Half year report 2017€¦ · Sioen in brief Sioen has the entire production process under one...

Half year report 2017

Table of content

Sioen in brief 5

Corporate information 7

Group structure 8

Report of the Board of Directors 10

1. Comments on the consolidated financial statements 10

2. Events after reporting date 11

3. Developments by division 11

4. Balance sheet and cash flow statement 12

5. Outlook for 2017 12

Financial overview 14

1. Interim consolidated financial statements for the six months ended in 30 June 2017 14

1.1. Consolidated statement of financial position 14

1.2. Consolidated income statement 16

1.3. Consolidated statement of cash flows 21

1.4. Consolidated statement of changes in equity 22

2. Notes to the consolidated financial statements 24

2.1. Application of new and revised International Financial Reporting Standards (IFRs) 24

2.2. Reporting entity 26

2.3. Statement of compliance with IFRs 26

2.4. Significant accounting policies 26

2.5. Seasonality of interim operations 27

2.6. Significant events and transactions 27

2.7. Assessment criteria in the application of the valuation rules 27

2.8. Segment information 28

2.9. Exchange rates 30

2.10. Income taxes relating to continuing operations 31

2.11. Discontinued operations 32

2.12. Debt and equity securities 33

2.13. Dividends 33

2.14. Property, plant and equipment 33

2.15. Inventories 34

2.16. Provisions 36

2.17. Borrowings 38

2.18. Obligations under finance leases 39

2.19. Share capital & shareholder structure 39

2.20. Financial instruments 40

2.21. Related party transactions 41

2.22. Acquisitions and disposal of subsidiaries 42

2.23. Events after reporting date 54

2.24. Contigent assets and liabilities 54

2.25. Financial risk management 54

2.26. Staff 55

2.27. Approval of interim financial statements 56

Definitions 57

Reconciliations 58

- Half year report 2017 3

SIOEN INDUSTRIES

Sioen in brief

Sioen has the entire production process under one roof, from the yarn, raw fabric and pigment pastes, to the coating and production of professional apparel.

As a leader in our industry we pride ourselves on our ability to find imaginative solutions to the challenges and ever-changing concerns and demands of our customers, the marketplace and all our stakeholders.

4 302Skilled people make your product.

56We have 56 companies (legal entities).

23Our plants are situated in 23 countries.

237.7Million € net sales in H1 2017 (+ 31.8%).

34.6Million € recurring EBITDA in H1 2017 (+ 7.2%).

12.1Million € Group profit in H1 2017 (- 13.2%).


Corporate information

Declaration regarding the information given in this report for the 6 months ended 30 June 2017

The undersigned declare that:

- The half year accounts, prepared in accordance with the applicable standards for annual financial statements, give a true and fair view of the net assets, financial condition and results of Sioen Industries and the companies included in the consolidation.

- The half year report gives a true and fair overview of the development and results of the company and the position of Sioen Industries and the companies included in the consolidation, and a description of the principal risks and uncertainties that they face.

M.J.S. Consulting BVBA, represented by Mrs. M. Sioen, CEO Asceca Consulting BVBA, represented by Mr. G. Asselman, CFO

The full financial report is available from 25 August 2017

in the ‘Investors’ section of our website www.sioen.com.

Management statement

Obligations to provide periodic information under the Transparency Directive effective from 1 January 2008.


Sioen Industries NV | Shared service center

Coating Apparel Chemicals Other

Sioen Industries NV (1)

Spinning, weaving, direct coating, online coating, Belgium

99.9% Sioen NVBelgium

100.0% European Master Batch NVProduction pastes, inks, varnishes, Belgium

100.0% Roltrans Tegelen BV (4)

The Netherlands (real estate)

100.0% Saint Frères SASDirect coating, France

10.5% Confection Tunisienne de Sécurité SARLTunisia

89.5% Richard SASPaste production, France

99.9% Roltrans Group America Inc.USA (real estate)

100.0%

100.0% Sioen Shanghai (2)

Direct coating sales office, ChinaSioen Ireland (3)

Ireland100.0% Le Comptoir Zouloo SAS

Sales office, France100.0% Roland Planen GmbH i.L.

Germany (dormant)100.0%

100.0% Sioen Fabrics SATransfer coating, Calendering, Belgium

100.0% Mullion Survival Technology Ltd.Sales office, UK

UV Curable Systems BVBA (7)

Radiation curing primers, inks and varnishes Belgium

100.0% Roland Real Estate Sp.z.o.oPoland (real estate)

100.0%

100.0% Siofab SATransfer coating, Portugal

95.0% PT. Sioen IndonesiaIndonesia

5.0% Roland Ukrain llc.Ukraine (dormant)

14.5% 85.5%

100.0% Pennel Automotive SASFrance

95.0% PT. Sungin TexIndonesia

5.0%

100.0% Coatex NVProcessing of coated fabrics and films, Belgium

Sioen France SASSales office, France

99.8%

100.0% Saint Frères Confection SASHeavy-duty manufacturing, France

99.7% Sioen Tunisie SARLSales office, Tunisia

100.0% Sioen Felt & Filtration SAFelt and filter production, Belgium

99.9% Sioen Zaghouan SATunisia

0.1%

100.0% Dynatex NV (5)

