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Recticel

Quarterly Report Aug 29, 2018

3993_ir_2018-08-29_2f8ed802-e487-47b1-a3bd-78b5e25bc587.pdf

Quarterly Report

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Brussels, 29 August 2018 – 07:00 CET

FIRST HALF-YEAR 2018 RESULTS

  • Combineda sales growth of +4.0% despite an adverse currency impact of -1.2%
  • Combined REBITDA: EUR 56.2 million (+12.1%)
  • Result of the period (share of the Group): from EUR 14.3 million to EUR 18.7 million (+30.7%)
  • Combined net financial debt: EUR 138.7 million

Olivier Chapelle (CEO): "We are satisfied with the overall 4.0% sales growth generated during the 1 st half of 2018, amid challenging market conditions in the comfort and bedding markets , and despite a -1.2% adverse currency environment.

Our combined REBITDA margin further improves from 6.9% to 7.4%, thanks to the dedication of our teams to mitigate the effects of historically high raw material prices during 1st quarter and of adverse currency evolutions.

Going forward, we remain concentrated on three axes to create the conditions for future growth:

  • (i) Geographic expansion: the converting units for Technical Foams in China and Morocco have started up during the 2nd quarter, and the new Insulation production plant in Finland will start up as planned at the beginning of the 4 th quarter.
  • (ii) Product innovations are being introduced in Bedding, Automotive Interiors and Technical Foams.
  • (iii) External growth opportunities, mainly focussed on Insulation.

Regarding our decision to divest our Automotive divisions, we confirm that the processes engaged during the 1st quarter are on-going, and so far progressing according to plan.

OUTLOOK

For the full-year 2018 the Group expects continued growth of its combined sales and REBITDA thanks to a combination of volume growth, improved mix and efficiency gains.

All comparisons are made with the comparable period of 2017, unless mentioned otherwise. The figures mentioned have been subject to an auditor's review.

Due to rounding, numbers presented throughout this and other documents may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.

a For the definition of other used terminology, see glossary at the end of this press release.

1. KEY FIGURES

1.1. CONSOLIDATED DATA

  • Sales: from EUR 566.0 million to EUR 579.7 million (+2.4%), including an adverse currency effect of EUR -7.0 million (-1.3%)
  • EBITDA: from EUR 35.4 million to EUR 45.4 million (+28.1%)
  • EBIT: from EUR 20.6 million to EUR 29.1 million (+41.5%)
  • Result of the period (share of the Group): from EUR 14.3 million to EUR 18.7 million (+30.7%)
  • Net financial debt4 : EUR 104.3 million per 30 June 2018 (30 June 2017: EUR 117.5 million; 31 December 2017: EUR 87.1 million)
in million EUR 1H2017 1H2018 1 D
(a) (b) (b)/(a)-1
Sales 566,0 579,7 2,4%
Gross profit 2 81,1 102,2 26,0%
as % of sales 14,3% 17,6%
EBITDA 35,4 45,4 28,1%
as % of sales 6,3% 7,8%
EBIT 20,6 29,1 41,5%
as % of sales 3,6% 5,0%
Result of the period (share of the Group) 14,3 18,7 30,7%
Result of the period (share of the Group) - base 0,27 0,34 29,4%
(per share, in EUR)
31 Dec 17 30 Jun 18
Total Equity 3 261,8 254,7 -2,7%
Net financial debt 4 87,1 104,3 19,7%
Gearing ratio (Net financial debt4
/Total Equity)
33,3% 41,0%

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

2 The gross profit of 1H2018 includes EUR -0.8 million (1H2017: EUR -17.0 million) non-recurring costs from residual additional expenses incurred due to alternative production solutions following the fire incident in Automotive Interiors plant in Most (Czech Republic).

For 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.

  • 3 Total equity 30 June 2018: cfr appendix 6
  • 4 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.

