RECTICEL CONDENSED FINANCIAL STATEMENTS PER 30 JUNE 2018

I. INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
I.1. CONSOLIDATED INCOME STATEMENT
I.2. EARNINGS PER SHARE
I.3. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
I.4. CONSOLIDATED BALANCE SHEET
I.5. CONSOLIDATED CASH FLOW STATEMENT
I.6. STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
I.7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDING 30 JUNE 2018
- I.7.1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- I.7.2. CHANGES IN SIGNIFICANT ACCOUNTING POLICIES
- I.7.3. IMPACT OF NEW STANDARDS (IFRS 15 AND IFRS 9) THAT ARE APPLICABLE STARTING FROM 01 JANUARY 2018
- I.7.4. POTENTIAL IMPACT OF NEW STANDARDS (IFRS 16) WHICH ARE YET NOT APPLICABLE
- I.7.5. CRITICAL ACCOUNTING ASSESSMENTS AND PRINCIPAL SOURCES OF UNCERTAINTY
- I.7.6. CHANGES IN SCOPE OF CONSOLIDATION
- I.7.7. BUSINESS SEGMENTS
- I.7.8. INCOME STATEMENT
- I.7.9. BALANCE SHEET
- I.7.10.WORKING CAPITAL NEEDS
- I.7.11.MISCELLANEOUS
II. INTERIM MANAGEMENT REPORT
III. DECLARATION BY THE RESPONSIBLE OFFICERS
IV. AUDITORS' REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDING 30 JUNE 2018
V. GLOSSARY

I. INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The condensed consolidated financial statements have been authorised for issue by the Board of Directors on 28 August 2018.

The Group has initially applied IFRS 15 and IFRS 9 at 1 January 2018. Under the transition methods chosen, comparative information is not restated.

I.1. CONSOLIDATED INCOME STATEMENT

Group Recticel in thousand EUR	Notes *	1H2018	1H2017
Sales	I.7.7.	579 730	566 042
Distribution costs		( 29 404)	( 31 708)
Cost of sales 4		( 448 157)	( 453 222)
Gross profit 1		102 169	81 112
General and administrative expenses 4		( 35 328)	( 33 065)
Sales and marketing expenses		( 34 399)	( 33 943)
Research and development expenses		( 6 919)	( 7 047)
Impairments	I.7.7.	( 570)	0
Other operating revenues (a)		5 015	25 167
Other operating expenses (b)		( 8 296)	( 13 142)
Total other operating revenues/(expenses) (a)+(b) 2	I.7.8.1.	( 3 281)	12 025
Income from joint ventures & associates 3		7 468	1 506
EBIT	I.7.7.	29 140	20 588
Interest income		280	402
Interest expenses		( 2 344)	( 3 974)
Other financial income		3 260	8 722
Other financial expenses		( 5 577)	( 7 239)
Financial result	I.7.8.2.	( 4 381)	( 2 089)
Result of the period before taxes		24 759	18 499
Current income taxes		( 2 371)	( 2 126)
Deferred taxes		( 3 702)	( 2 072)
Income taxes		( 6 073)	( 4 198)
Result of the period after taxes		18 686	14 301
of which attributable to non-controlling interests		0	0
of which share of the Group		18 686	14 301

1 The gross profit of 1H2018 includes EUR -0.8 million (1H2017: EUR -17,0 million) non-recurring costs from residual expenses incurred due to alternative production solutions following the fire incident in Automotive Interiors plant in Most (Czech Republic).

2 In 1H2017 "Other operating revenues" included mainly the first tranche of the insurers compensation (EUR +21.0 million) related to the fire incident in Most.

3 "Income from joint ventures & associates" improved compared to 1H2017 as a result of price adjustments to compensate for the increased chemical raw material costs, compensation received (EUR +0.9 million), a reversal of provisions (EUR +1.5 million) and improved operational performance.

In 1H2017 results were negatively impacted by the significant increase of chemical raw materials costs (i.e. isocyanates) in 2Q2017.

⁴For consistency reasons a reclassification has been recorded in 1H2017 between 'Cost of sales' and 'General and administrative expenses' for an amount of EUR 9.9 million.

* The accompanying notes are an integral part of this income statement.

I.2. EARNINGS PER SHARE

Group Recticel in EUR	Notes *	1H2018	1H2017
Basic earnings per share		0,343	0,265
Diluted earnings per share		0,339	0,248

The basic earnings per share are calculated on the basis of the weighted average number of shares outstanding during the period.

The diluted earnings per share are calculated on the basis of the weighted average number of shares outstanding during the period, increased for the warrants in-the-money.

I.3. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Group Recticel
Notes * in thousand EUR	1H2018	1H2017

Result for the period after taxes	18 686	14 301
Other comprehensive income
Items that will not subsequently be recycled to profit and loss
Actuarial gains and losses recognized in equity	4 478	422
Deferred taxes on actuarial gains and losses on employee benefits	( 568) ( 41)	( 134) 153
Currency translation differences Joint ventures & associates	491	( 29)
Total	4 360	412

Items that subsequently may be recycled to profit and loss
Hedging reserves	582	1 103
Currency translation differences	528	( 3 792)
Deferred taxes on hedging interest reserves Joint ventures & associates	( 101) ( 1 406)	( 381) 941
Total	( 397)	( 2 129)

Other comprehensive income net of tax	3 963	( 1 717)
Total comprehensive income for the period	22 649	12 584

Total comprehensive income for the period	22 649	12 584
of which attributable to non-controlling interests	0	0
of which attributable to the owners of the parent	22 649	12 584

I.4. CONSOLIDATED BALANCE SHEET

Group Recticel
in thousand EUR	Notes *	30 Jun 2018 (a)	31 Dec 2017

Intangible assets		12 166	12 323
Goodwill		23 294	24 169
Property, plant & equipment	I.7.9.1.	234 564	226 783
Investment property		3 331	3 331
Investments in joint ventures and associates	I.7.9.2.	76 861	76 241
Other financial investments		791	667
Non-current receivables		14 623	14 804
Non-current contract assets (a)	I.7.3.1.	19 182	0
Deferred tax		23 267	26 241
Non-currrent assets		408 079	384 559
Inventories and contracts in progress		107 243	99 408
Trade receivables		142 596	110 935
Current contract assets (a)	I.7.3.1.	14 220	0
Other receivables		57 338	73 373
Income tax receivables		2 128	1 350
Other investments		123	123
Cash and cash equivalents		41 231	57 844
Assets held for sale		2 570	2 570
Current assets		367 449	345 603
TOTAL ASSETS		775 528	730 162

Capital		137 497	136 941
Share premium		128 994	127 982
Share capital		266 491	264 923
Treasury shares		( 1 450)	( 1 450)
Other reserves Retained earnings		( 18 336) 28 308	( 22 633) 40 868
Hedging and translation reserves		( 20 319)	( 19 922)
Equity (share of the Group)		254 694	261 786
Equity attributable to non-controlling interests		0	0
Total equity	I.6.	254 694	261 786
Pensions and similar obligations	I.7.9.3.	49 368	54 295
Provisions	I.7.9.3.	11 361	14 266
Deferred tax		9 198	9 113
Financial leases		17 792	18 078
Bank loans		0	76 160
Other loans		1 743	1 842
Interest-bearing borrowings	I.7.9.4.	19 535	96 080
Non-current contract liabilities (a)	I.7.3.1.	30 170	0
Other amounts payable		235	230
Non-current liabilities		119 867	173 984
Pensions and similar obligations	I.7.9.3.	2 969	3 978
Provisions	I.7.9.3.	1 071	1 155
Other loans		126 854	48 988
Interest-bearing borrowings	I.7.9.4.	126 854	48 988
Trade payables		108 894	126 584
Current contract liabilities (a)	I.7.3.1.	45 785	0
Income tax payables		1 414	2 411
Other amounts payable		113 980	111 276
Current liabilities		400 967	294 392
TOTAL LIABILITIES AND EQUITY		775 528	730 162

(a) The Group has initially applied IFRS 15 and IFRS 9 at 1 January 2018. Under the transition methods choosen, comparative information is not restated.

* The accompanying notes are an integral part of this balance sheet.

I.5. CONSOLIDATED CASH FLOW STATEMENT

Group Recticel
in thousand EUR	Notes *	1H2018	1H2017

EARNINGS BEFORE INTEREST AND TAXES (EBIT)		29 141	20 588
Amortisation of intangible assets		1 252	1 342
Depreciation of tangible assets	I.7.7.	13 600	12 690
Amortisation of deferred long term and upfront payment		853	788
(Reversal) Impairment losses on tangible assets	I.7.7.	( 430)	0
(Reversal) Impairment losses on goodwill 4	I.7.7.	1 000	0
(Write-back)/Write-offs on assets		( 295)	1 449
Changes in provisions		( 4 825)	( 2 889)
(Gains) / Losses on destroyed assets or on disposals of assets 1		( 42)	3 224
Income from joint ventures and associates 2		( 7 468)	( 1 506)
GROSS OPERATING CASH FLOW BEFORE WORKING CAPITAL MOVEMENTS		32 787	35 687
Inventories		( 1 825)	( 21 461)
Trade receivables		( 32 751)	( 18 774)
Other receivables		6 833	( 7 732)
Contract assets		2 131	0
Trade payables		( 13 755)	17 459
Contract liabilities		21 413	0
Other payables		3 741	6 401
Changes in working capital 3		( 14 213)	( 24 108)
Trade & Other long term debts maturing within 1 year		( 531)	( 19)
GROSS OPERATING CASH FLOW AFTER WORKING CAPITAL MOVEMENTS		18 043	11 561
Income taxes paid		( 3 998)	( 2 757)
NET CASH FLOW FROM OPERATING ACTIVITIES (a)		14 045	8 804
Interests received		100	148
Dividends received		5 500	8 800
Investments in and subscriptions to capital increases		( 635)	0
Increase of loans and receivables Decrease of loans and receivables		( 119) 1 054	( 366) 523
Investments in intangible assets		( 1 775)	( 1 354)
Investments in property, plant and equipment		( 22 391)	( 16 711)
Disposals of intangible assets		90	0
Disposals of property, plant and equipment		116	24
NET CASH FLOW FROM INVESTMENT ACTIVITIES (b)		( 18 059)	( 8 936)
Interests paid (1)		( 3 348)	( 3 418)
Dividends paid		( 12 029)	( 9 684)
Increase (Decrease) of capital		1 568	2 814
Increase of financial debt (short term)		86 902	24 376
Decrease of financial debt (long term)		( 84 671)	( 1 956)
Decrease of lease debt		( 978)	( 1 018)
NET CASH FLOW FROM FINANCING ACTIVITIES (c)		( 12 556)	11 114
Effect of exchange rate changes (d)		( 42)	341
Effect of changes in scope of consolidation and of foreign currency translation reserves		0	1
recycled (e)
CHANGES IN CASH AND CASH EQUIVALENTS (a)+(b)+(c)+(d)+(e)		( 16 613)	11 323

Net cash position opening balance Net cash position closing balance		57 844	37 174
CHANGES IN CASH AND CASH EQUIVALENTS		41 231 ( 16 613)	48 498 11 323

NET FREE CASH FLOW (a)+(b)+(1)		( 7 362)	( 3 550)

1 "(Gains)/Losses on disposals of assets" in 1H2017 related to the losses on the net residual value of the destroyed tangible assets of the Interiors plant in Most (Czech Republic) as a result of the fire incident in January 2017 (EUR -3.2 million).

2 "Income from joint ventures & associates" improved compared to 1H2017 as a result of price adjustments to compensate for the increased chemical raw material costs, compensation received (EUR +0.9 million), a reversal of provisions (EUR +1.5 million) and improved operational performance.

In 1H2017 results were negatively impacted by the significant increase of chemical raw materials costs (i.e. isocyanates) in 2Q2017.

3 "Changes in working capital" reflect the seasonable build-up of working capital, inflated in 1H2017 by the impact of increased raw material and selling prices.

⁴The recognition of impairment on goodwill relates to UK Flex and has been decided in view of the uncertainties induced by the potential Brexit impact.

I.6. STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

For the half-year ending 30 June 2018

in thousand EUR	Capital	Share premium	Treasury shares	Other reserves Retained	earnings	Translation differences reserves	Hedging reserves	Total shareholders' equity	Non controlling interests	Total equity, non controlling interests included
At the end of the period (31 December 2017)	136 941	127 982	(1 450)	(22 633)	40 868	(16 399)	(3 523)	261 786	0	261 786
Adjustment on initial application of IFRS 9 (net of tax)	0	0	0	0	0	0	0	0	0	0
Adjustment on initial application of IFRS 15 (net of tax)	0	0	0	0	(19 477)	0	0	(19 477)	0	(19 477)
Changes in accounting policies	0	0	0	0	(19 477)	0	0	(19 477)	0	(19 477)
Dividends Stock options (IFRS 2) Capital movements	0 0 556	0 0 1 012	0 0 0	0 189 ( 252)	(12 021) 0 252	0 0 0	0 0 0	(12 021) 189 1 568	0 0 0	(12 021) 189 1 568
Shareholders' movements	556	1 012	0	( 63)	(11 769)	0	0	(10 264)	0	(10 264)
Profit or loss of the period	0	0	0	0	18 686	0	0	18 686	0	18 686
Other comprehensive income	0	0	0	4 360	0	( 878)	481	3 963	0	3 963
At the end of the period (30 June 2018)	137 497	128 994	(1 450)	(18 336)	28 308	(17 277)	(3 042)	254 694	0	254 694

For the half-year ending 30 June 2017

in thousand EUR	Capital	Share premium	Treasury shares	Other reserves Retained	earnings	Translation differences reserves	Hedging reserves	Total shareholders' equity	Non controlling interests	Total equity, non controlling interests included
At the end of the period (31 December 2016)	135 156	126 071	(1 450)	(17 430)	24 855	(11 043)	(4 954)	251 205	0	251 205
Dividends	0	0	0	0	(9 680)	0	0	(9 680)	0	(9 680)
Stock options (IFRS 2) Capital movements	0 1 200	0 1 614	0 0	131 0	0 0	0 0	0 0	131 2 814	0 0	131 2 814
Shareholders' movements	1 200	1 614	0	131	(9 680)	0	0	(6 735)	0	(6 735)

Profit or loss of the period	0	0	0	0	14 301	0	0	14 301	0	14 301
Other comprehensive income	0	0	0	412	0	(2 851)	722	(1 717)	0	(1 717)
At the end of the period (30 June 2017)	136 356	127 685	(1 450)	(16 887)	29 476	(13 894)	(4 232)	257 054	0	257 054

I.7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDING 30 JUNE 2018

I.7.1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

I.7.1.1. STATEMENT OF COMPLIANCE - BASIS OF PREPARATION

These condensed consolidated financial statements for the six months ended 30 June 2018 have been prepared in accordance with IAS 34 Interim Financial Reporting, as endorsed by the European Union. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 31 December 2017.

