.3
82.8
778.7
9.3
5,360

First half 2015

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

170.9
20.4
24.6
217.2
2.2
2,106

Corporate/
Elimination
– 0.2
0.2
– 5.9
– 5.7
16.2
0.2
42

Total
554.8
554.8
57.9
73.6
795.1
14.1
5,240

10

FORBO HALF-YEAR REPORT 2016

Reconciliation of division results to the income statement and balance sheet:First half 2016

First half 2015

64.3
0.8
65.1

57.9
– 0.6
57.3

30.6.201631.12.2015

778.7
144.3
923.0

756.1
156.0
912.1

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

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

04 Changes in the scope of consolidation
As per June 28, 2016, Forbo Siegling Italia S.p.A. acquired the entire share capital of Tema S.r.l. in Parma,
Italy. Tema S.r.l. was an existing customer of Forbo thatsells fabric conveyor belts and plastic modular belts.
Tema S.r.l. is now an additional service point for the
Movement Systems division in Northern Italy.
In the period under review, no further changes took
place in the scope of consolidation.
05 Balance sheet
Property, plant and equipment declined by CHF 9.5
million to CHF 217.8 million. Investments in property,
plant and equipment amounted to CHF 9.3 million in
the first half and were lower than depreciation of CHF
14.9 million. Intangible assets stood at CHF 123.2 million
as at June 30, 2016.
The present value of the pension liabilities rose by atotal of CHF 31.8 million owing mainly to lower discountrates in Switzerland and in the United Kingdom. Expenditure after deferred tax assets came to CHF 25.3
million and was recognized in the comprehensive income statement.

Inventories in the first half declined slightly by CHF 2.2
million versus year-end. The increase in trade and otherreceivables totaling CHF 46.7 million was mainly timing-related.
Compared with December 31, 2015, shareholders’ equity decreased by CHF 16.3 million to CHF 542.9 million.
While shareholders’ equity increased by the amount ofGroup profit of CHF 51.7 million, this was offset mainlyby the dividend of CHF 29.1 million in the form of a repayment from capital contribution reserves and by theother comprehensive income, net of tax of CHF 42.6
million. The equity ratio fell marginally to 58.8% as atJune 30, 2016.
Financial liabilities mainly consist of leasing obligations
for fixed assets carried in the balance sheet.

FORBO HALF-YEAR REPORT 201611

06 Income statement

07 Cash flow statement

Net sales of CHF 590.9 million were 6.5% higher than in
the comparable period the previous year. The sales increase came to 4.5% in local currencies.

Despite an increase of CHF 47.1 million in net operating
working capital, cash flow from operating activities
came to CHF 17.2 million.

Operating profit (EBIT) in the reporting period came to
CHF 64.3 million, which was CHF 6.4 million higher thanin the prior-year period.

Cash flow from investing activities comprises the cash
outflow of CHF 8.9 million for investments in property,
plant and equipment and intangible assets, CHF 0.7
million in connection with the acquisition of the sharecapital of Tema S.r.l. in Italy and cash inflow of CHF 0.3
million from interest.

Whereas the financial result in the prior-year period
came to CHF – 0.6 million owing to losses on securities
in the first half, the financial result in the reporting period amounted to CHF 0.8 million mainly on accountof positive currency effects.
Income tax amounted to CHF 13.4 million, corresponding to a tax rate of 20.6%. In the prior-year period, thetax rate had been 20.0%.
The resulting Group profit from continuing operations
came to CHF 51.7 million, which is CHF 5.9 million or
12.9% higher than the prior-year period.
Undiluted earnings per share on the basis of the average number of shares in circulation amounted to CHF
30.28 in the reporting period (prior-year period: CHF
24.24). Diluted earnings per share (adjusted for the dilution effect of outstanding options) came to CHF 30.27(prior-year period: CHF 24.23).

Cash flow from financing activities reflects the dividendof CHF 29.1 million in the form of a repayment from
capital contribution reserves.

08 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
Eurozone
USA
Great Britain
Japan

EUR
USD
GBP
JPY

1
1
1
100

2016
1.09620.98211.40960.87922015
1.05780.94751.44300.7882

Balance sheet
On balance sheet date
30.6.2016
1.08630.98191.31010.955509 Contingent liabilities

10 Events after the balance sheet date

The Group’s contingent liabilities have not changed
significantly compared with December 31, 2015. Asannounced 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 29, 2016,
the shareholders of Forbo Holding Ltd voted to reduce
the share capital of CHF 199,000 to CHF 180,000 by cancellation of the 190,000 registered shares repurchased
through the fixed-price share buyback program as well
as via the second trading line of the SIX Swiss Exchange,
as approved at the Ordinary General Meeting of April
24, 2015. The capital reduction was completed with theentry in the Commercial Register of the canton of Zug
on July 11, 2016, and was published in the SHAB on July
14, 2016. The exchange adjustment took place on thesame day.

CalendarMedia and financial analysts’ conference for the 2016 business year:
Ordinary General Meeting:	
Half-Year Report 2017:

Tuesday, March 7, 2017
Thursday, April 6, 2017
Friday, July 28, 2017

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

Forbo Holding Ltd
Lindenstrasse 8
CH-6340 Baar

Forbo International SA
Lindenstrasse 8
CH-6340 Baar

T + 41 58 787 25 25
F + 41 58 787 20 25

info@forbo.com
www.forbo.com

31.12.2015
1.08781.00191.47720.8329