Direct coating, Belgium5.0% Siorom SRL

Romania95.0%

(1) Merger Holding company Sioen Industries (Shared Service Center) and Belgian direct coating companies at July 1st 2009(2) Official name: Sioen Coated Fabrics (Shanghai) Trading Co. Ltd. (3) Official name: Gairmeidi Caomhnaithe Dhun na nGall Teoranta (4) Respectively through Monal SA and Roltrans Group BV (5) Acquisition in 2015 - still 10.5% to acquire by means of deferred payments(6) Acquisition in 2016 - still 10.0% to acquire by means of deferred payment(7) New acquisition in 2017(8) New acquisition in 2017, via holding companies Jade Equity Ltd., Emerald Bond Ltd. and Jade Mezzanine Ltd.(9) Former Verseidag Ballistic Protection OY, name change with effect as from 9 August 2017

100.0% Manifattura Fontana S.p.A. (6)

Geotextile non-wovens, ItalySioen Nederland BVThe Netherlands

100.0%

52.0% Fontana International GmbHGeotextile non-wovens sales office, Austria

48.0% Sioen Asia Pacific PTE. Ltd.Singapore

100.0%

100.0% Dimension-Polyant GmbHSailcloth, Germany

Sioen Myanmar Ltd.Myanmar

99.0%

Dimension-Polyant Inc.Sailcloth, USA

100.0% 5.0% PT. Sioen Semarang AsiaSemarang

95.0%

Dimension-Polyant Sailcloth PTY Ltd.Sailcloth, Australia

100.0% Ursuk OYFinland

100.0%

Dimension-Polyant (UK) Ltd.Sailcloth, UK

100.0% Kiinteistö Oy Turun Teijonkatu 3Finland (real estate)

100.0%

Dimension-Polyant SASSailcloth, France

100.0% SG Balticum ASEstonia

100.0%

100.0% James Dewhurst Ltd. (8)

Open construction laid scrims, UKArctic Diving ABSweden

100.0%

Dewtex Inc. (7)

Open construction laid scrims, USA100.0% Sioen Ballistics OY (7)(9)

Finland100.0%

James Dewhurst Trustees Ltd. (7)

UK (dormant)100.0%

Group structure


Sioen Industries NV | Shared service center

Coating Apparel Chemicals Other

Sioen Industries NV (1)

Spinning, weaving, direct coating, online coating, Belgium

99.9% Sioen NVBelgium

100.0% European Master Batch NVProduction pastes, inks, varnishes, Belgium

100.0% Roltrans Tegelen BV (4)

The Netherlands (real estate)

100.0% Saint Frères SASDirect coating, France

10.5% Confection Tunisienne de Sécurité SARLTunisia

89.5% Richard SASPaste production, France

99.9% Roltrans Group America Inc.USA (real estate)

100.0%

100.0% Sioen Shanghai (2)

Direct coating sales office, ChinaSioen Ireland (3)

Ireland100.0% Le Comptoir Zouloo SAS

Sales office, France100.0% Roland Planen GmbH i.L.

Germany (dormant)100.0%

100.0% Sioen Fabrics SATransfer coating, Calendering, Belgium

100.0% Mullion Survival Technology Ltd.Sales office, UK

UV Curable Systems BVBA (7)

Radiation curing primers, inks and varnishes Belgium

100.0% Roland Real Estate Sp.z.o.oPoland (real estate)

100.0%

100.0% Siofab SATransfer coating, Portugal

95.0% PT. Sioen IndonesiaIndonesia

5.0% Roland Ukrain llc.Ukraine (dormant)

14.5% 85.5%

100.0% Pennel Automotive SASFrance

95.0% PT. Sungin TexIndonesia

5.0%

100.0% Coatex NVProcessing of coated fabrics and films, Belgium

Sioen France SASSales office, France

99.8%

100.0% Saint Frères Confection SASHeavy-duty manufacturing, France

99.7% Sioen Tunisie SARLSales office, Tunisia

100.0% Sioen Felt & Filtration SAFelt and filter production, Belgium

99.9% Sioen Zaghouan SATunisia

0.1%

100.0% Dynatex NV (5)

Direct coating, Belgium5.0% Siorom SRL

Romania95.0%

(1) Merger Holding company Sioen Industries (Shared Service Center) and Belgian direct coating companies at July 1st 2009(2) Official name: Sioen Coated Fabrics (Shanghai) Trading Co. Ltd. (3) Official name: Gairmeidi Caomhnaithe Dhun na nGall Teoranta (4) Respectively through Monal SA and Roltrans Group BV (5) Acquisition in 2015 - still 10.5% to acquire by means of deferred payments(6) Acquisition in 2016 - still 10.0% to acquire by means of deferred payment(7) New acquisition in 2017(8) New acquisition in 2017, via holding companies Jade Equity Ltd., Emerald Bond Ltd. and Jade Mezzanine Ltd.(9) Former Verseidag Ballistic Protection OY, name change with effect as from 9 August 2017