These condensed consolidated interim financial statements have been authorised for issue by the Board of Directors on 28 August 2018.

I.7.1.2. BASIS OF ACCOUNTING

This is the first set of the Group's financial statements where IFRS 15 and IFRS 9 have been applied. Changes to significant accounting policies are described below.

I.7.2. CHANGES IN SIGNIFICANT ACCOUNTING POLICIES

Except as described below, the accounting policies applied in these interim financial statements are the same as those applied in the Group's consolidated financial statements as at and for the year ended 31 December 2017.

The changes in accounting policies are also expected to be reflected in the Group's consolidated financial statements as at and for the year ending 31 December 2018.

The Group has initially adopted IFRS 15 Revenue from Contracts with Customers and IFRS 9 Financial instruments from 01 January 2018. A number of other new standards are effective from 01 January 2018 but they do not have a material effect on the Group's financial statements.

The effect of initially applying IFRS 15 is mainly attributed to the recognition of revenue from mould activities in the segment Automotive.

There is no impact of initially applying IFRS 9.

I.7.3. IMPACT OF NEW STANDARDS (IFRS 15 AND IFRS 9) THAT ARE APPLICABLE STARTING FROM 01 JANUARY 2018

I.7.3.1. IFRS 15 Revenue from Contracts with Customers, applicable as from 1 January 2018

IFRS 15 was issued in May 2014 and Clarifications to IFRS 15 in April 2016 as part of a convergence project with the FASB. The standard is to be applied for reporting periods beginning on 1 January 2018 or later. The standard replaces the current standards IAS 18 and IAS 11 as well as their interpretations.

Either a full retrospective application or a modified retrospective application is required. Early adoption is permitted. The Group decides to adopt the new standard on the required effective date using the modified retrospective method. Under this method, IFRS 15 is only applied to contracts that were not completed as of the date of initial application (1 January 2018). This means that comparative figures of 2017 are not restated and that the cumulative effect of initially applying IFRS 15 is recognized as an adjustment to the opening balance of retained earnings of 2018.

General consideration

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, VAT and other sales-related taxes. Revenue from the sale of goods is recognized when the goods are delivered and titles have passed, at which time all the following conditions are satisfied:

the Group has transferred to the buyer the significant risks and rewards of ownership of the goods;
the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
the amount of revenue can be measured reliably;
it is probable that the economic benefits associated with the transaction will flow to the Group; and
the costs incurred or to be incurred in respect of the transaction can be measured reliably

In the case of moulds (Automotive), the revenue is recognized over time at the moment parts are produced with these moulds. See below (Automotive) for more information.

Changes in accounting policies

Except for the changes below, Recticel has consistently applied the accounting policies to all periods presented in these consolidated financial statements.

The Group applied IFRS15 under modified retrospective approach (IFRS 15 applied to only the most current period presented in the financial statements - i.e., the initial period of application) with a date of initial application of 1 January 2018.

The details of the new accounting policies and the nature of the changes to previous accounting policies in relation to the Group's various goods and services are set out below. Under IFRS 15, revenue is recognized when a customer obtains control of the goods or services. Determining the timing of the transfer of control – at a point in time or over time – requires judgment.

Type of product/ service	Nature, timing of satisfaction of performance obligations, significant payment terms	Nature of change in accounting policy
Flexible Foams	Customers obtain control of Flexible Foam products when the goods are delivered to and have been accepted at their premises. Invoices are generated and revenue is recognized at that point in time. The most common types of variable consideration that can be identified are:  Volume discounts;  Year-end rebates  Adjustments to cope with changes in raw material prices (on a prospective basis) The amount of revenue recognized is adjusted for expected rebates and discounts. If a credit note is issued to the customer to compensate for quality claims, this shall be recognized as a reduction of the revenues.	IFRS 15 did not have a significant impact on the Group's accounting policies.
Bedding	Customers obtain control of Bedding products when the goods are delivered to and have been accepted at their premises. Invoices are generated and revenue is recognized at that point in time The most common types of variable consideration that can be identified are:  Volume discounts;  Year-end rebates The amount of revenue recognized is	IFRS 15 did not have a significant impact on the Group's accounting policies.

	adjusted for expected rebates and discounts.
	The most common types of considerations paid to the customer relate to: a. Participation to flyers b. Participation to advertising campaigns c. Promotional in-store activities The consideration paid to participate in the customer's flyers shall be deducted from revenue as the services provided by the customer to the Group can generally not be
	considered as being distinct.
Insulation	Customers obtain control of Insulation products when the goods are delivered to and have been accepted at their premises. Invoices are generated and revenue is recognized at that point in time. The most common types of variable consideration that can be identified are:  Volume discounts;  Year-end rebates The amount of revenue recognized is adjusted for expected rebates and discounts. The most common types of considerations paid to the customer relate to: b. Participation to flyers c. Participation to advertising campaigns d. Promotional in-store activities The consideration paid to participate in the customer's flyers shall be deducted from revenue as the services provided by the customer to the Group can generally not be considered as being distinct.	policies.
Automotive	> Contract types The Group serves global Tier-1 customers as well as Original Equipment Makers (OEM) in the automotive sector. Parts are produced with moulds purchased on behalf of the Tier 1 / customer. These moulds are re-invoiced to the Tier 1 / customer. Customers obtain control of the products when the goods are delivered to and have been accepted at their premises. Invoices are generated and revenue is recognized at that point in time. Moulds are not capable of being distinct as moulds have no stand-alone value to the customer and due to its protected technology, no supplier other than Recticel is able to produce the specific parts on these moulds. Consequently contracts always incorporate the delivery of parts using these moulds. Therefore the delivery of these moulds has to be bundled with the delivery of the parts. The revenue is being recognized over time (4 years) as from the moment serial parts are delivered to the customer (=start of production), regardless of the moment the

IFRS 15 did not have a significant impact on the Group's accounting

In Automotive, the moulds do generally not represent a distinct performance obligation and shall therefore be combined with the parts to be produced using the mould (under previous practices, the moulds were always considered as a distinct performance obligation). Mould revenues were previously reported over time based on the 'percentage of completion' method (IAS 11). Under IFRS15, revenue is recognized at the moment the parts are produced with the moulds. Revenue and costs will be recognised over four years (linear amortization) from the moment the parts are produced with the moulds.

Remark: Given the materiality concerned by this type of performance obligation, no amortization of revenues (and costs) is reported by the Seating division.

mould costs are reimbursed by the customer.

A contract liability is recognized upon billing the mould to the customer. That contract liability will be released as revenue to the income statement upon selling the parts to the customer.

> LTA's

Another type of variable consideration that can be identified for some customers are Long Term Agreements (prices are decreasing as from a particular moment, as the customer assumes that there should be experience gains)

The LTA adjustments also do not trigger a measurement issue, because selling prices are only adjusted on a prospective basis.

	I.7.3.1.1. Impact IFRS 15 on balance sheet
--	--------------------------------------------	--	--	--

Group Recticel	30 Jun 2018		30 Jun 2018
in thousand EUR	(as published)	Impact IFRS 15	(restated without
			adoption of IFRS 15)
Intangible assets	12 166	0	12 166
Goodwill	23 294	0	23 294
Property, plant & equipment	234 564	0	234 564
Investment property	3 331	0	3 331
Investments in joint ventures and associates	76 861	0	76 861
Other financial investments	63	0	63
Available for sale investments	728	0	728
Non-current receivables	14 623	0	14 623
Non-current contract assets (a)	19 182	(19 182)	0
Deferred tax	23 267	0	23 267
Non-current assets	408 079	(19 182)	388 897
Inventories and contracts in progress	107 243	(2 178)	105 065
Trade receivables	142 596	( 714)	141 882
Current contract assets (a)	14 220	(14 220)	0
Other receivables	57 338	2 165	59 503
Income tax receivables	2 128	0	2 128
Other investments	123	0	123
Cash and cash equivalents	41 231	0	41 231
Assets held for sale	2 570	0	2 570
Current assets TOTAL ASSETS	367 449 775 528	(14 947) (34 129)	352 502 741 399

Capital	137 497	0	137 497
Share premium	128 994	0	128 994
Share capital	266 491	0	266 491
Treasury shares	( 1 450)	0	( 1 450)
Other reserves	( 18 336)	0	( 18 336)
Retained earnings	28 308	18 515	46 823
Hedging and translation reserves	( 20 319)	0	( 20 319)
Equity (share of the Group)	254 694	18 515	273 209
Equity attributable to non-controlling interests	0	0	0
Total equity	254 694	18 515	273 209
Pensions and similar obligations	49 368	0	49 368
Provisions	11 361	0	11 361
Deferred tax	9 198	( 1 014)	8 184
Financial leases	17 792	0	17 792
Other loans	1 743	0	1 743
Interest-bearing borrowings Non-current contract liabilities (b)	19 535	0	19 535
Other amounts payable	30 170 235	(30 170) 0	0 235
Non-current liabilities	119 867	( 31 184)	88 683
Pensions and similar obligations	2 969	0	2 969
Provisions	1 071	0	1 071
Bonds & Notes	0	0	0
Other loans	126 854	0	126 854
Interest-bearing borrowings	126 854	0	126 854
Trade payables	108 894	0	108 894
Current contract liabilities (b)	45 785	(45 785)	0
Income tax payables	1 414	0	1 414
Other amounts payable	113 980	24 325	138 305
Current liabilities	400 967	( 21 460)	379 507
TOTAL LIABILITIES AND EQUITY	775 528	( 34 129)	741 399

The column "Amount without adoption of IFRS 15" does not include the impact of the percentage of completion method which has been discontinued as from 01 January 2018.

(a) Contract assets (current and non-current)

Non-current contract assets: costs to obtain a contract previously reported as Other Receivables
Current and non-current contract assets: contracts in progress previously reported as Inventories and restated deferred costs to be recognised over time
(b) Contract liabilities (current and non-current)
Current and non-current contract liabilities: moulds revenue recognition previously reported as Trade Receivables (including the percentage of completion method) and restated deferred revenue to be recognised over time
Current contract liabilities: rebates and volume discounts previously reported as Trade Receivables (credit notes to issue) and Other Amounts Payable
Current contract liabilities: price adjustments on agreements previously reported as Trade receivables (credit notes to issue)

I.7.3.1.2. Impact IFRS 15 on equity

Group Recticel in thousand EUR
Total equity as per 31 December 2017	261 786
Impact of application of IFRS 15 on retained earnings at 01 January 2018 Mould contracts recognised over time	( 20 725)
Deferred tax	1 247
Total equity as per 01 January 2018	242 308

Impact to balance sheet at 01 January 2018

Current and non-current contract assets	33 385
Inventories / Contracts in progress	6 255
Trade receivables	( 8 100)
Total assets (a)	31 540
Current and non-current liabilities	54 550
Trade payables	( 2 552)
Other payables	267
Total liabilities (b)	52 265
Equity impact from mould contracts' recognition over time (a)-(b)	( 20 725)

I.7.3.1.3. Impact IFRS 15 on income statement
-----------------------------------------------

Sales 579 730 ( 2 306) Distribution costs ( 29 404) 0 ( 29 404) Cost of sales ( 448 157) 1 733 ( 446 424) Gross profit 102 169 ( 573) General and administrative expenses ( 35 328) 0 ( 35 328)	Amounts without adoption of IFRS 15
	577 424


	101 596

Sales and marketing expenses ( 34 399) ( 623) ( 35 022)
Research and development expenses ( 6 919) 0	( 6 919)
Impairments ( 570) 0	( 570)
Other operating revenues (a) 5 015 0 5 015
Other operating expenses (b) ( 8 296) 0 ( 8 296)
Total other operating revenues/(expenses) (a)+(b) ( 3 281) 0	( 3 281)
Income from joint ventures & associates 7 468 0	7 468
EBIT 29 140 ( 1 196)	27 944
Interest income 280 0	280
Interest expenses ( 2 344) 0	( 2 344)
Other financial income 3 260 0	3 260
Other financial expenses ( 5 577) 0	( 5 577)
Financial result ( 4 381) 0	( 4 381)
Result of the period before taxes 24 759 ( 1 196)	23 563
Current income taxes ( 2 371) 0	( 2 371)
Deferred taxes ( 3 702) 233	( 3 469)
Result of the period after taxes 18 686 ( 963)	17 723
of which attributable to non-controlling interests 0 0	0
of which share of the Group 18 686 ( 963) 17 723

The column "Amount without adoption of IFRS 15" does not include the impact of the percentage of completion method which has been discontinued as from 01 January 2018.