1.2. COMBINED DATA

  • Sales: from EUR 726.8 million to EUR 755.9 million (+4.0%) including currency effect (-1.2%)
  • REBITDA: from EUR 50.1 million to EUR 56.2 million (+12.1%)
  • EBITDA: from EUR 41.0 million to EUR 51.6 million (+25.7%)
  • EBIT: from EUR 22.2 million to EUR 31.0 million (+39.4%)
  • Result of the period (share of the Group): from EUR 14.3 million to EUR 18.7 million (+30.7%)
  • Net financial debt4 : EUR 138.7 million (30 June 2017: EUR 151.4 million; 31 December 2017: EUR 122.9 million)
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 3 261,8 254,7 -2,7%
Net financial debt 4 122,9 138,7 12,9%
Gearing ratio (Net financial debt4
/Total Equity)
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 residual expenses incurred due to alternative production solutions following the fire incident in the Automotive Interiors plant in Most (Czech Republic).
  • 3 Total equity 30 June 2018: cfr appendix 6
  • 4 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.

2. COMMENTS ON THE GROUP RESULTS

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

There were no changes in the scope of consolidation in 1H2018.

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 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 1 st 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 improved thanks to excellent operational efficiency, positive mix and pricing.
  • 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
Restructuring charges and provisions
Other
( 4,9)
0,4
( 4,5)
( 0,8)
( 0,2)
( 3,7)
Total impact on EBITDA ( 9,1) ( 4,6)
Impairments 0,0 ( 0,6)
Total impact on EBIT ( 9,1) ( 5,2)

Non-recurring elements in 1H2018 relate 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 to 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%).

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 milliona 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.

4. MARKET SEGMENTS

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. Therefore, the Group will continue to comment on the development of the different segments on the basis of the combined figures, consistent with the managerial reporting and in line with IFRS 8.

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 is pursued through new converting sites in Wuxi (China) and Tanger (Morocco) which 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).

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.

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.

4.4. AUTOMOTIVE

(a) (b) (b)/(a)-1
195,6 12,8%
13,5 14,7 9,0%
45,1%
-4,2%
99,4%
1,5% 2,7%
173,5
7,8%
9,1
5,3%
7,0
4,0%
2,6
7,5%
13,2
6,8%
6,7
3,4%
5,2

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 start-ups. Both sub-segments 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 mainly 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.

APPENDICES

All figures and tables contained in these annexes have been compiled in accordance with the IFRS accounting and valuation principles, as adopted within the European Union. The applied valuation principles, as published in the latest annual report at 31 December 2017, were consistently applied for the figures included in this press release.

The analysis of the risk management is described in the annual report which is be available from www.recticel.com.

1. Condensed consolidated income statement

in million EUR 1H2017 1H2018 1 D
(a) (b) (b)/(a)-1
Sales 566,0 579,7 2,4%
Distribution costs ( 31,7) ( 29,4) -7,3%
Cost of sales 2 ( 453,2) ( 448,2) -1,1%
Gross profit 81,1 102,2 26,0%
General and administrative expenses 2 ( 33,1) ( 35,3) 6,8%
Sales and marketing expenses ( 33,9) ( 34,4) 1,3%
Research and development expenses ( 7,0) ( 6,9) -1,8%
Impairments 0,0 ( 0,6) n.m.
Other operating revenues (1) 4 25,2 5,0 -80,1%
Other operating expenses (2) ( 13,1) ( 8,3) -36,9%
Other operating result (1)+(2) 12,0 ( 3,3) -127,3%
Income from joint ventures & associates 3 1,5 7,5 395,9%
Income from investments 0,0 0,0 n.m.
EBIT 20,6 29,1 41,5%
Interest income 0,4 0,3 -30,3%
Interest expenses ( 4,0) ( 2,3) -41,0%
Other financial income 8,7 3,3 -62,6%
Other financial expenses ( 7,2) ( 5,6) -23,0%
Financial result ( 2,1) ( 4,4) 109,7%
Result of the period before taxes 18,5 24,8 33,8%
Income taxes ( 4,2) ( 6,1) 44,7%
Result of the period after taxes 14,3 18,7 30,7%
of which attributable to the owners of the parent 14,3 18,7 30,7%
of which attributable to non-controlling interests 0,0 0,0 n.m.

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

2 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).

For 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.

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, compensations 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.

4 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.