100.0% Manifattura Fontana S.p.A. (6)

Geotextile non-wovens, ItalySioen Nederland BVThe Netherlands

100.0%

52.0% Fontana International GmbHGeotextile non-wovens sales office, Austria

48.0% Sioen Asia Pacific PTE. Ltd.Singapore

100.0%

100.0% Dimension-Polyant GmbHSailcloth, Germany

Sioen Myanmar Ltd.Myanmar

99.0%

Dimension-Polyant Inc.Sailcloth, USA

100.0% 5.0% PT. Sioen Semarang AsiaSemarang

95.0%

Dimension-Polyant Sailcloth PTY Ltd.Sailcloth, Australia

100.0% Ursuk OYFinland

100.0%

Dimension-Polyant (UK) Ltd.Sailcloth, UK

100.0% Kiinteistö Oy Turun Teijonkatu 3Finland (real estate)

100.0%

Dimension-Polyant SASSailcloth, France

100.0% SG Balticum ASEstonia

100.0%

100.0% James Dewhurst Ltd. (8)

Open construction laid scrims, UKArctic Diving ABSweden

100.0%

Dewtex Inc. (7)

Open construction laid scrims, USA100.0% Sioen Ballistics OY (7)(9)

Finland100.0%

James Dewhurst Trustees Ltd. (7)

UK (dormant)100.0%


Report of the Board of Directors

1. Comments on the consolidated financial statements

Net sales (overall growth of 31.8%, organic growth of 4.4%):

At the end of the first half of 2017 Sioen realized a growth in consolidated sales with 31.8% to EUR 237.7 million compared to EUR 180.3 million over the same period in 2016. This sales figure includes the sales of the recently acquired companies;

- Fontana, accounted for as of 1 April 2016

- Dimension-Polyant, accounted for as of 1 August 2016

- Ursuit, accounted for as of 31 December 2016

- Verseidag Ballistic Protection, accounted for as of 1 January 2017

- UCS, accounted for as of 1 January 2017

- James Dewhurst Group, accounted for as of 1 June 2017

Excluding the above mentioned recent acquisitions the Sioen Industries Group realized an organic growth of 4.4% compared to the same period previous year. All acquisitions are well on track and perform in line with expectations.

Gross margin:

The consolidated gross margin (material margin) has evolved from 53.59% at the end of the first half of 2016 to 49.54% in the first half of the year.

A change driven by various factors such as; price pressure from raw material prices which accounts for 2.7% of the 4% change and a substantial change in sales mix resulting from the acquired companies.

Operating result:

The operating result has evolved from EUR 26.1 million at the end of the first half of 2016 to EUR 23.1 million at the end of the first half of 2017 or a decrease with 11.5%.

Financial result:

Financial result of the Group amounted to EUR -4.4 million over the first half of 2017 against EUR -4.7 million in the first half of 2016.

Income tax:

Income tax amounts to EUR 6.5 million over the first half of 2017 against EUR 7.5 million over the first half of 2016.

Profit (loss) for the period from continuing operations:

The company recorded EUR 12.1 million profit over the first half of 2017 against EUR 14.0 million over the first half of 2016 or a decrease with 13.6%.

Recurring EBITDA:

The EBITDA with the exception of the one off expenses (expenses related to the acquired companies and the reorganization of the Indonesian plants) amounts to EUR 34.6 million or a growth of 7.2% compared to last year.

Net cash flow:

The net cash flow amounts to EUR 22.1 million over the first half of 2017 against EUR 19.4 million over the first half of 2016, or an increase with 13.9%.


2. Events after reporting date

No subsequent events occurred which could have a significant impact on the consolidated financial statements of the Group, for the period ended 30 June 2017.

3. Developments by division

Coating division

The coating division specializes in technical textiles. This division is fully vertically integrated. Starting point is the extrusion of technical yarns and staple fibers (polyester) followed in a second stage by the production of woven fabrics, non-woven technical fabrics and reinforcement scrims most of them to be coated, through dedicated coating processes, with various polymers (PVC, PU, silicons, etc.). The Group is the only player in the world with full competency in various coating technologies, each with its own specific products and markets.

In the first half of 2017, the coating division achieved external sales of EUR 151.8 million versus EUR 112.3 million over the same period last year. Market demand remains strong in all product lines. Excluding the acquisitions, this division realized an organic growth rate of 7.2% compared to last year. Including the newly acquired activity the growth rate in this division is 35.2%.

Apparel division

This division stands for ‘professional protective garments’. The apparel division is an innovative producer of a wide range of high-quality professional protective garments that meet all European standards. Sioen Apparel is active in various sectors where attention to safety is a priority. Attention to customer needs, strong quality consciousness and continuing research and development, combined with technically advanced products, are the basis of the successful development of this division.

In the first half of 2017, the apparel division achieved external sales of EUR 62.7 million versus EUR 45.9 million over the same period last year or a growth rate of 36.7% including acquisitions. Excluding the acquisitions this division suffers a slight decline in organic sales of 1.9% and thus a total acquisition growth rate of 38.6%. Profitability of the division is temporarily impacted by the reorganization of the production plants in Asia.