The adjustment of Sales results from (i) the effective revenue recognition of moulds during the half-year combined with the reversal of the IFRS 15 impact on revenue recognition over time (EUR -3.6 million) and (ii) the impact of the reclassification of consideration related to quality claims (from deduction of Sales to Cost of Sales; EUR +0.7 million) and participation to marketing costs (from deduction of Sales to Marketing Expenses; EUR +0.6 million).

The adjustment of Cost of Sales results from (i) the cost of sales related to the revenue recognition of moulds (see above) for EUR +2.4 million and (ii) the reclassification of cost from quality claims to Cost of Sales (EUR -0.7 million).

The adjustment of Deferred Taxes results from the reversal of the IFRS 15 impact of mould recognition over the period.

I.7.3.1.4. Disaggregation of revenues

Group Recticel in thousand EUR	1H2018
Combined segment revenues
Comfort foam	189 250
Technical foams	141 342
Flexible Foams	330 592
Branded Products	78 056
Non-branded/Private label	46 561
Bedding	124 617
Insulation	132 704
Interiors	104 747
Seating	90 835
Automotive	195 582
Eliminations	( 27 599)
TOTAL COMBINED REVENUES	755 896
Adjustment for joint ventures by application of IFRS 11	( 176 166)
TOTAL CONSOLIDATED REVENUES	579 730

Timing of revenue recognition
At a point in time	744 866
Overtime	11 030
TOTAL	755 896

I.7.3.1.5. Overview of contract assets and liabilities following application of IFRS 15

The following schedule includes both the impact of the opening balance and the movements of the period.

Group Recticel in thousand EUR	Changes in accounting policies	Changes in inventories	New costs to obtain contracts	Increase	Decrease	Reclassification	Translation differences	Closing balance at the end of the period
Non-current contract assets - Cost to obtain a contract	2 557	0	26	0	( 404)	0	( 14)	2 165
Non-current contract assets - Contracts in progress	33 385	( 2 131)	0	0	0	( 14 220)	( 17)	17 017
Non-current contract assets	35 942	( 2 131)	26	0	( 404)	( 14 220)	( 30)	19 182
Current contract assets - Contracts in progress	0	0	0	0	0	14 220	0	14 220
Current contract assets	0	0	0	0	0	14 220	0	14 220
Total contract assets	35 942	( 2 131)	26	0	( 404)	0	( 30)	33 402
Non-current contract liabilities - Mould revenue recognition	54 550	0	0	7 406	( 11 030)	( 20 746)	( 10)	30 170
Non-current contract liabilities	54 550		0	7 406	( 11 030)	( 20 746)	( 10)	30 170
Contract liabilities - Expected rebates and volume discounts	21 142	0	0	32 810	( 29 634)	0	7	24 325
Contract liabilities - Long term agreements	247	0	0	472	0	0	( 6)	713
Contract liabilities - Moulds revenue recognition	0	0	0	0	0	20 746	0	20 746
Current contract liabilities	21 389	0	0	33 283	( 29 634)	20 746	1	45 785
Total contract liabilities	75 939	0	0	40 688	( 40 664)	0	( 9)	75 954

I.7.3.2. IFRS 9 Financial instruments (as revised in 2014), effective for annual periods beginning on or after 1 January 2018

In July 2014, the IASB finalized the reform of financial instruments accounting and issued IFRS 9 (as revised in 2014), which contains the requirements for a) the classification and measurement of financial assets and financial liabilities, b) impairment methodology, and c) general hedge accounting. IFRS 9 (as revised in 2014) will supersede IAS 39 Financial Instruments: Recognition and Measurement upon its effective date.

The Group elected not to restate the comparative amounts of 2017 for the impact of IFRS 9.

I.7.3.2.1. Classification and measurement of financial assets

The date of initial application (i. e. the date on which the Group has assessed its existing financial assets and financial liabilities in terms of the requirements of IFRS 9) is 1 January 2018. Accordingly, the Group applies the requirements of IFRS 9 to instruments that have not been derecognized as at 1 January 2018 and does not apply the requirements of IFRS 9 to instruments that have already been derecognized as at 1 January 2018.

The management of the Group reviewed and assessed the Group's existing financial assets and liabilities as at 1 January 2018 based on the facts and circumstances that existed at that date and concluded that the initial application of IFRS 9 has the following impact on the Group's financial assets as regards their classification and measurement:

The financial assets classified in the category "Loans and receivables" such as non-current receivables, trade receivables, cash and cash equivalents, other receivables (except for derivatives) under IAS 39 are classified and measured at amortised cost under IFRS 9, as the contractual terms of these financial assets are solely payments of principal and interest (SPPI test) and they are managed within 'hold to collect' business model;
The financial assets (unquoted equity investments) classified in the category "Available-for-sale investments" such as other financial investments, available for sale investments, other investments under IAS 39 are designated as at fair value through other comprehensive income. The management has assessed that cost is an appropriate estimate of fair value for those unquoted equity investments because there is a wide range of possible fair value measurements and cost represents the best estimate of fair value within that range.
Classification and measurement of financial liabilities of the Group has not been modified by the requirements of IFRS 9.
None of these changes has any impact on the Group's financial position, other comprehensive income or total comprehensive income at the date of initial applicable of IFRS 9.

I.7.3.2.2. Impairment of financial assets

In relation to the impairment of financial assets, IFRS 9 requires an expected credit loss model as opposed to an incurred credit loss model under IAS 39. The expected credit loss model requires the Group to account for expected credit losses and changes in those expected credit losses at each reporting date to reflect changes in credit risk since initial recognition of the financial assets.

Specifically, IFRS 9 requires the Group to recognize a loss allowance for expected credit losses on 1) trade receivables; 2) loans to related parties; 3) loan commitments and financial guarantee contracts to which the impairment requirements of IFRS 9 apply; 4) cash and cash equivalents.

IFRS 9 provides a simplified approach for measuring the loss allowance at an amount equal to lifetime expected credit losses for trade receivables without a significant financing component (shortterm trade receivables).

For long-term loans to related parties the general impairment assessment model is applied. In particular, IFRS 9 requires the Group to measure the loss allowance for a financial instrument at an amount equal to the lifetime expected credit loss if the credit risk on that financial instrument has increased significantly since initial recognition, or if the financial instrument is a purchased or originated credit-impaired financial asset.

On the other hand, if the credit risk on a financial instrument has not increased significantly since initial recognition (except for a purchased or originated credit-impaired financial asset), the Group is required to measure the loss allowance for that financial instrument at an amount equal to 12 months expected credit loss.

The management has concluded that it would require undue cost and effort to determine the credit risk of each loan on their respective dates of initial recognition. These loans are also assessed to have credit risk other than low. Accordingly, the Group recognizes lifetime ECL for these loans until they are derecognized.

IFRS 9 applies the same measurement approach to loan commitments and financial guarantee contracts (other than measured at fair value through profit or loss) where previously these were measured with reference to IAS 37 Provisions, Contingent Liabilities and Contingent Assets.

All bank balances are assessed to have low credit risk at date of initial application of IFRS 9 and 30 June 2018, as they are held with reputable international banking institutions.

The introduction of expected loss model by IFRS 9 does not have material impact on the Group's financial position or total comprehensive income at the date of initial applicable of IFRS 9.

I.7.3.2.3. General hedge accounting

The new general hedge accounting requirements retain the three types of hedge accounting. However, greater flexibility has been introduced to the types of transactions eligible for hedge accounting, specifically broadening the types of instruments that qualify for hedging instruments and the types of risk components of non-financial items that are eligible for hedge accounting. In addition, the effectiveness test has been overhauled and replaced with a principle of an "economic relationship".

Retrospective assessment of hedge effectiveness is also no longer required. Enhanced disclosure requirements about the Group's risk management activities have also been introduced.

In accordance with IFRS 9's transition provisions for hedge accounting, the Group has applied the IFRS 9 hedge accounting requirements prospectively from the date of initial application on 1 January 2018. The Group's qualifying hedging relationships in place as at 1 January 2018 also qualify for hedge accounting in accordance with IFRS 9 and were therefore regarded as continuing hedging relationships. No rebalancing of any of the hedging relationships was necessary on 1 January 2018.

As the critical terms of the hedging instruments match those of their corresponding hedged items, all hedging relationships continue to be effective under IFRS 9's effectiveness assessment requirements. The Group has also not designated any hedging relationships under IFRS 9 that would not have met the qualifying hedge accounting criteria under IAS 39.

The application of the IFRS 9 hedge accounting requirements has no impact on the Group's financial position or total comprehensive income at the date of initial applicable of IFRS 9.

I.7.4. POTENTIAL IMPACT OF NEW STANDARDS (IFRS 16) WHICH ARE NOT YET APPLICABLE

I.7.4.1. IFRS 16 Leases

IFRS 16 replaces existing leases guidance, including IAS 17 Leases, IFRICR 4 Determining whether an Arrangement contains a Lease, SIC-15R Operating Leases – Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease.

The standard is effective for annual periods beginning on or after 1 January 2019. Early adoption is permitted.

IFRS 16 introduces a single, on-balance sheet lease accounting model for lessees. A lessee recognises a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. There are recognition exemptions for short-term leases and leases of low-value items. Lessor accounting remains similar to the current standard – i.e. lessors continue to classify leases as finance or operating leases.

The Group has completed an initial assessment of the potential impact on its consolidated financial statements but has not yet completed its detailed assessment. The actual impact of applying IFRS 16 on the financial statements in the period of initial application will depend on future economic conditions, including the Group's borrowing rate at 1 January 2019, the composition of the Group's lease portfolio at that date, the Group's latest assessment of whether it will exercise any lease renewal options and the extent to which the Group chooses to use practical expedients and recognition exemptions.

I.7.5. CRITICAL ACCOUNTING ASSESSMENTS AND PRINCIPAL SOURCES OF UNCERTAINTY

Drawing up the annual accounts in accordance with IFRS requires management to make the necessary estimates and assessments. The management bases its estimates on past experience and other reasonable assessment criteria. These are reviewed periodically and the effects of such reviews are taken into account in the annual accounts of the period concerned. Future events which may have a financial impact on the Group are also included in this.

The estimated results of such possible future events may consequently diverge from the actual impact on results. Assessments and estimates were made, inter alia, regarding:

additional impairments in respect of fixed assets, including Goodwill;
determination of provisions for restructuring, contingent liabilities and other exposures;
determination of provisions for irrecoverable receivables;
determination of write-downs on inventories;
valuation of post-employment defined benefit obligations, other long term employee benefits and termination benefits;
the recoverability of deferred tax assets;
period applied over which the revenue related to moulds (Automotive) is released to the income statement.

Under IFRS15, moulds revenue is recognized at the moment the parts are produced with the moulds. Revenue and costs will be recognised over four years (linear amortization) from the moment the parts are produced with the moulds. The period of four years corresponds to the period during which the volumes of production are the most important over the life time of the programs.

It is not excluded that future revisions of such estimates and assessments could trigger an adjustment in the value of the assets and liabilities in future financial years.

I.7.6. CHANGES IN SCOPE OF CONSOLIDATION

There were no changes in the scope of consolidation during the first half-year of 2018.

I.7.7. BUSINESS SEGMENTS

The principal market segments for Recticel's goods and services are the four operating segments: Flexible Foams, Bedding, Insulation, Automotive; and Corporate. For more details on these segments, reference is made to the press release of 29 August 2018 (First Half-Year 2018 Results). Information regarding the Group's reportable segments is presented below. Inter-segment sales are made at prevailing market conditions.

Segment information for the first half-year 2018

Group Recticel in thousand EUR	FLEXIBLE FOAMS	BEDDING	AUTOMOTIVE	INSULATION	ELIMINATIONS	COMBINED TOTAL (A)	ADJUSTMENT FOR JOINT VENTURES BY APPLICATION OF IFRS 11 (B)	CONSOLIDATED TOTAL (A)+(B)
SALES
External sales	307 391	121 210	194 620	132 675	0	755 896
Inter-segment sales	23 200	3 407	962	30	( 27 599)	0
Total sales	330 591	124 617	195 582	132 705	( 27 599)	755 896	( 176 166)	579 730
EARNINGS BEFORE INTEREST AND TAXES (EBIT)
Segment result	11 623	3 724	5 223	19 621	0	40 190
Unallocated corporate expenses						( 9 208)
EBIT Financial result	11 623	3 724	5 223	19 621	0	30 982	( 1 842)	29 140 ( 4 381)
Result for the period before taxes								24 759
Income taxes								( 6 073)
Result for the period after taxes								18 686
Attibutable to non-controlling interests								0
Share of the Group								18 686

Segment information for the first half-year 2017

Group Recticel in thousand EUR	FLEXIBLE FOAMS	BEDDING	AUTOMOTIVE	INSULATION	ELIMINATIONS	COMBINED TOTAL (A)	ADJUSTMENT FOR JOINT VENTURES BY APPLICATION OF IFRS 11 (B)	CONSOLIDATED TOTAL (A)+(B)
SALES External sales Inter-segment sales	291 369 26 179	133 655 4 665	172 599 859	129 213 0	0 ( 31 703)	726 836 0
Total sales	317 548	138 320	173 459	129 213	( 31 703)	726 836	( 160 794)	566 042
EARNINGS BEFORE INTEREST AND TAXES (EBIT)
Segment result Unallocated corporate expenses	12 483	5 266	2 619	10 959	0	31 326 ( 9 098)
EBIT Financial result	12 483	5 266	2 619	10 959	0	22 228	( 1 640)	20 588 ( 2 089)
Result for the period before taxes								18 499
Income taxes Result for the period after taxes								( 4 198) 14 301
Attibutable to non-controlling interests								0
Share of the Group								14 301