2. Earnings per share

(a)
(b)
(b)/(a)-1
Number of shares outstanding (including treasury shares)
54 542 382
54 998 850
0,8%
Weighted average number of shares outstanding (before
53 918 269
54 527 800
1,1%
dilution effect)
Weighted average number of shares outstanding (after dilution
60 351 199
55 139 945
-8,6%
effect)
EBITDA
0,66
0,83
26,7%
EBIT
0,38
0,53
40,0%
Result for the period before taxes
0,34
0,45
32,3%
Result for the period after taxes
0,27
0,34
29,2%
Result for the period (share of the Group) - basic
0,265
0,343
29,2%
Result for the period (share of the Group) - diluted
0,248
0,339
36,6%
Net book value
4,71
4,63
-1,7%

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

3. Condensed consolidated statement of comprehensive income

in million EUR 1H2017 1H2018 1
Result for the period after taxes 14,3 18,7
Other comprehensive income
Items that will not subsequently be recycled to profit and loss
Actuarial gains (losses) on employee benefits recognized in equity 0,4 4,5
Deferred taxes on actuarial gains (losses) on employee benefits ( 0,1) ( 0,6)
Currency translation differences 0,2 ( 0,0)
Joint ventures & associates ( 0,0) 0,5
Total 0,4 4,4
Items that subsequently may be recycled to profit and loss
Hedging reserves 1,1 0,6
Currency translation differences ( 3,8) 0,5
Deferred taxes on hedging interest reserves ( 0,4) ( 0,1)
Joint ventures & associates 0,9 ( 1,4)
Total ( 2,1) ( 0,4)
Other comprehensive income net of tax ( 1,7) 4,0
Total comprehensive income for the period 12,6 22,6
Total comprehensive income for the period 12,6 22,6
of which attributable to the owners of the parent 12,6 22,6
of which attributable to non-controlling interests 0,0 0,0

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

4. Condensed consolidated balance sheet

in million EUR 31 DEC 17 30 JUN 18 1 D
(a) (b) (b)/(a)-1
Intangible assets 12,3 12,2 -1,3%
Goodwill 24,2 23,3 -3,6%
Property, plant & equipment 226,8 234,6 3,4%
Investment property 3,3 3,3 0,0%
Interest in joint ventures & associates 76,2 76,9 0,8%
Other financial investments and available for sale investments 0,7 0,8 18,6%
Non-current receivables 14,8 14,6 -1,2%
Non-current contract assets 0,0 19,2 n.m.
Deferred tax 26,2 23,3 -11,3%
Non-current assets 384,6 408,1 6,1%
Inventories and contracts in progress 99,4 107,2 7,9%
Trade receivables 110,9 142,6 28,5%
Current contract assets 0,0 14,2 n.m.
Other receivables 73,4 57,3 -21,9%
Income tax receivables 1,4 2,1 57,6%
Other investments 0,1 0,1 0,0%
Cash and cash equivalents 57,8 41,2 -28,7%
Disposal group held for sale 2,6 2,6 0,0%
Current assets 345,6 367,4 6,3%
TOTAL ASSETS 730,2 775,5 6,2%
in million EUR 31 DEC 17 30 JUN 18 1 D
(a) (b) (b)/(a)-1
Equity (share of the Group) 261,8 254,7 -2,7%
Non-controlling interests 0,0 0,0 n.m.
Total equity 261,8 254,7 -2,7%
Pensions and other provisions 68,6 60,7 -11,4%
Deferred tax 9,1 9,2 0,9%
Interest-bearing borrowings 96,1 19,5 -79,7%
Other amounts payable 0,2 0,2 2,6%
Non-current contract liabilities 0,0 30,2 n.m.
Non-current liabilities 174,0 119,9 -31,1%
Pensions and other provisions 5,1 4,0 -21,3%
Interest-bearing borrowings 49,0 126,9 158,9%
Trade payables 126,6 108,9 -14,0%
Current contract liabilities 0,0 45,8 n.m.
Income tax payables 2,4 1,4 -41,4%
Other amounts payable 111,3 114,0 2,4%
Current liabilities 294,4 401,0 36,2%
TOTAL LIABILITIES 730,2 775,5 6,2%