Chemicals division

Sioen Chemicals is the expert in coloring, dispersing pigments and additives in pigment pastes, liquids, concentrates and inks for a wide range of applications. Our customers operate in the fields of wall- and floorcovering, sealants, adhesives, paints, plasters, technical textiles up to automotive, paper, agriculture, food and many other industry segments. Sioen Chemicals offers high quality standard and tailor made customer solutions and is well reputed for its customized pigment pastes, inks and varnishes.

In the first half of 2017, the chemicals division achieved external sales of EUR 23.2 million versus EUR 22.1 million over the same period last year, or a sales growth rate of 5.0% (3.1% organic growth and 1.8% growth through acquisitions).

Division Other

This division consists of the real estate activities.


4. Balance sheet and cash flow statement

Working capital, expressed as a percentage of net sales, decreased from 31.0% as per 30 June 2016 to 29.9% as per 30 June 2017. In Euro however, due to the acquired companies, it has increased to EUR 142.1 million or an increase of about EUR 30.3 million.

The net financial debt position increased from EUR 79.4 million at the end of last year, to EUR 145.9 million at the end of June 2017.

5. Outlook for 2017

Without geopolitical landslides we expect the underlying trend of the first semester to continue into the second semester.

In the second half of 2017 the Sioen Industries Group will continue to put emphasis on:

- the further integration of the acquired companies

- the mitigation of the impact of raw material price increases

- the start of capacity extension projects in Italy and Belgium

Sioen core values:

- strong focus on R&D and innovation

- diversified product portfolio, tailored to the customer’s needs

- cost efficiency


Financial overview

1. Interim consolidated financial statements for the six months ended 30 June 2017

1.1. Consolidated statement of financial position | In thousands of euros

Assets Note 30 June 2017 31 December 2016

Unaudited Audited

Non-current assets

Intangible assets 25 897 11 519

Goodwill 72 163 39 372

Property, plant and equipment 115 759 110 412

Investment property 5 375 5 425

Interests in associates 86 286

Other long term assets 465 1 600

Deferred tax assets 6 238 4 002

Total non-current assets 225 983 172 616

Current assets

Inventories 2.15 129 445 114 473

Trade receivables 76 951 57 273

Other receivables 7 014 4 966

Other financial assets 14

Cash and cash equivalents 1.3 19 189 16 596

Derivatives fair value 954 1 400

Deferred charges and accrued income 2 353 1 082

Total current assets 235 920 195 790

Total assets 461 903 368 406


Equity & liabilities Note 30 June 2017 31 December 2016

Unaudited Audited

Equity

Share capital 46 000 46 000

Retained earnings 153 287 151 708

Other reserves -9 141 -8 522

Equity attributable to the owners of the company 1.4 190 146 189 186

Non-controlling interest 0 0

Total equity 1.4 190 146 189 186

Non-current liabilities

Borrowings 64 424 66 531

Provisions 2.16 1 157 2 231

Retirement benefit obligations 4 473 4 743

Deferred tax liabilities 23 233 18 457

Obligations under finance leases 4 576 4 911

Other amounts payable 3 120

Total non-current liabilities 97 866 96 993

Current liabilities

Trade and other payables 38 205 31 135

Borrowings 95 380 23 655

Provisions 2.16 100 190

Retirement benefit obligations 53 61

Current income tax liabilities 6 128 3 031

Social debts 17 097 11 402

Other amounts payable 4 928 5 383

Obligations under finance leases 763 735

Derivatives fair value 1 764 1 225

Accrued charges and deferred income 9 473 5 410

Total current liabilities 173 891 82 227

Total equity and liabilities 461 903 368 406


1.2. Consolidated income statement

1.2.1. By function | In thousands of euros

NoteSix months ended

30 June 2017Six months ended

30 June 2016 (1)

Unaudited Unaudited

Net sales 2.8 237 653 180 255

Cost of sales - 183 299 - 131 714

Manufacturing contribution 54 354 48 541

Sales and marketing expenses - 12 738 - 9 739

Research and development expenses - 4 915 - 3 839

Administrative expenses - 17 907 - 11 793

Financial income 674 585

Financial charges - 5 078 - 5 290

Other income 3 705 2 725

Other expenses 626 236

Profit (loss) before taxes 18 721 21 425

Income tax 2.10 - 6 545 - 7 456

Profit (loss) after taxes 12 176 13 969

Share in the results of associates - 114

Profit (loss) for the period from continuing operations 12 063 13 969

Profit (loss) for the period from discontinued operations 2.11 - 66

Group profit (loss) 12 063 13 903

Group profit (loss) attributable to shareholders of Sioen Industries 12 063 13 903

Group profit (loss) attributable to minority interests 0 0

EBIT 23 125 26 185

EBITDA 33 055 31 683

Recurring EBIT 23 499 26 247

Recurring EBITDA 34 560 32 235

Net cash flow 22 107 19 402

Definitions and reconciliations for non-GAAP measures can be found on pages 57 & 58 of this half year report.(1) As a consequence of the European Securities and Markets Authority (ESMA)’s guidelines on the use of Alternative Performance Measures (APMs), the presentation of the 30 June 2016 figures has been adjusted to be comparable with the presentation of the 30 June 2017 figures.