Other segment information first half-year 2018

Group Recticel in thousand EUR	FLEXIBLE FOAMS	BEDDING	AUTOMOTIVE	INSULATION	CORPORATE	COMBINED TOTAL (A)	ADJUSTMENT FOR JOINT VENTURES BY APPLICATION OF IFRS 11 (B)	CONSOLIDATED TOTAL (A)+(B)
Depreciation and amortisation	6 221	2 223	8 017	3 212	325	19 997	( 4 291)	15 706
Impairment losses recognised in profit and loss	1 000	( 430)	0	0	0	570	0	570
EBITDA	18 844	5 517	13 239	22 833	( 8 883)	51 549	( 6 134)	45 415
Capital additions	7 473	1 146	7 155	8 064	952	24 791	( 2 295)	22 496

Other segment information first half-year 2017

Group Recticel in thousand EUR	FLEXIBLE FOAMS	BEDDING	AUTOMOTIVE	INSULATION	CORPORATE	COMBINED TOTAL (A)	ADJUSTMENT FOR JOINT VENTURES BY APPLICATION OF IFRS 11 (B)	CONSOLIDATED TOTAL (A)+(B)
Depreciation and amortisation	6 198	2 320	6 505	3 262	481	18 766	( 3 945)	14 821
Impairment losses recognised in profit and loss	0	0	0	0	0	0	0	0
EBITDA	18 681	7 586	9 124	14 221	( 8 617)	40 994	( 5 586)	35 409
Capital additions	5 684	1 352	15 518	1 640	1 633	25 826	( 6 214)	19 612

Balance sheet information per segment at 30 June 2018

Group Recticel in thousand EUR	FLEXIBLE FOAMS	BEDDING	AUTOMOTIVE	INSULATION	ELIMINATIONS	COMBINED TOTAL (A)	ADJUSTMENT FOR JOINT VENTURES BY APPLICATION OF IFRS 11 (B)	CONSOLIDATED TOTAL (A)+(B)
ASSETS Segment assets Investment in associates Unallocated corporate assets Total consolidated assets	276 972 14 981	99 661 0	277 407 0	127 669 1 467	( 71 976) 0	709 733 16 448 143 066 869 247	( 155 682) 58 914 3 049 ( 93 719)	554 052 75 361 146 115 775 528
LIABILITIES Segment liabilities Unallocated corporate liabilities Total consolidated liabilities (excluding equity)	129 763	39 450	145 945	70 295	( 71 948)	313 505 301 048 614 553	( 44 804) ( 48 915) ( 93 719)	268 701 252 133 520 834

The unallocated assets, which amount to EUR 143.1 million, include mainly the following items:

Short-term financial receivables for EUR 14.5 million
Long-term financial receivables for EUR 14.4 million
Current tax receivables for EUR 3.7 million
Deferred tax assets for EUR 24.2 million
Cash & cash equivalent for EUR 60.4 million.

The unallocated liabilities, which amount to EUR 301.0 million (equity excluded), include mainly the following items:

Provisions for pensions long term for EUR 58.0 million
Provisions for pensions short term for EUR 3.0 million
Other provisions long term for EUR 12.6 million
Other provisions short term for EUR 1.3 million
Deferred tax liabilities for EUR 10.2 million
Interest-bearing borrowings long-term for EUR 14.2 million
Interest-bearing borrowings short-term for EUR 162.9 million
Current tax payables for EUR 2.1 million.

Balance sheet at 31 December 2017

Group Recticel in thousand EUR	FLEXIBLE FOAMS	BEDDING	AUTOMOTIVE	INSULATION	ELIMINATIONS	COMBINED TOTAL (A)	ADJUSTMENT FOR JOINT VENTURES BY APPLICATION OF IFRS 11 (B)	CONSOLIDATED TOTAL (A)+(B)
ASSETS Segment assets Investment in associates Unallocated corporate assets Total consolidated assets	283 945 15 110	113 990 0	261 917 0	122 047 1 490	( 117 554) 0	664 345 16 600 140 205 821 149	( 171 372) 59 642 20 744 ( 90 987)	492 973 76 241 160 948 730 162
LIABILITIES Segment liabilities Unallocated corporate liabilities Total consolidated liabilities (excluding equity)	138 658	55 302	116 512	78 943	( 117 320)	272 096 287 267 559 363	( 60 172) ( 30 815) ( 90 987)	211 924 256 452 468 376

The unallocated assets, which amount to EUR 140.2 million, include the following items:

Financial receivables for EUR 19.7 million
Current tax receivables for EUR 3.3 million
Other receivables (including tax credits) for EUR 17.2 million
Deferred tax assets for EUR 26.7 million
Cash & cash equivalent for EUR 73.2 million.

The unallocated liabilities, which amount to EUR 287.3 million (equity excluded), include mainly the following items:

Provisions for pensions long term for EUR 63.4 million
Provisions for pensions short term for EUR 4.0 million
Provisions other long term for EUR 17.1 million
Provisions other short term for EUR 1.4 million
Deferred tax liabilities for EUR 10.3 million
Interest-bearing borrowings long-term for EUR 90.5 million
Interest-bearing borrowings short-term for EUR 81.6 million
Current taxes payable for EUR 2.9 million.

Non-recurring elements in the operating result per segment

Group Recticel in thousand EUR	FLEXIBLE FOAMS	BEDDING	AUTOMOTIVE	INSULATION	NOT ALLOCATED	TOTAL COMBINED
First half-year 2018
Impairment Net impact of fire incident in Most plant	( 1 000)	430	0	0	0	( 570)
(Czech Republic)	0	0	( 765)	0	0	( 765)
Restructuring charges	( 74)	110	( 216)	0	0	( 180)
Other	( 2 728)	0	( 474)	0	( 496)	( 3 698)
TOTAL	( 3 802)	540	( 1 455)	0	( 496)	( 5 213)

The net impact of the fire incident in Most includes (i) additional residual costs (EUR -0.8 million) due to alternative production solutions - which are included in "Cost of sales".
Restructuring charges (EUR -0.2 million) refer to some smaller complementary measures in Flexible Foams, Automotive and Bedding. Bedding includes the positive impact of the reversal of provisions for onerous contracts (EUR +0.3 million).
Other non-recurring elements relate mainly to legal fees and provisions for litigation.

Group Recticel in thousand EUR	FLEXIBLE FOAMS	BEDDING	AUTOMOTIVE	INSULATION	NOT ALLOCATED	TOTAL COMBINED
First half-year 2017 Net impact of fire incident in Most plant (Czech Republic)	0	0	( 4 946)	0	0	( 4 946)
Restructuring charges	( 97)	( 121)	590		0	372
Other	( 4 542)	0	0	0		( 4 542)
TOTAL	( 4 639)	( 121)	( 4 356)	0	0	( 9 116)

The net impact of the fire incident in Most includes (i) additional costs (EUR -17.0 million) due to alternative production solutions and operational inefficiencies - which are included in "Cost of sales" -, (ii) the loss recognised on the residual value of the destroyed assets and write-offs of inventories (EUR -4.9 million), (iii) reinsurance costs and accrued legal fees (EUR -4.0 million) and (iv) advance payments received from insurers (EUR +21.0 million).
Restructuring charges refer to some smaller complementary measures in Flexible Foams and Bedding; which were offset by the positive impact of the reversal of provisions for onerous contracts in Bedding and Automotive Interiors (EUR +0.9 millions).
Other non-recurring elements relate mainly to incurred costs and provisions for legal fees.

I.7.8. INCOME STATEMENT

I.7.8.1. OTHER OPERATING INCOME AND EXPENSES

Group Recticel in thousand EUR	1H2018	1H2017
Other operating income	5 015	25 167
Other operating expenses	( 8 296)	( 13 142)
TOTAL	( 3 281)	12 025

Group Recticel in thousand EUR	1H2018	1H2017
Restructuring costs (including site closure, onerous contracts and clean-up costs)	( 180)	( 372)
Net impact fire incident Automotive Interiors in Most (Czech
Republic); excluding EUR -17.0 million which is included in "Cost of sales"	0	12 055
Gain (Loss) on disposal of intangible and tangible assets	42	( 5)
Other income	4 860	4 124
Other expenses	( 8 004)	( 3 778)
TOTAL	( 3 281)	12 025

COMMENTS ON FIRST HALF-YEAR RESULTS 2018

Restructuring

Restructuring charges (EUR -0.2 million) refer to some smaller complementary measures in Flexible Foams, Automotive and Bedding. Bedding includes the positive impact of the reversal of provisions for onerous contracts (EUR +0.3 million).

Other operating revenues and expenses

Other operating revenues and expenses during the first half-year of 2018 comprised, a.o.

(i) the net impact of pension liabilities and other employee benefits (EUR -0.6 million), including a curtailment effect, additional service costs, other social costs and currency effects on pension plans.
(ii) Damage cost on industrial sinister (EUR -0.5 million)
(iii) consultancy and legal fees mainly related to EU claims (EUR -2.0 million)
(iv) royalties received (EUR +0.1 million)
(v) net revenues from insurance premiums (EUR +0.4 million)
(vi) re-invoicing of services and goods, rentals (EUR +1.8 million)
(vii) reversal of accruals for social risks (EUR +0.7 million)
(viii) indemnities received (EUR +0.3 million)
(ix) additional provisions for risks and charges related to EU claim settlements (EUR -3.3 million)

COMMENTS ON FIRST HALF-YEAR RESULTS 2017

Restructuring

Restructuring charges refer to some smaller complementary measures in Flexible Foams and Bedding; which were offset by the positive impact of the reversal of provisions for onerous contracts in Bedding and Automotive Interiors (EUR +0.9 millions).

Other operating revenues and expenses

Other operating revenues and expenses during the first half-year of 2017 comprised, a.o.

(i) the net impact of pension liabilities (EUR -0.3 million), including additional service costs, other social costs and currency effects on pension plans.
(ii) additional legal fees related to civil claims in relation with the EC investigation (Flexible Foams) (EUR -0.5 million)
(iii) net revenues from insurance premiums (EUR +0.6 million)
(iv) re-invoicing of services and goods, rentals (EUR +0.1 million)
(v) received insurance indemnities for an incident in Flexible Foams in Norway (EUR +0.6 million)
(vi) write-off on a financial receivable towards an affiliated company (EUR -0.4 million)
(vii) reversal of accruals for social risks (EUR +0.2 million)
(viii) indemnities received (EUR +0.3 million)
(ix) other miscellaneous costs (EUR -0.2 million)

I.7.8.2. FINANCIAL RESULT

Group Recticel in thousand EUR	1H2018	1H2017
Interest charges on bonds & notes	0	( 703)
Interest on financial lease	( 147)	( 80)
Interest on long-term bank loans	( 539)	( 628)
Interest on short-term bank loans & overdraft	( 1 002)	( 944)
Interest on other short-term loans	4	( 134)
Net interest charges on Interest Rate Swaps	( 654)	( 1 187)
Net interest charges on foreign currency swaps	( 6)	67
Total borrowing cost	( 2 343)	( 3 610)
Interest income from bank deposits	34	18
Interest income from financial receivables	231	317
Interest income from financial receivables and cash	265	335
Interest charges on other debts	( 47)	( 343)
Interest income from other financial receivables	61	46
Total other interest	14	( 297)
Interest income and expenses	( 2 064)	( 3 571)
Exchange rate differences	( 1 920)	1 982
Premium on CAP/Floor contracts	0	0
Result on derivative instruments	0	0
Interest actualisation and expected return on provisions for
employee benefits	0	0
Interest actualisation for other provisions	0	0
Net interest cost IAS 19	( 380)	( 486)
Interest on provisions for employee benefits and other debt	( 380)	( 486)
Other financial result	( 18)	( 13)
FINANCIAL RESULT	( 4 381)	( 2 089)

The lower borrowing cost results from (i) the reimbursement of a 5% convertible bond (July 2017) which was refinanced by a commercial paper program at a lower interest rate and (ii) a reduction of the debt hedging programs (interest rate swaps).

I.7.8.3. DIVIDENDS

The Board of Directors' proposal to distribute a gross dividend of EUR 0.22 per share or EUR 12.0 million for the year 2017, which was approved by the shareholders at the Annual General Meeting of 29 May 2018. The payment of this dividend took place on 01 June 2018, and is thus reflected in the financial statements for the first half of 2018.

I.7.9. BALANCE SHEET

I.7.9.1. PROPERTY, PLANT & EQUIPMENT

For the half-year ending 30 June 2018:

Group Recticel in thousand EUR	Land and buildings	Plant, machinery & equipment	Furniture and vehicles	Leases and similar rights	Other tangible assets	Assets under construction and advance payments	TOTAL
At the end of the preceding period (31
December 2017)
Gross value	174 573	509 343	25 562	44 751	1 146	23 248	778 622
Accumulated depreciation	( 117 173)	( 381 437)	( 21 422)	( 16 410)	( 1 060)	( 240)	( 537 741)
Accumulated impairments	( 1 258)	( 12 741)	( 2)	( 76)	0	( 21)	( 14 098)
Net book value at opening	56 142	115 165	4 139	28 265	86	22 987	226 783

Movements during the period
Acquisitions, including own production	532	2 007	94	0	9	18 518	21 160 (1)
Impairments	430	0	0	0	0	0	430
Expensed depreciation	( 1 681)	( 10 585)	( 859)	( 465)	( 10)	0	( 13 600)
Sales, scrapped or destroyed	0	( 127)	0	0	0	0	( 127) (2)
Transfers from one heading to another	385	6 167	334	9	( 4)	( 6 744)	147
Change in scope	0	( 0)	0	0	0	24	24
Exchange rate differences	( 98)	( 177)	( 24)	( 1)	( 2)	48	( 252)
At the end of the period (30 June 2018)	55 710	112 449	3 684	27 809	79	34 833	234 564

Gross value	178 144	508 307	25 431	44 729	1 160	35 091	792 863
Accumulated depreciation	( 121 584)	( 384 502)	( 21 734)	( 16 844)	( 1 081)	( 237)	( 545 983)
Accumulated impairments	( 850)	( 11 356)	( 13)	( 76)	0	( 21)	( 12 317)
Net book value at the end of the period (30 June 2018)	55 710	112 449	3 684	27 809	79	34 833	234 564
Acquisitions			Disposals
Cash-out on acquisitions tangible assets	( 22 391)		Cash-in from disposals tangible assets				116
Acquisitions included in working capital	1 231		Disposals included in working capital				( 243)
Total acquisitions tangible assets (1)	( 21 160)		Total disposals tangible assets (2)				( 127)

Total acquisitions of tangible assets amount to EUR 21.2 million in the first half of 2018.