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

in million EUR 31 DEC 17 30 JUN 18 D
Net financial debt 87,1 104,3 19,7%
Net financial debt / Equity (non-controlling interests included) 33% 41%
Equity (non-controlling interests included) / Total assets 35% 33%

5. Condensed consolidated statement of cash flow

in million EUR 1H2017 1H2018 D
(a) (b) (b)/(a) -1
EBIT 20,6 29,1 41,5%
Depreciation, amortisation and impairment losses on assets 14,8 16,3 9,8%
Write-offs (-back) on assets 1,4 ( 0,3) nr
Changes in provisions ( 2,9) ( 4,8) 67,0%
Income from associates and joint ventures ( 1,5) ( 7,5) 395,9%
Other non-cash elements 3,2 ( 0,0) nr
Gross operating cash flow 35,7 32,8 -8,2%
Changes in working capital ( 24,1) ( 14,7) -38,9%
Gross operating cash flow after changes in working capital 11,6 18,0 55,8%
Income taxes paid ( 2,8) ( 4,0) 45,0%
Net cash flow from operating activities (a) 8,8 14,0 59,2%
Net cash flow from investment activities (b) ( 8,9) ( 18,1) 102,1%
Paid interest charges (1) ( 3,4) ( 3,3) -2,0%
Paid dividends (2) ( 9,7) ( 12,0) 24,2%
Increase (Decrease) of capital (3) 2,8 1,6 -44,3%
Increase (Decrease) of financial liabilities (4) 21,4 1,3 -94,1%
Other (5) 0,0 0,0 -
Net cash flow from financing activities (c)= (1)+(2)+(3)+(4)+(5) 11,1 ( 12,6) nr
Effect of exchange rate changes (d) 0,3 ( 0,0) nr
Effect of change in scope of consolidation (e) 0,0 0,0 -
Changes in cash and cash equivalents (a)+(b)+(c)+(d)+(e) 11,3 ( 16,6) nr
FREE CASH FLOW (a)+(b)+(1) ( 3,5) ( 7,4) 108,5%

6. Condensed consolidated statement of changes in shareholders' equity

in million 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)
136,9 128,0 ( 1,5) ( 22,6) 40,9 ( 16,4) ( 3,5) 261,8 0,0 261,8
IFRS 9
IFRS 15
0,0
0,0
0,0
0,0
0,0
0,0
0,0
0,0
0,0
( 19,5)
0,0
0,0
0,0
0,0
0,0
( 19,5)
0,0
0,0
0,0
( 19,5)
Changes in
accounting policies
0,0 0,0 0,0 0,0 ( 19,5) 0,0 0,0 ( 19,5) 0,0 ( 19,5)
Dividends 0,0 0,0 0,0 0,0 ( 12,0) 0,0 0,0 ( 12,0) 0,0 ( 12,0)
Stock options (IFRS 2) 0,0 0,0 0,0 0,2 0,0 0,0 0,0 0,2 0,0 0,2
Capital movements 0,6 1,0 0,0 ( 0,3) 0,3 0,0 0,0 1,6 0,0 1,6
Shareholders'
movements
0,6 1,0 0,0 ( 0,1) ( 11,8) 0,0 0,0 ( 10,3) 0,0 ( 10,3)
Profit or loss of the
period
0,0 0,0 0,0 0,0 18,7 0,0 0,0 18,7 0,0 18,7
Other
comprehensive
income'
0,0 0,0 0,0 4,4 0,0 ( 0,9) 0,5 4,0 0,0 4,0
At the end of the
period (30 June
2018)
137,5 129,0 ( 1,5) ( 18,3) 28,3 ( 17,3) ( 3,0) 254,7 0,0 254,7

7. 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

8. Auditor's report a

To the Board of Directors

The auditor confirms that the review is substantially completed, and did not reveal any significant adjustments to the financial information included in the press release.