Earnings per share | amounts in euro

Six months ended 30 June 2017


Basic earnings per share

Net earnings for the period 12 062 638 13 903 332

Net earnings from continuing operations 12 062 638 13 969 099

Net earnings from discontinued operations -65 767

Weighted average ordinary shares outstanding 19 779 933 19 779 933

Basic earnings per share 0.61 0.70

Basic earnings per share from continuing operations 0.61 0.71

Diluted earnings per share

Net earnings for the period 12 062 638 13 903 332

Net earnings from continuing operations 12 062 638 13 969 099

Net earnings from discontinued operations -65 767

Weighted average ordinary shares outstanding 19 779 933 19 779 933

Diluted earnings per share 0.61 0.70

Diluted earnings per share from continuing operations 0.61 0.71


1.2.2. By nature | In thousands of euros



30 June 2016 (1)

Unaudited Unaudited

Net sales 2.8 237 653 180 255

Changes in stocks and WIP (work in progress) - 848 9 099

Other operating income (2) 3 722 2 730

Raw materials and consumables used -119 075 -92 757

Gross margin 49.54% 53.59%

Services and other goods -35 271 -27 359

Remuneration, social security and pensions -49 749 -37 477

Depreciations 2.8 -10 337 -7 323

Write off inventories and receivables - 713 1 175

Provisions for liabilities and charges 1 120 650

Other operating charges (3) -3 377 -2 863

Operating result 23 125 26 129

Financial result -4 404 -4 704

Financial income 674 585

Financial charges -5 078 -5 290

Profit (loss) before taxes 18 721 21 425

Income tax 2.10 -6 545 -7 456

Profit (loss) after taxes 12 176 13 969

Share in the results of associates - 114

Profit (loss) for the period from continuing operations 12 063 13 969

Profit (loss) for the period from discontinued operations 2.11 - 66

Group profit (loss) 12 063 13 903

Group profit (loss) attributable to shareholders of Sioen Industries 12 063 13 903

Group profit (loss) attributable to non-controlling interest 0 0

EBIT 23 125 26 185EBITDA 33 055 31 683Recurring EBIT 23 499 26 247Recurring EBITDA 34 560 32 235Net cash flow 22 107 19 402

Definitions and reconciliations for non-GAAP measures can be found on pages 57 & 58 of this annual report.(1) As a consequence of the European Securities and Markets Authority (ESMA)’s guidelines on the use of Alternative Performance Measures (APMs), the presentation of the 30 June 2016 figures has been adjusted to be comparable with the presentation of the 30 June 2017 figures.(2) Other operating income mainly consists of exemption withholding tax, rental income, transport recharges, indemnities, R&D subventions and gains on sale of assets. In the consolidated income statement by function (1.2.1), transport recharges are not included in ‘Other income’, but spread by function.(3) Other operating charges cover a number of general expenses, mostly non-profit related taxes such as property tax, ‘taxe foncière’ in France and similar. In the consolidated income statement by function (1.2.1), taxes on tangible assets are not included in ‘Other expenses’, but spread by function. On the other hand, provisions for liabilities and charges are included in ‘Other expenses’, while they are shown separately here.


1.2.3. Consolidated statement of total comprehensive income | In thousands of euros



30 June 2017

Unaudited Unaudited

Group profit (loss) 1.2.1 12 063 13 903

Exchange differences on translating foreign operationsExchange difference arising during the period 1.4 -1 114 -559Cash flow hedgesGains (losses) arising during the period 1.4 688 -2 364Income tax -234 803

Net other comprehensive income (loss) potentially to be reclassified to profit or loss in subsequent periods

-659 -2 119

Remeasurement of defined benefit obligationGains (losses) arising during the period 1.4 61 -55Income tax -20 18

Net other comprehensive income (loss) not to be reclassified to profit or loss in subsequent periods

40 -36

Other comprehensive income (loss) after tax impact -619 -2 156

Total comprehensive income (loss) for the period 11 444 11 747

Attributable to shareholders of Sioen Industries 11 444 11 747Attributable to non-controlling interests 0 0


1.3. Consolidated statement of cash flows | In thousands of euros



30 June 2016Unaudited Unaudited

Group profit (loss) 1.2.1 12 063 13 903

Income tax (1) 6 545 7 577 Financial charges (1) 5 078 5 290 Financial income (1) -674 -585 Share in the result of associates 114

Operating result (1) 23 125 26 185

Depreciation and amortisation of non-current assets 10 337 7 323Write off inventories and receivables 713 -1 175Provisions -1 120 -650Movements in working capital:

Inventories -4 113 -13 262

Trade receivables -8 824 -10 781

Other long term assets, other receivables & deferred charges and accrued income

-1 709 158

Trade and other payables 1 854 1 747

Current income tax liabilities, social debts, other amounts payable & accrued charges and deferred income