At 30 June 2018, the Group has entered into contractual commitments for the acquisition of property, plant & equipment amounting to EUR 14.3 million.

At 31 December 2017, the Group had entered into contractual commitments for the acquisition of property, plant & equipment amounting to EUR 2.4 million.

For the half-year ending 30 June 2017:

Group Recticel in thousand EUR	Land and buildings	Plant, machinery & equipment	Furniture and vehicles	Leases and similar rights	Other tangible assets	Assets under construction and advance payments	TOTAL
At the end of the preceding period (31
December 2016)
Gross value	181 487	498 464	24 912	35 319	5 076	18 307	763 565
Accumulated depreciation	( 114 877)	( 385 022)	( 20 803)	( 15 805)	( 1 325)	( 79)	( 537 910)
Accumulated impairments	( 1 302)	( 7 059)	( 3)	( 76)	( 984)	( 24)	( 9 447)
Net book value at opening	65 308	106 383	4 106	19 438	2 767	18 205	216 207
Movements during the period
Acquisitions, including own production	1	1 309	160	0	4	16 804	18 278 (1)
Expensed depreciation	( 1 813)	( 9 625)	( 1 016)	( 359)	123	0	( 12 690)
Sales, scrapped or destroyed	( 35)	( 3 204)	( 106)	0	0	( 19)	( 3 364) (2)
Transfers from one heading to another	862	13 775	967	0	( 264)	( 14 888)	452
Exchange rate differences	( 4)	( 1 313)	( 38)	( 0)	( 2)	68	( 1 288)
At the end of the period (30 June 2017)	64 319	107 326	4 071	19 079	2 629	20 171	217 594
Gross value	181 912	499 346	25 405	35 310	4 705	20 269	766 947
Accumulated depreciation	( 116 335)	( 385 911)	( 21 331)	( 16 155)	( 1 091)	( 77)	( 540 901)
Accumulated impairments	( 1 259)	( 6 109)	( 2)	( 76)	( 984)	( 22)	( 8 452)
Net book value at the end of the period
(30 June 2017)	64 319	107 326	4 071	19 079	2 629	20 171	217 594
Acquisitions			Disposals
Cash-out on acquisitions tangible assets	( 16 711)		Cash-in from disposals tangible assets				24
Acquisitions included in working capital	( 1 568)		Disposals included in working capital				3 341
Total acquisitions tangible assets (1)	( 18 278)		Total disposals tangible assets (2)				3 364

Total acquisitions of tangible assets amount to EUR 18.3 million in the first half of 2017.

At 30 June 2017, the Group has entered into contractual commitments for the acquisition of property, plant & equipment amounting to EUR 7.3 million.

At 31 December 2016, the Group had entered into contractual commitments for the acquisition of property, plant & equipment amounting to EUR 6.7 million.

I.7.9.2. INTERESTS IN JOINT VENTURES AND ASSOCIATES

Group Recticel in thousand EUR	30 JUN 2018	31 DEC 2017
At the end of the preceding period	76 241	82 389
Movements during the year
Actuarial gains/(losses) recognized in equity 1	385	( 236)
Deferred tax relating to components of other comprehensive income	93	( 131)
Exchange rate differences 2	( 1 361)	915
Group's share in the result of the period 3	7 468	2 390
Dividends distributed 4	( 5 523)	( 8 765)
Result transfer	( 952)	( 318)
Capital increase	510	0
Other	0	( 3)
At the end of the period	76 861	76 241

(1) In 1H2018 the actuarial impact is the consequence of a higher discount rate under IAS19 pension liabilities

(2) In 1H2018 exchange rate differences relates mainly to PLN (Eurofoam Polska)

(3) "Income from joint ventures & associates" improved compared to 1H2017 (EUR +1.5 million; full-year 2017: EUR 2.4 million) as a result of price adjustments to compensate for the increased chemical raw material costs, compensation received (EUR +0.9 million), a reversal of provisions (EUR +1.5 million) and improved operational performance.

In 2017 results were negatively impacted by the significant increase of chemical raw materials costs (i.e. isocyanates) in 2Q2017.

(4) Dividends distributed by the joint ventures relate solely to the Eurofoam group.

I.7.9.3. PROVISIONS

For the half-year ending 30 June 2018:

Group Recticel in thousand EUR	EMPLOYEE BENEFITS	CUSTOMER & OTHER LITIGATIONS	DEFECTIVE PRODUCTS	ENVIRONMENTAL RISKS	REORGANISATION	ONEROUS CONTRACTS PROVISIONS FOR	OTHER RISKS	TOTAL
At the end of the preceding period (31 Dec 2017)	58 274	120	2 681	3 373	3 530	1 453	4 265	73 695
Movements during the period
Actuarial (gains) losses recognized in equity	( 4 477)	0	0	0	0	0	0	( 4 477)
Actualisation	380	0	0	0	0	0	0	380
Increases	3 782	0	24	0	190	0	3 500	7 495
Utilisations	( 4 303)	( 18)	( 141)	( 209)	( 266)	( 137)		( 5 548) ( 10 622)
Write-backs	( 1 351)	0	( 48)	0	( 27)	( 283)	( 177)	( 1 887)
Transfers from one heading to another	0	48	0	0	0	0	118	166
Exchange rate differences	34	( 5)	( 13)	0	0	3	( 1)	18
At the end of the period (30 Jun 2018)	52 337	146	2 503	3 164	3 427	1 035	2 157	64 769

Non-current provisions (more than one year)	49 368	146	2 171	2 956	3 237	694	2 157	60 728
Current provisions (less than one year)	2 969	0	332	208	190	342	0	4 041
Total at end of the period (30 Jun 2018)	52 337	146	2 503	3 164	3 427	1 035	2 157	64 769

The provisions for employee benefits have decreased by EUR -5.9 million. This variance is mainly explained by:

actuarial gains of EUR 4.5 million due to a higher discount rate,
a write-back (EUR -1.4 million) resulting from a curtailment effect in the pension plan in France.

Provisions for other risks relate mainly to legal costs and a EU claim settlement.

For the half-year ending 30 June 2017:

Group Recticel in thousand EUR	EMPLOYEE BENEFITS	CUSTOMER & OTHER LITIGATIONS	DEFECTIVE PRODUCTS	ENVIRONMENTAL RISKS	REORGANISATION	ONEROUS CONTRACTS PROVISIONS FOR	OTHER RISKS	TOTAL
At the end of the preceding period (31 Dec 2016)	55 147	48	3 002	4 452	2 631	2 097	2 758	70 134
Movements during the period
Actuarial (gains) losses recognized in equity	( 422)	0	0	0	0	0	0	( 422)
Actualisation	487	0	0	0	0	0	0	487
Increases	4 837	100	168	0	279	0	0	5 384
Utilisations	( 5 104)	( 42)	( 380)	( 221)	( 1 433)	( 93)	0	( 7 272)
Write-backs	0	0	( 61)	0	( 355)	( 716)	0	( 1 132)
Transfers from one heading to another	( 75)	0	288	0	( 288)	0	0	( 75)
Exchange rate differences	( 292)	0	9	0	0	( 10)	0	( 293)
At the end of the period (30 Jun 2017)	54 576	106	3 026	4 231	834	1 279	2 758	66 811

Non-current provisions (more than one year)	48 903	106	2 677	3 981	770	782	2 758	59 976
Current provisions (less than one year)	5 674	0	350	250	64	497	0	6 834
Total (30 Jun 2017)	54 576	106	3 027	4 231	834	1 279	2 758	66 811

Provisions for reorganisation decreased by EUR -1.8 million mainly due to (i) utilisations for EUR - 0.9 million in Flexible Foams (Noyen-sur-Sarthe, France) and for EUR -0.6 million in Bedding (Germany and Switzerland), and (ii) a write-back of EUR +0.3 million in Automotive Interiors (Germany).

Provisions for onerous contracts relate mainly to the write-back in Automotive Interiors (Germany).

Provisions for other risks relate mainly to legal costs for civil claims.

I.7.9.4. INTEREST-BEARING BORROWINGS

Group Recticel in thousand EUR		Non-current liabilities	Current liabilities
	30 JUN 2018	31 DEC 2017	30 JUN 2018	31 DEC 2017
Secured
Financial leases	17 791	18 078	1 263	1 778
Bank loans	0	76 160	0	0
Bank loans - factoring with recourse	0	0	662	751
Total secured	17 791	94 238	1 925	2 529

Unsecured
Bonds & notes	0	0	0	0
Other loans	1 744	1 842	260	260
Current bank loans	0	0	2 895	3 103
Commercial paper	0	0	105 991	19 999
Bank overdraft	0	0	13 769	20 195
Other financial liabilities	0	0	2 002	2 902
Total unsecured	1 744	1 842	124 917	46 459

Total liabilities carried at amortised
cost	19 535	96 080	126 841	48 988


Group Recticel

I.7.9.4.1. FINANCIAL LIABILITIES CARRIED AT AMORTISED COST

in thousand EUR	Unused credit facilities		Unused credit facilities
	Long-term		Short-term
	30 JUN 2018	31 DEC 2017	30 JUN 2018	31 DEC 2017
Secured
Bank loans	69 009	78 840	0	0
Total secured	69 009	78 840	0	0
Unsecured Bank loans	15 500	0	58 184	52 808
Total unsecured	15 500	0	58 184	52 808
Total unused credit facilities	84 509	78 840	58 184	52 808

At the end of June 2018, the gross interest-bearing borrowings of the Group amounted to EUR 146.4 million, compared to EUR 145.1 million at the end of 2017, i.e. an increase of EUR +1.9 million. This was mainly due to the seasonable build-up of working capital, inflated in 1H2018 by the impact of increased raw material and selling prices.

The use of non-recourse factoring/forfaiting programs amounted to EUR 62.3 million, compared to EUR 54.7 million per end-2017.

At the end of June 2018, the weighted average lifetime of debts payable after one year was 11.0 years (2017: 5.0 years). The financial leases are at fixed interest rates, except the financial lease for the facility in Bourges).

At the end of June 2018, the Group benefited from EUR 21.1 million long term loan commitments, of which EUR 2.0 million are maturing within one year. Besides the Group also had at its disposal the following undrawn facilities: (i) EUR 69.0 million* under the 'club deal' facility, (ii) EUR 15.5 million under a long term credit facility and (iii) EUR 85.1 million under short term credit facilities ('on balance' (EUR 58.2 million) as well as available 'off balance' amounts under the factoring programs (EUR 26.9 million)).

* The amount issued under the commercial paper program is to be covered at any time by the undrawn amount under the club deal.

At the end of 2017, besides the net drawn amounts under the club deal financing facility (EUR 76.2 million), the Group also benefited from EUR 22.7 million long term loan commitments, of which EUR 2.8 million are maturing within one year. The Group also had at its disposal EUR 78.8 million under the 'club deal' facility and EUR 86.8 million undrawn short term credit facilities ('on balance' (EUR 52.3 million) as well as available 'off balance' amounts under the factoring programs (EUR 34.5 million)).

Outstandings other than the 'club deal'

Group Recticel in thousand EUR	30 JUN 2018	31 DEC 2017
Long term liabilities
Financial leases	17 791	18 078
Other loans	1 743	1 843
Subtotal	19 534	19 920
Short term liabilities
Bonds & Notes	0	0
Financial leases	1 263	1 778
Loans - Factoring	662	751
Commercial paper	105 991	19 999
Other loans	260	260
Subtotal	108 176	22 788

Total	127 710	42 708

The fair value of floating rate borrowings is close to the nominal value. The interest cost for these variable interest rate borrowings ranged from 0.05% to 3.0% p.a. in EUR.

The majority of the Group's financial debt is centrally contracted and managed through Recticel International Services n.v./s.a., which acts as the Group's internal bank.

The borrowings under the 'club deal' are subject to bank covenants based on a leverage ratio, an interest cover and a minimum equity requirement. At end-June 2018, Recticel complied with all its bank covenants. On the basis of the budget 2018 management expects to be in a position to meet the bank covenants in the coming year.

Under the club deal financing agreement, the maximum dividend authorised for distribution amounts to the highest of (i) 50% of the consolidated net income of the Group for the previous financial year and (ii) EUR 12.0 million.

(i) Financial leases

This item consists mainly of three leases. The first one finances the Insulation plant in Bourges (France) and has an outstanding amount as of 30 June 2018 of EUR 8.1 million and is at floating rate. The second one for buildings in Belgium, has an outstanding amount as of 30 June 2018 of EUR 2.0 million on the balance sheet and is at a fixed rate. In 2017 a new lease was taken to finance the extension of the Insulation plant in Wevelgem (Belgium). Per 30 June 2018 the outstanding amount of this new lease amounted to EUR 8.9 million.