Ghent, 28 August 2018

The Statutory Auditor

DELOITTE Bedrijfsrevisoren BV o.v.v.e. CVBA

______________________________________

Represented by Kurt Dehoorne

a For the full version of the review report we refer to the half-year consolidated financial statements on our website www.recticel.com under the chapter Investor Relations > Annual and half-year Reports > Condensed financial statements per 30 June 2018

Glossary


IFRS measures
Combined (figures) : Figures including Recticel's pro rata share in the joint ventures, 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.

Alternative Performance Measures

In addition, the Group uses alternative performance measures (Alternative Performance Measures or "APM") to express its underlying performance and to help the reader to better understand the results. APM are not defined performance indicators by IFRS. The Group does not present APM as an alternative to financial measures determined in accordance with IFRS and does not give more emphasis to APM than the defined IFRS financial measures.

EBITDA : = EBIT + depreciation, amortisation and impairment on assets.
Gearing : Net financial debt / Total equity
Net financial debt : Interest bearing financial debts at more than one year + interest bearing financial debts within
maximum one year – cash and cash equivalents + Net marked-to-market value position of
hedging derivative instruments. The interest-bearing borrowings do not include the drawn
amounts under non-recourse factoring/forfeiting programs
Non-recurring elements : 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 onerous 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.
REBIT : = EBIT before non-recurring elements.
REBITDA : = EBITDA before non-recurring elements
Total net financial debt : = Net financial debt + the drawn amounts under off-balance sheet non-recourse
factoring/forfeiting programs

Uncertainty risks concerning the forecasts made

This press report contains forecasts which entail risks and uncertainties, including with regard to statements concerning plans, objectives, expectations and/or intentions of the Recticel Group and its subsidiaries. Readers are informed that such forecasts entail known and unknown risks and/or may be subject to considerable business, macroeconomic and competition uncertainties and unforeseen circumstances which largely lie outside the control of the Recticel Group. Should one or more of these risks, uncertainties or unforeseen or unexpected circumstances arise or if the underlying assumptions were to prove to be incorrect, the final financial results of the Group may possibly differ significantly from the assumed, expected, estimated or extrapolated results. Consequently, neither Recticel nor any other person assumes any responsibility for the accuracy of these forecasts.

Financial calendar

First half-year 2018 results 29.08.2018 (at 07:00 AM CET) Third quarter 2018 trading update 31.10.2018 (at 07:00 AM CET) Annual results 2018 28.02.2019 (at 07:00 AM CET) First quarter 2019 trading update 29.04.2019 (at 07:00 AM CET) Annual General Meeting 28.05.2019 (at 10:00 AM CET) First half-year 2019 results 30.08.2019 (at 07:00 AM CET) Third quarter 2019 trading update 30.10.2019 (at 07:00 AM CET)

For additional information

RECTICEL - Olympiadenlaan 2, B-1140 Brussels (Evere)
PRESS INVESTOR RELATIONS
Mr Olivier Chapelle Mr Michel De Smedt
Tel: +32 2 775 18 01 Mobile: +32 479 91 11 38
[email protected] [email protected]

Recticel in a nutshell

Recticel is a Belgian Group with a strong European dimension, but it also operates in the rest of the world. Recticel employs 8,411 people in 98 establishments in 28 countries.

Recticel contributes to daily comfort with foam filling for seats, mattresses and slat bases of top brands, insulation material, interior comfort for cars and an extensive range of other industrial and domestic applications.

Recticel is the Group behind well-known bedding brands (Beka®, Lattoflex®, Literie Bultex®, Schlaraffia®, Sembella®, Swissflex®, Superba®, etc.) and GELTEX® inside. Within the Insulation sub-segment high-quality thermal insulation products are marketed under the well-known brands Eurowall®, Powerroof®, Powerdeck®, Powerwall® and Xentro®. Technological progress and innovation have led to breakthrough at the biggest names in the Automotive industry thanks to Colo-Fast®, Colo-Sense® and Colo-Sense Lite®.

In 2017 Recticel achieved combined sales of EUR 1.46 billion (IFRS 11 consolidated sales: EUR 1.14 billion).

Recticel (Euronext: REC – Reuters: RECTt.BR – Bloomberg: REC:BB) is listed on Euronext in Brussels.

The press release is available in English, Dutch and French on the website www.recticel.com

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