6 705 5 722

Amounts written off inventories and receivables 427 165

Cash flow from operating activities 27 395 15 432

Income taxes paid -4 049 -2 346

Net cash flow from operating activities 23 346 13 086

Interest received 49 198

Other financial assets (deposits) -14 19 030

Acquisitions/sale of subsidiaries -27 713 -3 305

Investments in intangible and property, plant and equipment -4 671 -3 872

Disposal and sale of intangible and property, plant and equipment 321 31

Net cash flow from investing activities -32 028 12 082

Net cash flow before financing activities -8 682 25 168

Interest paid -782 -1 429

Disbursed dividend -10 483 -9 494

Increase/(decrease) borrowings 26 007 -38 806

Increase/(decrease) obligations under finance leases -308 -747

Other -722 -18 286 (2)

Currency result -1 165 -3 210

Net cash flow from financing activities 12 548 -71 972

Impact of cumulative translation adjustments and hedging -1 273 -147

Change in cash and cash equivalents 2 593 -46 951

Cash and cash equivalents at the beginning of the year 16 596 89 261

Cash and cash equivalents at the end of the year 1.1 19 189 42 310

(1) Including discontinued operations(2) Cash settlement of interest rate collar, see also paragraph 2.20. Financial instruments.


1.4. Consolidated statement of changes in equity | In thousands of eurosSh

are

capi

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Rese

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Other reserves

Equi

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Balance at 1 January 2017

46 000 151 708 2 344 76 -334 -10 609 189 186 189 186 1.1

Group profit (loss) 12 063 12 063 12 063 1.2.1

Hedging 688 688 688 1.2.3

Currency translation adjustments

-1 114 -1 114 -1 114 1.2.3

Remeasurement of defined benefit obligation

61 61 61 1.2.3

Deferred tax -20 -234 -254 -254

Total comprehensive income for the period

12 063 -1 114 40 454 11 444 11 444 1.2.3

Payment of dividends -10 483 -10 483 -10 483

Purchase of treasury sharesElimination of treasury shares purchased

Balance at 30 June 2017 46 000 153 287 1 230 76 -294 -10 154 190 146 190 146 1.1


Shar

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Rese

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Other reserves

Equi

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Non

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Balance at 1 January 2016

46 000 135 825 2 294 76 -174 -581 -9 483 173 957 173 957

Group profit (loss) 13 903 13 903 13 903 1.2.1

Hedging -2 364 -2 364 -2 364 1.2.3

Currency translation adjustments

-559 -559 -559 1.2.3

Remeasurement of defined benefit obligation

-55 -55 -55 1.2.3

Deferred tax 18 803 822 822

Total comprehensive income for the period

13 903 -559 -36 -1 560 11 747 11 747

Payment of dividends -9 494 -9 494 -9 494

Elimination of treasury shares purchased

-581 581

Balance at 30 June 2016 46 000 139 653 1 735 76 -211 -11 043 176 211 176 211


2. Notes to the consolidated financial statements

2.1. Application of new and revised International Financial Reporting Standards (IFRSs)

In the current year, the Group has adopted all of the new and revised Standards and Interpretations issued by the International Accounting Standards Board (the IASB) and the International Financial Reporting Interpretations Committee (the IFRIC) of the IASB that are relevant to its operations and effective for annual reporting periods beginning on 1 January 2017, all of which were endorsed by the European Union.

Standards and interpretations applicable for the annual period beginning on 1 January 2017

- Annual improvements to IFRS Standards 2014-2016 Cycle: Amendments to IFRS 12 (applicable for annual periods beginning on or after 1 January 2017, but not yet endorsed by the EU)

- Amendments to IAS 7 Statement of Cash Flows - Disclosure

Initiative (applicable for annual periods beginning on or after 1 January 2017, but not yet endorsed by the EU)

- Amendments to IAS 12 Income Taxes - Recognition of

Deferred Tax Assets for Unrealised Losses (applicable for annual periods beginning on or after 1 January 2017, but not yet endorsed by the EU)

The mandatory application of all amendments to or improvements of standards and interpretations listed above did not give rise to any major effects on the Group’s financial position and financial performance.

Standards and interpretations published, but not yet applicable for the annual period beginning on 1 January 2017

- Annual improvements to IFRS Standards 2014-2016 Cycle: Amendments to IFRS 1 and IAS 28 (applicable for annual periods beginning on or after 1 January 2018, but not yet endorsed in the EU)

- IFRS 9 Financial Instruments and subsequent amendments (applicable for annual periods beginning on or after 1 January 2018)

- IFRS 15 Revenue from Contracts with Customers

(applicable for annual periods beginning on or after 1 January 2018)

- IFRS 16 Leases (applicable for annual periods beginning on or after 1 January 2019, but not yet endorsed in the EU)

- Amendments to IAS 40 Transfers of Investment Property

(applicable for annual periods beginning on or after 1 January 2018, but not yet endorsed in the EU)

- IFRIC 22 Foreign Currency Transactions and Advance

Consideration (applicable for annual periods beginning on or after 1 January 2018, but not yet endorsed in the EU)

- IFRIC 23 Uncertainty over Income Tax Treatments (applicable for annual periods beginning on or after 1 January 2019, but not yet endorsed in the EU)


IFRS 15 Revenue from contracts with customers

IFRS 15 is the new revenue standard and will supersede all current revenue recognition requirements under IFRS. It consists of a five-step model to account for revenue arising from contracts with customers.