(ii) Bank loans – "club deal"

On 09 December 2011, Recticel concluded a five-year club deal with 7 European banks for a multicurrency loan of EUR 175 million. The tenor of this 'club deal' facility has been extended in February 2016 for another five years. It currently will mature in February 2021.

(iii) Commercial paper program

In 2017 the Group started a short term commercial paper program (TCN – Titres de Créances Négociables) in France for an amount of EUR 150 million. This TCN-program is used to complement the financing of day-to-day working capital needs of the Group.

The amount issued under the commercial paper program is to be covered at any time by the undrawn amount under the club deal.

I.7.9.4.2. FINANCIAL INSTRUMENTS AND FINANCIAL RISKS

I.7.9.4.2.1. TRANSITION TABEL IFRS 9 FINANCIAL INSTRUMENTS

	According to IAS 39		According to IFRS 9
	Measurement	Carrying	New	New carrying
Group Recticel	category under	amount	measurement	amount
in thousand EUR	IAS 39	31 DEC 2017	category under	31 DEC 2017
			IFRS 9
Financial assets Transactional hedges - operational	FVTPL	39	FVTPL	39
Current trade receivables	L&A	110 936	AC	110 936
Other non-current receivables	L&A	8 100	AC	8 100
Other receivables	L&A	39 330	AC	39 330
Other receivables	L&A	47 430	AC	47 430
Loans to affiliates	L&A	4 109	AC	4 109
Other loans	L&A	1 867	AC	1 867
Non-current loans	L&A	5 976	AC	5 976
Financial receivables	L&A	34 004	AC	34 004
Loans to affiliates	L&A	39 980	AC	39 980
Cash and cash equivalents	L&A	57 844	AC	57 844
Other investments	AFS	725	FVTOCI	725



Financial liabilities
Interest rate swaps designed as cash flow
hedge relationship	CFH	1 454	CFH	1 454
Interest from currency swap contracts	FVTPL	1	FVTPL	1
Currency swap contracts	FVTPL	9	FVTPL	9
Transactional hedges - operational	FVTPL	42	FVTPL	42
Economic hedge - operational	FVTPL	82	FVTPL	82
Economic hedge - operational	FVTPL	0	FVTPL	0
Economic hedge	FVTPL	134	FVTPL	134
Non-current financial liabilities at amortised	FlaAC	96 080	AC	96 080
cost
Current financial liabilities at amortised cost	FlaAC	47 400	AC	47 400
Trade payables	FlaAC	126 583	AC	126 583
Other non-current payables	FlaAC	230	AC	230
Other payables Other payables	FlaAC FlaAC	111 276 111 506	AC AC	111 276 111 506

AC = financial assets or liabilities at amortised cost

AFS = available for sale

CFH = cash flow hedge

FlaAC = financial loan at amortised cost

FVTPL = Financial assets or liabilities at fair value through profit or loss

FVTOCI = financial assets at fair value through other comprehensive income

L&A = loans and advances

I.7.9.4.2.2. FINANCIAL INSTRUMENTS

Group Recticel in thousand EUR			30 JUN 2018	31 DEC 2017	Fair value level
Financial assets
Transactional hedges - operational	a	FVTPL	34	39	2
Currency forward contracts - financial		FVTPL	5	28	2
Currency swap contracts		FVTPL	49	0	2
Economic hedge	b	FVTPL	54	28
Current trade receivables	c	AC	142 596	110 936
Other non-current receivables	d	AC	1 871	1 998	2
Other receivables	e	AC	30 207	39 330	2
Other receivables		AC	32 078	41 328
Loans to affiliates	f	AC	4 032	4 109	2
Other loans	g	AC	1 666	1 867	2
Non-current loans		AC	5 698	5 976
Financial receivables	h	AC	27 044	33 976	2
Loans		AC	32 742	39 952
Cash and cash equivalents		AC	41 231	57 844	2
Other investments		FVTOCI	851	725	2


Non-current receivables	d+f+g		7 569	7 973
Current financial receivables	j=a+b+h		27 131	34 043
Current other receivables	e+j		57 338	73 373


Financial liabilities
Interest rate swaps	k	FVTPL	319	1 454	2
Transactional hedges - operational	l	FVTPL	55	42	2
Interest from currency swap contracts		FVTPL	8	1	2
Currency forward contracts - financial		FVTPL	839	79	2
Currency swap contracts		FVTPL	0	9	2
Economic hedge - operational		FVTPL	477	82	2
Economic hedge	m	FVTPL	1 324	171

Non-current financial liabilities at amortised	n	AC	19 535	96 080	2
cost
Current financial liabilities at amortised cost	o	AC	125 156	47 321	2
Trade payables		AC	108 896	126 583	2
Other non-current payables		AC	235	230	2
Other payables		AC	113 980	111 276	2
Other payables		AC	114 215	111 506

Non-current interest-bearing borrowings	n		19 535	96 080

Current interest-bearing borrowings	k+l+m+o		126 854	48 988

Categories of financial instruments











































Total financial liabilities and payables (G+H+I+J)	368 639	381 569

Footnote: Currency swap contracts are taken to hedge (1) financial currency exposure that results from current accounts balances of affiliates towards Recticel International in foreign currency and (2) financial currency exposure that results from long term loans and deposits to/from affiliates in foreign currencies. Transactional hedges are forward currency contracts taken to hedge the currency exposure resulting from the monetary assets and liabilities of affiliates booked in foreign currencies (Balance sheet exposure).

The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1 : quoted (unadjusted) prices in active markets for identical assets or liabilities

Level 2 : other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly
Level 3 : techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.

During the reporting period ending 30 June 2018, there were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into and out of Level 3 fair value measurements.

Interest rate risk management

Recticel is hedging the interest rate risk linked to its interest-bearing borrowings on a global basis. The main hedging instruments used to convert floating rate debt into fixed rate debt are Interest Rate Swaps (IRS). The amount of fixed rate arrangements in relation to total financial debt is reviewed on an on-going basis by the Finance Committee and adjusted as and when deemed appropriate. In this, the Finance Committee aims at maintaining an appropriate balance between fixed and floating rate arrangements based on a philosophy of sound spreading of interest rate risks.

In an interest rate swap ("IRS") agreement, the Group undertakes to pay or receive the difference between the amounts of interest at fixed and floating rates on a nominal amount. This type of agreement enables the Group to fix the rate on a portion of its floating rate debt in order to be protected against the risk of higher interest charges on a loan at floating interest rates.

The market value of the portfolio of interest rate swaps on the balance sheet date is the discounted value of the future cash flows from the contract, using the interest rate curves at that date.

The current portfolio of IRS covers a portion of interest-bearing borrowings until October 2019 for EUR 10 million. In addition, an interest rate swap was concluded for EUR 25 million maturing in February 2021.

The weighted average life of this IRS portfolio is 2.26 years.

On 30 June 2018, the fair value of the interest rate swaps was estimated at EUR -0.3 million. The revaluation of the IRS portfolio directly impacts the Group the profit and loss accounts.

For first half-year 2018

No hedge accounting is applied on the outstanding IRS portfolio.

For first half-year 2017

1. Hedge accounting

Group Recticel in thousand EUR	At the end of the preceding period	Payment of interests	Fair value recognized in equity	Interest recognized in income statement	At the end of the current period
Interest Rate Swaps (IRS) assets	0	0	0	0	0
Interest Rate Swaps (IRS) liabilities	( 3 690)	1 239	1 103	( 1 187)	( 2 535)
Net position	( 3 690)	1 239	1 103	( 1 187)	( 2 535)

For full-year 2017

1. Hedge accounting

Group Recticel in thousand EUR	At the end of the preceding period	Payment of interests	Fair value recognized in equity	Interest recognized in income statement	At the end of the current period
Interest Rate Swaps (IRS) assets	0	0	0	0	0
Interest Rate Swaps (IRS) liabilities	( 3 690)	2 414	2 212	( 2 390)	( 1 454)
Net position	( 3 690)	2 414	2 212	( 2 390)	( 1 454)

The table does not comprise the deferred tax impact of EUR -0.781 million.

I.7.10. WORKING CAPITAL NEED

Higher working capital needs reflect the seasonable build-up of working capital – primarily in Bedding and Insulation –, inflated in 1H2018 by the impact of increased selling prices.

The utilization of the factoring programs per 30 June 2018 amounted to EUR 62.3 million, compared to EUR 70.8 million per 30 June 2017 and EUR 54.7 million per 31 December 2017.

I.7.11. MISCELLANEOUS

I.7.11.1. RELATED PARTY TRANSACTIONS

Compared to December 2017 there are no significant changes in the related party transactions.

I.7.11.2. ISSUE OF NEW WARRANT PLAN

On 25 April 2018 a new warrant plan was issued in favour of leading staff members of the Group. In total 460,000 new warrants were issued with an exercise price of EUR 10.21. The exercise period runs - after a vesting period of three years -, from 25 April 2021 till 25 April 2025. Fair value of this warrant serie amounts to EUR 0.7 million.

I.7.11.3. CONTINGENT ASSETS AND LIABILITIES

The contingent assets and liabilities as communicated in the annual report 2017 (section III.6.10.) encountered the following developments:

I.7.11.4.1. Tertre (Belgium)

Carbochimique, which was progressively integrated into Recticel in the 1980s and early 1990s, owned industrial site in Tertre (Belgium), where various carbochemical activities in particular had been carried on since 1928. These activities were gradually spun off and sold and are now carried on by different industrial companies, including Yara and Prince Erachem (Eramet group). Finapal, a Recticel subsidiary, retained ownership of some plots on the site, chiefly old dumping sites and settling ponds that have been drained.

In 1986, Recticel sold its "fertilizer" division, in particular the activities of the Tertre site, to Kemira, now acquired by Yara. As part of this agreement, Recticel undertook to set an old basin ("Valcke Basin"), in line with environmental regulations. This requirement has not yet been performed because of the mutual dependence of the environmental conditions within the industrial site in Tertre. Yara has for precautionary reasons sued Recticel pursuant to this obligation in July 2003. A settlement agreement was negotiated and signed by the parties in the course of 2011, which ended the dispute definitively.

Under the settlement agreement Yara and Recticel are committed to prepare together a recovery plan for four contaminated areas of the industrial area in Tertre, including the Valcke Bassin and a dump of Finapal, and for dividing the cost thereof.

This plan was approved in December 2013 by Ministerial Order of the Walloon Government.

The parties have developed in consultation a specification book, which was approved by the authorities. End of December 2015 Ecoterres was appointed as contractor. The works were started on 15 February, 2016. End of the works is expected by end 2019.

Following the sale of the entity Sadacem to the French group Comilog, now part of the group Eramet, Recticel committed itself to sanitise, on a shared cost basis, an old industrial waste site on the grounds of Prince Erachem. The start of the execution of this commitment was studied in consultation with the entity Prince Erachem and has been provisioned in the accounts of the Recticel Group. A proposal was submitted to the Office Wallon des Déchets in April 2009 and since been approved.

The implementation of the restructuring plan started in 2013 and runs to date as planned. The clean-up works were completed last year but are still subject to a monitoring phase during 3 years.

The expected costs for these works were provisioned in Recticel's accounts for an amount EUR 1.71 million as per 30 June 2018.

I.7.11.4.2. Litigations

The Group has been the subject of antitrust investigations at European and national level. At European level, Recticel announced on 29 January 2014 that a settlement was reached with the European Commission in the polyurethane foam investigation. The case was closed after payment of the last instalment of the effective overall fine in April 2016. At national level, the Group was involved in several appeals started by competitors after a decision of the Spanish competition authority in 2013. The last Spanish appeal procedure ended in the beginning of 2018, without impact on the position of Recticel. It cannot be excluded that other claims (including class actions claims) based on the same facts, may arise.

Various claims have been issued by one or more customers in the United Kingdom, in which these entities allege harm with regard to the conduct covered by the European Commission's cartel decision. Some procedures have been ended or concluded in the course of 2016, 2017 and 2018.

While Recticel believes there to be no harm done, and it is up to the customer to prove any damage incurred, Recticel carefully reviews and evaluates the merits for each case with its legal advisors to determine the appropriate defensive strategy and takes in the relevant cases provisions to cover any legal costs in this regard.

Compared to end 2017 there is no significant change to the situation per 30 June 2018.

Regarding the on-going litigations no considered judgment can at this stage be formed on the outcome of these procedures or on the amount of any potential loss for the company.

One of our Group entities in the United Kingdom is the subject of a HSE investigation following the accidental death of one of its employees. It cannot be excluded that further procedural steps might be taken by the authorities, leading to prosecution, legal costs and fines.

One of the Group's entities in France is implicated in a labour law case following the closure of a production site, whereby the former employees have launched a claim to obtain additional compensations, on the basis that the economic reasons for the closure were invalid.

One of the Group's entities in the Netherlands has been the object of a labour law claim by temporary workers for compensation putting in question the temporary nature of their employment.

Following the fire incident in Most, the involved Group entity has been temporarily unable to supply the contractually agreed quantities of products, leading to production interruptions at the direct customers and the car manufacturers. While the Group entity involved have claimed Force Majeure in this respect, this has been put in question or even contested by certain customers, with indication that further claims could be raised to obtain damage compensation. While the Group is insured in this regard in line with industrial standards, it cannot be excluded that such claims could lead to financial losses for the group companies involved.

Some years ago Recticel has initiated opposition proceedings against the patent application of a Swiss competitor which had been developed by and has been since many years used by the Group. Recticel's opposition was successful; the patent was revoked. The patent owner has appealed the decision. Recticel is confident that the revocation of the patent will be maintained in appeal.