During 2017 the company started a detailed assessment of the impact of IFRS 15. Based on a top-down risk assessment the impact of this new standard is expected to be very limited for the Sioen Industries Group, as the Sioen Industries Group is an industrial group whose performance obligations according to IFRS 15 are mainly limited to the delivery of goods. As such there is no major impact expected compared to the current IAS 18 standard on revenues.

For the IFRS 15 top-down assessment we have made a distinction between the following revenue streams: industry/distributors, retail and business to government/tenders across the different divisions. For each of these different revenue streams we have identified some IFRS 15 attention points (like rebates & discounts, considerations payables to retailers, customer specific contracts, …).

For rebates & discounts (which are mainly applicable to our industry/distributor and retail revenue streams) the allocation to the correct reporting period is assured by the set-up of our software applications. Even within the business to government/tenders revenue stream the impact of IFRS 15 is very limited as the performance obligation in a tender is in most cases also limited to the one-time delivery of goods. There are some multi-year governmental contracts, which will be further analyzed in the second half year of 2017 on a case-by-case basis for IFRS 15 impact, but also here no significant impact on the Group’s consolidated financial result or position.

It is expected that the other standards and interpretations, not yet applicable, will have no significant impact on the Group’s consolidated financial result or position.


2.2. Reporting entity

The consolidated interim financial statements of Sioen Industries NV (the ‘Company’) include the financial statements of the Company and its subsidiaries (together referred to as the ‘Group’).

The consolidated interim financial statements give a general overview of the Group’s activities and the results obtained. They give an accurate picture of the entity’s financial position, financial performance and cash flow, and are drawn up on a going concern basis.

The consolidated interim financial statements are stated in thousands of euros, unless stated otherwise, as the euro is the currency of the primary economic environment in which the Group is active. The financial statements of foreign participations are converted in accordance with the principles described in the section ‘Foreign currencies’ of the annual report 2016.

2.3. Statement of compliance with IFRs

These interim consolidated financial statements are for the six months ended 30 June 2017. They have been prepared in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting.

The interim consolidated financial statements do not include all of the information required in annual financial statements in accordance with IFRS, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2016.

2.4. Significant accounting policies

These consolidated interim financial statements have been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year ended 31 December 2016.

The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these consolidated interim financial statements.


2.5. Seasonality of interim operations

The consolidated income statement of the Group reflects the seasonal nature of the activities, more than half of the annual results are generated in the first half of the year. Future results will depend on developments in the market for technical textiles. Adverse changes in the economic environment, customer investment cycles, major developments in production and market acceptance of new applications in this market can influence this market and as a consequence the results of the Group.

2.6. Significant events and transactions

The Group’s management believes that the Group is well positioned in the current economic circumstances.

Overall, the Group is in a strong position and has sufficient capital and liquidity to service its operating activities and debt. The Group’s objectives and policies for managing capital, credit risk and liquidity risk are described in its recent annual financial statements.

2.7. Assessment criteria in the application of the valuation rules

In the application of the valuation rules, in certain cases an accounting assessment must be made. This assessment is done by making the most accurate assessment possible of uncertain future evolutions. The management determines its assessment on the basis of different realistically assessed parameters, such as future market expectations, sector growth rates, industry studies, economic realities, budgets and multi-year plans, expected profitability studies, etc. The most important elements within the Group that are subject to this are: impairments, provisions and deferred tax items.

Impairment test for the six months ended 30 June 2017

In order to provide the stakeholders with in-depth knowledge as to the financial strength of the Group, we reassessed the recoverable amount of goodwill for each of the cash-generating units.

Key assumptions related to all divisions of the Group, as described in our annual report of 2016, are still valid and review based on the latest developments did not result in any adverse changes. There are no impairment indicators during the first half of the year.


2.8. Segment information | in thousand of euros

Operating segments are reported in a way consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker has been identified as the Board of Directors.

In 2017 the operating segments have not changed. We refer to section ‘Group structure’. The Group operates in following main business segments: coating, apparel and chemicals. These divisions are the basis on which the Group reports its segment information. The principal products and services of each of these divisions are described in the annual report of 2016.

Segment revenues and results:

Coating Apparel Chemicals Other Total Note

Six months ended 30 June 2017Revenue from external customers 151 755 62 708 23 189 237 653 1.2.1Intersegment revenues 2 114 33 5 555Segment operating result 18 040 2 283 3 936 918 25 178

Six months ended 30 June 2016Revenue from external customers 112 273 45 888 22 094 180 255 1.2.1Intersegment revenues 2 172 69 5 295Segment operating result 17 379 5 065 4 230 193 26 867

Intersegment sales are undertaken at prevailing market conditions.