As of 30 June 2018, total litigation provisions and accruals on Recticel Group level amounted to EUR 5.3 million in the combined financial statements.

II. INTERIM MANAGEMENT REPORT

The interim management report is based on the segment reporting as prescribed by IFRS 8.

IFRS 8 requires operating segments to be identified on the basis of the internal reporting structure of the Group that allows a regular performance review by the chief operating decision maker and an adequate allocation of resources to each segment. In line with the content of the press release on the first half-year 2018 results (dd. 29 August 2018), comments on the development of the different segments are made on the basis of the combined figures, consistent with the managerial reporting and in line with IFRS 8.

II.1. KEY FIGURES - COMBINED

in million EUR	1H2017	1H2018 1	D
	(a)	(b)	(b)/(a)-1
Sales	726,8	755,9	4,0%
Gross profit ²	100,2	122,4	22,1%
as % of sales	13,8%	16,2%
REBITDA	50,1	56,2	12,1%
as % of sales	6,9%	7,4%
EBITDA	41,0	51,6	25,7%
as % of sales	5,6%	6,8%
REBIT	31,3	36,2	15,5%
as % of sales	4,3%	4,8%
EBIT	22,2	31,0	39,4%
as % of sales	3,1%	4,1%

	31 Dec 17	30 Jun 18
Total Equity	261,8	254,7	-2,7%
Net financial debt 3	122,9	138,7	12,9%
Gearing ratio	46,9%	54,5%

1 The combined financial statements of 1H2018 include the impact of IFRS 15.

2 The gross profit 1H2018 includes EUR -0.8 million (1H2017: EUR -17.0 million) non-recurring costs from additional expenses incurred due to alternative production solutions following the fire incident in the Automotive Interiors plant in Most (Czech Republic).
3 Excluding the drawn amounts under off-balance non-recourse factoring/forfeiting programs: EUR 62.3 million per 30 June 2018 versus EUR 70.8 million per 30 June 2017 and EUR 54.7 million per 31 December 2017.

II.2. COMMENTS ON THE GROUP RESULTS

Detailed comments on sales and results of the different segments are given in section II.4. on the basis of the combined figures (joint ventures integrated following the proportionate consolidation method).

Combined Sales: from EUR 726.8 million to EUR 755.9 million (+4.0%), including an adverse currency impact of -1.2% due to the depreciation of most currencies versus the Euro.

All divisions reported higher sales during 1H2018, except Bedding.

Flexible Foams sales growth results mostly from pricing adjustments and discipline linked to the increased chemical raw material costs.
Bedding sales contracted by -9.9% in unfavourable market conditions.
The Automotive divisions reported higher sales driven by strong volumes.
Insulation activities have grown by 7.0% in the 2nd quarter after a soft 1st quarter, impacted by unfavourable weather conditions and by the consequences of the MDI shortage in 2017.

Breakdown of the combined sales by segment

in million EUR	1Q2017	2Q2017	1H2017	1Q2018	2Q2018	1H2018	D 1Q	D 2Q	D 1H
Flexible Foams	160,6	157,0	317,5	170,9	159,7	330,6	6,4%	1,8%	4,1%
Bedding	75,0	63,3	138,3	70,7	54,0	124,6	-5,8%	-14,8%	-9,9%
Insulation	61,3	67,9	129,2	60,1	72,6	132,7	-2,0%	7,0%	2,7%
Automotive	84,6	88,8	173,5	95,5	100,1	195,6	12,8%	12,7%	12,8%
Eliminations	( 16,3)	( 15,4)	( 31,7)	( 15,0)	( 12,6)	( 27,6)	-7,6%	-18,6%	-13,0%
TOTAL COMBINED SALES	365,3	361,5	726,8	382,0	373,9	755,9	4,6%	3,4%	4,0%
Adjustment for joint ventures by application of IFRS 11	( 83,4)	( 77,4)	( 160,8)	( 90,8)	( 85,3)	( 176,2)	8,9%	10,2%	9,6%
TOTAL CONSOLIDATED SALES	281,9	284,1	566,0	291,2	288,5	579,7	3,3%	1,5%	2,4%

Combined REBITDA: from EUR 50.1 million to EUR 56.2 million (+12.1%)

REBITDA margin increased from 6.9% to 7.4%.

The REBITDA improvement is driven by Insulation and Automotive. Flexible Foams to some extent, and Bedding to a larger extent, have been impacted by (i) a softer market environment, especially in Germany, and (ii) by substantial raw material price increases during 1Q2018.

Breakdown of the combined REBITDA by segment

in million EUR	1H2017	1H2018	D
Flexible Foams	23,3	21,6	-7,2%
Bedding	7,7	5,4	-29,9%
Insulation	14,2	22,8	60,5%
Automotive	13,5	14,7	9,0%
Corporate	( 8,6)	( 8,4)	-2,7%
TOTAL COMBINED REBITDA	50,1	56,2	12,1%

Flexible Foams continued to implement its operational efficiency and mix improvement plan, and almost mitigated the effects of the 1Q2018 raw material price increases combined with soft volumes in its Comfort foam segment.
Bedding volumes have been affected by the weak market conditions, especially in Germany, its largest market, which could not be fully compensated by significant efficiency & mix improvements.
Profitability in Insulation substantially improved thanks to a positive mix and pricing, supported by excellent operational efficiency.
Automotive benefited from higher volumes, both in Interiors and Seating, induced by strong market demand and the addition of the new programs in Interiors.

Combined REBIT: from EUR 31.3 million to EUR 36.2 million (+15.5%)

REBIT margin increased from 4.3% to 4.8%.

Breakdown of the combined REBIT by segment

in million EUR	1H2017	1H2018	D
Flexible Foams	17,1	15,4	-9,9%
Bedding	5,4	3,2	-40,9%
Insulation	11,0	19,6	79,0%
Automotive	7,0	6,7	-4,2%
Corporate	( 9,1)	( 8,7)	-4,2%
TOTAL COMBINED REBIT	31,3	36,2	15,5%

Non-recurring elements: (on combined basis, including pro rata share in joint ventures)

EBIT includes non-recurring elements for a total net amount of EUR -5.2 million (1H2017: EUR -9.1 million).

in million EUR	1H2017	1H2018
Net impact fire incident Automotive Interiors	( 4,9)	( 0,8)
Restructuring charges and provisions	0,4	( 0,2)
Other	( 4,5)	( 3,7)
Total impact on EBITDA	( 9,1)	( 4,6)
Impairments	0,0	( 0,6)
Total impact on EBIT	( 9,1)	( 5,2)

The major non-recurring element in 1H2018 relates to mainly (i) provisions for litigations and legal fees and (ii) the residual impact of the fire incident in the Automotive Interiors plant in Most (Czech Republic in 1Q2017).

Combined EBITDA: from EUR 41.0 million to EUR 51.6 million (+25.7%)

EBITDA margin increased from 5.6% to 6.8%.

Breakdown of EBITDA by segment

in million EUR	1H2017	1H2018	D
Flexible Foams	18,7	18,8	0,9%
Bedding	7,6	5,5	-27,3%
Insulation	14,2	22,8	60,6%
Automotive	9,1	13,2	45,1%
Corporate	( 8,6)	( 8,9)	3,1%
TOTAL COMBINED EBITDA	41,0	51,6	25,7%
Adjustment for joint ventures by application of IFRS 11	( 5,6)	( 6,1)	10,5%
TOTAL CONSOLIDATED EBITDA	35,4	45,4	28,1%

Combined EBIT: from EUR 22.2 million to EUR 31.0 million (+39.4%)

EBIT margin increased from 3.1% to 4.1%.

Breakdown of EBIT by segment

in million EUR	1H2017	1H2018	D
Flexible Foams	12,5	11,6	-6,9%
Bedding	5,3	3,7	-29,3%
Insulation	11,0	19,6	79,0%
Automotive	2,6	5,2	99,4%
Corporate	( 9,1)	( 9,2)	1,2%
TOTAL COMBINED EBIT	22,2	31,0	39,4%
Adjustment for joint ventures by application of IFRS 11	( 1,6)	( 1,8)	12,2%
TOTAL CONSOLIDATED EBIT	20,6	29,1	41,5%

Consolidated financial result: from EUR -2.1 million to EUR -4.4 million

Net interest charges decreased from EUR -3.6 million to EUR -2.1 million due a lower average debt combined to a reduced cost of debt, mainly induced by the increased issuance under a cost-efficient commercial paper program and the reimbursement of the convertible bonds in July 2017.

'Other net financial income and expenses' totalled EUR -2.3 million, compared to EUR +1.5 million in 1H2017, and comprise mainly interest capitalisation costs under provisions for pension liabilities (EUR -0.4 million versus EUR -0.5 million in 1H2017) and exchange rate differences (EUR -1.9 million versus EUR +2.0 million in 1H2017),

Consolidated income taxes and deferred taxes: increased from EUR -4.2 million to EUR -6.1 million:

Current income tax charges: EUR -2.4 million (EUR -2.1 million in 1H2017);
Deferred tax charges: EUR -3.7 million (EUR -2.1 million in 1H2017).

Consolidated result of the period (share of the Group): from EUR +14.3 million to EUR +18.7 million (+30.7%).

II.3. FINANCIAL POSITION

On 30 June 2018 the combined net financial debt amounted to EUR 138.7 million (30 June 2017: EUR 151.4 million; 31 December 2017: EUR 122.9 million) excluding the amount of EUR 62.3 million drawn under the factoring programs (30 June 2017: EUR 70.8 million; 31 December 2017: EUR 54.7 million).

Total combined debt, including amounts drawn under the factoring programs, amounted to EUR 201.0 million (30 June 2017: 222.2 million; 31 December 2017: 177.6 million).

On 30 June 2018 the consolidated net financial debt amounted to EUR 104.3 million (30 June 2017: EUR 117.5 million; 31 December 2017: EUR 87.1 million) excluding the amounts of EUR 62.3 million drawn under the factoring programs (30 June 2017: EUR 70.8 million; 31 December 2017: EUR 54.7 million).

Total consolidated debt, including amounts drawn under off-balance non-recourse factoring programs, amounted to EUR 166.6 million (30 June 2017: 188.3 million; 31 December 2017: 141.8 million).

On 30 June 2018 total equity amounted to EUR 254.7 million^a compared to EUR 261.8 million (as published) on 31 December 2017.

Combined 'net debt to equity' ratio: 54.5% versus 30 June 2017: 58.9% (as published) and 31 December 2017: 46.9% (as published).

Consolidated 'net debt to equity' ratio: 41.0% versus 30 June 2017: 44.6% (as published) and 31 December 2017: 33.3% (as published).

The Group confirms that all conditions under the financial arrangements with its banks are respected on 30 June 2018.

^aImpact of IFRS 15 on equity per 30 June 2018: EUR -18.5 million

II.4. MARKET SEGMENTS

II.4.1.FLEXIBLE FOAMS

in million EUR	1H2017	1H2018	D
	(a)	(b)	(b)/(a)-1
Sales	317,5	330,6	4,1%
REBITDA	23,3	21,6	-7,2%
as % of sales	7,3%	6,5%
EBITDA	18,7	18,8	0,9%
as % of sales	5,9%	5,7%
REBIT	17,1	15,4	-9,9%
as % of sales	5,4%	4,7%
EBIT	12,5	11,6	-6,9%
as % of sales	3,9%	3,5%

Sales

After a good 1Q2018 (+6.4%), combined sales further increased from EUR 157.0 million in 2Q2017 to EUR 159.7 million in 2Q2018 (+1.8%), including a -1.4% impact from exchange rate differences. Excluding intersegment sales, combined external sales increased by +3.5% from EUR 144.0.million to EUR 149.1 million.

Over 1H2018, combined sales increased from EUR 317.5 million to EUR 330.6 million (+4.1%), including a -1.3% impact from exchange rate differences. Excluding intersegment sales, combined external sales increased by +5.5% from EUR 291.4 million to EUR 307.4 million.

Comfort Foams (+2.5%) has passed through the significantly higher chemical raw material costs to the market, off-setting slightly lower volumes due to an overall softer market.

Sales in Technical Foams (+6.3%) continued to benefit from good demand in the industrial and automotive markets within Europe, as well as in the USA, China, India and Turkey.

The expansion though new converting sites in Wuxi (China) and Tanger (Morocco) have been started up, while production in Buren (The Netherlands) will be closed by year-end.

Profitability

REBITDA margin decreased from 7.3% to 6.5%.

REBITDA margin decreased versus 1H2017 as a result of the time lag, although very limited, required to pass through the substantial 1Q2018 raw material price increases in the selling prices.

EBITDA remained stable at EUR 18.8 million, including non-recurring elements for EUR -2.8 million (1H2017: EUR -4.6 million).

II.4.2.BEDDING

in million EUR	1H2017	1H2018	D
	(a)	(b)	(b)/(a)-1
Sales	138,3	124,6	-9,9%
REBITDA	7,7	5,4	-29,9%
as % of sales	5,6%	4,3%
EBITDA	7,6	5,5	-27,3%
as % of sales	5,5%	4,4%
REBIT	5,4	3,2	-40,9%
as % of sales	3,9%	2,6%
EBIT	5,3	3,7	-29,3%
as % of sales	3,8%	3,0%

Sales

After a weak 1Q2018 (-5.8%), combined sales further decreased by -14.8% from EUR 63.3 million in 2Q2017 to EUR 54.0 million in 2Q2018, including a -0.9% impact from exchange rate differences. Excluding intersegment sales, combined external sales decreased by -14.2% to amount EUR 52.5 million in 2Q2018.

Over 1H2018, combined sales decreased from EUR 138.3 million to EUR 124.6 million (-9.9%). Excluding intersegment sales, combined external sales decreased by -9.3% from EUR 133.7 million to EUR 121.2 million.

The sub-segment "Branded Products" contracted by 7.6% while the sub-segment "Non-Branded/Private Label" receded by 12.0%, as a result of low shop traffic.

The introduction of the new innovative Geltex 2.0 and boxsprings product lines is taking place in order to be ready for the high season starting in 3Q2018.

Profitability

REBITDA margin decreased from 5.6% to 4.3%.

The improved mix and operational efficiency were insufficient to compensate for the negative impact of the lower volumes.

EBITDA decreased from EUR 7.6 million to EUR 5.5 million, including non-recurring elements for EUR +0.1 million.

II.4.3.INSULATION

in million EUR	1H2017	1H2018	D
	(a)	(b)	(b)/(a)-1
Sales	129,2	132,7	2,7%
REBITDA	14,2	22,8	60,5%
as % of sales	11,0%	17,2%
EBITDA	14,2	22,8	60,6%
as % of sales	11,0%	17,2%
REBIT	11,0	19,6	79,0%
as % of sales	8,5%	14,8%
EBIT	11,0	19,6	79,0%
as % of sales	8,5%	14,8%

Sales

After the slowdown in 1Q2018 (-2.0%) due to the consequence of the 2017 MDI shortage and the unfavourable weather conditions, sales increased by +7.0% in 2Q2018, from EUR 67.9 million to EUR 72.6 million.

Over 1H2018, sales increased by +2.7% from EUR 129.2 million to EUR 132.7 million, including a negative currency impact of -0.8%.

The construction of the new plant in Finland, dedicated to the supply of the Scandinavian and Baltics markets, is on schedule to start up in 4Q2018.

Profitability

REBITDA margin increased from 11.0% to 17.2%.

Profitability improved strongly, as a result of positive mix, price and efficiencies.

II.4.4.AUTOMOTIVE

in million EUR	1H2017	1H2018 1	D
	(a)	(b)	(b)/(a)-1
Sales	173,5	195,6	12,8%
REBITDA	13,5	14,7	9,0%
as % of sales	7,8%	7,5%
EBITDA	9,1	13,2	45,1%
as % of sales	5,3%	6,8%
REBIT	7,0	6,7	-4,2%
as % of sales	4,0%	3,4%
EBIT	2,6	5,2	99,4%
as % of sales	1,5%	2,7%

Sales ¹

After a strong 1Q2018 (+12.8%), the growth trend continued in 2Q2018 with a combined sales increase from EUR 88.8 million to EUR 100.1 million (+12.7%), despite a negative currency impact of -2.9%.

The Automotive segment continued to benefit from positive market dynamics and new program startups. Sales were also impacted by the application of the new accounting standard IFRS 15. Both subsegments reported double-digit growth rates in 2Q2018; Interiors (+14.4%) and Seating (i.e. Proseat, the 51/49 joint venture between Recticel and Woodbridge) (+10.8%).

Over 1H2018 combined sales increased from EUR 173.5 million to EUR 195.6 million (+12.8%), including a -1.2 % impact from exchange rate differences, with Interiors (EUR 104.7 million, +13.4%) and Seating (EUR 90.8 million; +12.0%).

Profitability

REBITDA margin remained broadly stable from 7.8% to 7.5%.

Strong volumes in both segments, as well as a gradual adaptation of sales prices to reflect higher raw material costs in Seating, supported the stabilisation of profit margins; despite the negative impact linked to the depreciation of the Chinese Yuan and the US dollar.

EBITDA includes non-recurring elements (EUR -1.5 million, compared to EUR -4.4 million in 1H2017) which still relate to the consequences of the fire accident in the Most plant (Czech Republic)

1 The financial figures of 1H2018 include the impact of IFRS 15.

II.5. Reconciliation with alternative performance measures (consolidated)

in million EUR	1H2017	1H2018
EBIT	20,6	29,1
Depreciation intangible assets	1,3	1,3
Depreciation tangible assets	12,7	13,6
Impairment	0,0	0,6
Amortisation other operational assets a	0,8	0,9
EBITDA	35,4	45,4

in million EUR	31 DEC 2017	30 JUN 2018
Non-current interest-bearing borrowings	96,1	19,5
Current interest-bearing borrowings	49,0	126,9
Cash	( 57,8)	( 41,2)
Other financial assets b	( 0,2)	( 0,9)
Net financial debt	87,1	104,3

a Cost to obtain a contract/Upfront fees (Automotive) and showroom (Bedding)

b Hedging instruments and interest advances

III. DECLARATION BY THE RESPONSIBLE OFFICERS

Mr Johnny Thijs (Chairman of the Board of Directors), Mr Olivier Chapelle (Chief Executive Officer) and Mr Jean-Pierre Mellen (Chief Financial Officer), certify in the name and on behalf of Recticel, that to the best of their knowledge:

the summary financial information, prepared in conformity with applicable accounting standards, reflects the faithful image of the financial situation and results of the Recticel Group
the intermediate report contains a faithful presentation of significant events occurring over the first six months of 2018, and their impact on the summary financial information

* * *

IV. STATUTORY AUDITOR'S REPORT ON THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDING 30 JUNE 2018

Report on the review of the consolidated interim financial information of Recticel NV for the six-month period ended 30 June 2018

In the context of our appointment as the company's statutory auditor, we report to you on the consolidated interim financial information. This consolidated interim financial information comprises the consolidated statement of financial position as at 30 June 2018, the consolidated condensed income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the period of six months then ended, as well as selective notes I.7.1 to I.7.11.

Report on the consolidated interim financial information

We have reviewed the consolidated interim financial information of Recticel NV ("the company") and its subsidiaries (jointly "the group"), prepared in accordance with International Accounting Standard (IAS) 34, "Interim Financial Reporting" as adopted by the European Union.

The consolidated statement of financial position shows total assets of 775 528 (000) EUR and the consolidated condensed income statement shows a consolidated profit (group share) for the period then ended of 18 686 (000) EUR.

The board of directors of the company is responsible for the preparation and fair presentation of the consolidated interim financial information in accordance with IAS 34, "Interim Financial Reporting" as adopted by the European Union. Our responsibility is to express a conclusion on this consolidated interim financial information based on our review.

Scope of review

We conducted our review of the consolidated interim financial information in accordance with International Standard on Review Engagements (ISRE) 2410, "Review of interim financial information performed by the independent auditor of the entity". A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit performed in accordance with the International Standards on Auditing (ISA) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion on the consolidated interim financial information.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the consolidated interim financial information of Recticel NV has not been prepared, in all material respects, in accordance with IAS 34, "Interim Financial Reporting" as adopted by the European Union.

Gent, 29 August 2018

The statutory auditor

DELOITTE Bedrijfsrevisoren / Réviseurs d'Entreprises BV o.v.v.e. CVBA / SC s.f.d. SCRL Represented by Kurt Dehoorne

V. GLOSSARY

IFRS measures

Associated companies	Entities in which Recticel has a significant influence and that are
	processed using the equity-method.
CGU	Is short for Cash Generating Unit or cash flow generating unit.
	Figures including Recticel's pro rata share in the joint ventures,
Combined figures	after elimination of intercompany transactions, in accordance with
	the proportional consolidation method.
Consolidated figures	Figures following the application of IFRS 11, whereby Recticel's
	joint ventures are integrated on the basis of the equity method.
Earnings per share, base	Net result for the period (Group share) / Average outstanding
	shares over the period.
	Net result for the period (Group share) / [Average number of
Earnings per share, diluted	outstanding shares over the period – own shares + (number of
	possible new shares that have to be issued within the framework of
	the existing outstanding stock option plans x dilution effect of the
	stock option plans)].
EBIT	Operating results + profit or loss from equities.
Equity capital	Total equity, including minority interests.
Investments	Capitalized investments in tangible and intangible assets.
	Entities that are controlled jointly and that are consolidated
Joint ventures	proportionately. Following the early adaption of IFRS 11 since
	2013, these participations are consolidated following the equity
	method.
	Interest bearing financial debts at more than one year + interest
	bearing financial debts within maximum one year – cash and cash
Net financial debt	equivalents - Available for sale investments + Net marked-to
	market value position of hedging derivative instruments.
Subsidiaries	Fully consolidated entities under Recticel control.

 Alternative Performance measures
Net intangible fixed assets + goodwill + tangible fixed assets + working capital. Average = [Appropriated capital at the end of last year + Appropriated capital at the end of the last period] / 2.
Half yearly: average appropriated capital at the beginning and at the end of the period. Average = [Appropriated capital at the end of last year + Appropriated capital at the end of the last period] / 2. For the full year: average of the half yearly averages.
EBIT + depreciation and additional impairments/increases on assets.
Net financial debt / Total equity (including shares of external parties).
Net financial debt/EBITDA
Closing price x total number of outstanding shares.
Non-recurring elements include operating revenues, expenses and provisions that pertain to restructuring programmes (redundancy payments, closure & clean-up costs, relocation costs,), reorganisation charges and onereous contracts, impairments on assets ((in)tangible assets and goodwill), revaluation gains or losses on investment property, gains or losses on divestments of non operational investment property, and on the liquidation of investments in affiliated companies, gains or losses on discontinued operations, revenues or charges due to important (inter)national legal issues.
EBIT(DA) before non-recurring elements.
EBIT / average appropriated capital.
Net result for the period (share of the Group) / Average total equity over the period (the Group's share).
Represents Return on Capital Employed.
= Net financial debt + the drawn amounts under off-balance sheet non-recourse factoring/forfeiting programs.
Inventories + trade receivables + other receivables + recoverable taxes - trade payables - payable taxes - other commitments.

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Recticel

3993_rns_2018-08-29_a2163431-0efe-4ddd-a1de-7eac9840b52b.pdf

RECTICEL CONDENSED FINANCIAL STATEMENTS PER 30 JUNE 2018

TABLE OF CONTENTS

I. INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

I.1. CONSOLIDATED INCOME STATEMENT

I.2. EARNINGS PER SHARE

I.3. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

I.4. CONSOLIDATED BALANCE SHEET

I.5. CONSOLIDATED CASH FLOW STATEMENT

I.6. STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

For the half-year ending 30 June 2018

For the half-year ending 30 June 2017

I.7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDING 30 JUNE 2018

I.7.1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

I.7.1.1. STATEMENT OF COMPLIANCE - BASIS OF PREPARATION

I.7.1.2. BASIS OF ACCOUNTING

I.7.2. CHANGES IN SIGNIFICANT ACCOUNTING POLICIES

I.7.3. IMPACT OF NEW STANDARDS (IFRS 15 AND IFRS 9) THAT ARE APPLICABLE STARTING FROM 01 JANUARY 2018

I.7.3.1. IFRS 15 Revenue from Contracts with Customers, applicable as from 1 January 2018

General consideration

Changes in accounting policies

> LTA's

I.7.3.1.2. Impact IFRS 15 on equity

Impact to balance sheet at 01 January 2018

I.7.3.1.4. Disaggregation of revenues

I.7.3.1.5. Overview of contract assets and liabilities following application of IFRS 15

I.7.3.2. IFRS 9 Financial instruments (as revised in 2014), effective for annual periods beginning on or after 1 January 2018

I.7.3.2.1. Classification and measurement of financial assets

I.7.3.2.2. Impairment of financial assets

I.7.3.2.3. General hedge accounting

I.7.4. POTENTIAL IMPACT OF NEW STANDARDS (IFRS 16) WHICH ARE NOT YET APPLICABLE

I.7.4.1. IFRS 16 Leases

I.7.5. CRITICAL ACCOUNTING ASSESSMENTS AND PRINCIPAL SOURCES OF UNCERTAINTY

I.7.6. CHANGES IN SCOPE OF CONSOLIDATION

I.7.7. BUSINESS SEGMENTS

Segment information for the first half-year 2018

Segment information for the first half-year 2017

Other segment information first half-year 2018

Other segment information first half-year 2017

Balance sheet information per segment at 30 June 2018

Balance sheet at 31 December 2017

Non-recurring elements in the operating result per segment

I.7.8. INCOME STATEMENT

I.7.8.1. OTHER OPERATING INCOME AND EXPENSES

COMMENTS ON FIRST HALF-YEAR RESULTS 2018

Restructuring

Other operating revenues and expenses

COMMENTS ON FIRST HALF-YEAR RESULTS 2017

Restructuring

Other operating revenues and expenses

I.7.8.2. FINANCIAL RESULT

I.7.8.3. DIVIDENDS

I.7.9. BALANCE SHEET

I.7.9.1. PROPERTY, PLANT & EQUIPMENT

For the half-year ending 30 June 2018:

For the half-year ending 30 June 2017:

I.7.9.2. INTERESTS IN JOINT VENTURES AND ASSOCIATES

I.7.9.3. PROVISIONS

For the half-year ending 30 June 2018:

For the half-year ending 30 June 2017:

I.7.9.4. INTEREST-BEARING BORROWINGS

I.7.9.4.1. FINANCIAL LIABILITIES CARRIED AT AMORTISED COST

(i) Financial leases

(ii) Bank loans – "club deal"

(iii) Commercial paper program

I.7.9.4.2. FINANCIAL INSTRUMENTS AND FINANCIAL RISKS

I.7.9.4.2.1. TRANSITION TABEL IFRS 9 FINANCIAL INSTRUMENTS

I.7.9.4.2.2. FINANCIAL INSTRUMENTS

Categories of financial instruments

Interest rate risk management

For first half-year 2018

For first half-year 2017

1. Hedge accounting

For full-year 2017

1. Hedge accounting

I.7.10. WORKING CAPITAL NEED

I.7.11. MISCELLANEOUS

I.7.11.1. RELATED PARTY TRANSACTIONS

Sales ¹