Six months ended 30 June 2016 Note

Segment operating result 25 178 26 867Reconciling items:Elimination of intersegment results -2 053 -738

Operating result 23 125 26 129 1.2.2Financial charges -5 078 -5 290 1.2.2Financial income 674 585 1.2.2Profit (loss) before tax 18 721 21 425 1.2.2


Segment assets and liabilities:

Coating Apparel Chemicals OtherUnallocated/eliminations

Total Note

Six months ended 30 June 2017Segment assets 301 478 125 475 33 659 6 576 -5 284 461 903 1.1Segment liabilities 256 516 100 727 21 108 39 241 -145 834 271 758 1.1

Year ended 31 December 2016Segment assets 228 030 112 560 28 810 6 977 -7 971 368 406 1.1Segment liabilities 167 799 86 654 16 786 40 551 -132 570 179 227 1.1

The segment liabilities, including the centrally contracted financial debt, have been allocated according the capital employed by the segment. The assets and liabilities of the head office (Group) have been allocated to the segments as good as possible. Unallocated assets or liabilities are head office assets/liabilities which have not been allocated to the segments.

Information about major customers:

There is no reliance on a limited number of customers and there are no revenues from transactions with a single external customer amounting to 10% or more of the total Group revenues.

Other segment information:

Coating Apparel Chemicals Other Head office Total Note

Six months ended 30 June 2017Depreciation and amortisation

6 977 2 349 490 92 429 10 337 1.2.2

Additions to non-current assets

34 923 11 550 156 695 47 324

Six months ended 30 June 2016Depreciation and amortisation

5 234 772 721 92 531 7 350 1.2.2

Additions to non-current assets

2 848 590 193 546 4 177


2.9. Exchange rates

Code Rate 30 June 2017 31 December 2016 30 June 2016

EUR average 1.0000 1.0000 1.0000closing 1.0000 1.0000 1.0000

USD average 1.0934 1.1032 1.1142closing 1.1412 1.0541 1.1102

GBP average 0.8612 0.8227 0.7850closing 0.8793 0.8561 0.8265

RMB average 7.4934 7.3416 7.2955closing 7.7387 7.3201 7.3757

PLN average 4.2474 4.3745 4.3785closing 4.2258 4.4103 4.4362

TND average 2.5875 2.3824 2.3051closing 2.7754 2.4301 2.4380

UAH average 29.1206 28.4010 28.5063closing 29.5247 28.5470 27.5103

AUD average 1.4420 1.4852closing 1.4851 1.4596

SEK average 9.5960 9.4715closing 9.6395 9.5529


2.10. Income taxes relating to continuing operations | in thousands of euros

Note Six months ended

30 June 2017 Six months ended

30 June 2016

Profit (loss) before taxes 1.2.1 18 721 21 425

Income tax expense calculated at theoretical tax rate (1) 5 975 31.9% 7 155 33.4%

Tax impact of:effect of expenses that are not deductible in determining taxable profit (2) 319 1.7% 464 2.2%

effect of revenue under favourable tax regime (3) - 182 -1.0% - 41 -0.2%

withholding taxes 149 0.8% 154 0.7%movement on deferred tax assets not recognized

- 218 -1.2% - 39 -0.2%

tax assets recognized on previously not recognized losses

- 40 -0.2%

adjustments recognized in current year in relation to the tax of prior years

54 0.3% 4 0.0%

notional interest deduction - 123 -0.7% - 152 -0.7%changes in tax rate - 49 -0.2%new valuation allowance on previously recognized deferred tax assets

571 3.1%

Income tax expense recognized in profit or loss

1.2.1 6 545 35.0% 7 456 34.8%

(1) Weighted average tax rate(2) Mainly disallowed expenses in Belgium(3) Corporate income tax rates of 10% or lower are considered as favourable tax regimes


2.11. Discontinued operations | in thousands of euros

In 2017, no discontinued operations are included anymore. For 30 June 2016, the income statement from discontinued operations consisted of costs related to the ‘specialized automotive foils in small batches’ business.

Note Six months ended 30 June 2016

Profit (loss) for the period from discontinued operationsNet salesOther operating income 68Expenses -12

Profit (loss) before tax 56

Attributable income tax -122

Profit (loss) for the period from discontinued operations 1.2.1 -66

Cash flows from discontinued operationsNet cash flow from operating activities -12Net cash flow from investing activitiesNet cash flow from financing activities

Net cash flow -12


2.12. Debt and equity securities

There were no insurances, repurchases and repayments of equity securities for the six months ended 30 June 2017.

2.13. Dividends

The Board of Directors does not propose to pay an interim dividend for the six months ended 30 June 2017.

2.14. Property, plant and equipment

During the reporting period, the Group invested for approximately EUR 4.7 million on assets compared to EUR 3.7 million over the same period ended 30 June 2016. Investments in 2017 and 2016 mainly related to machinery in the coating division.

The net value of assets sold and disposed in 2017 was minor, compared to a net value of EUR 0.2 million over the same period of last year.

An impairment analysis has been done at the end of June 2017 (see ‘impairment test’ review).

At 30 June 2017, the Group had contractual commitments for the acquisition of property, plant & equipment for a total amount of EUR 6.0 million.


2.15. Inventories | in thousands of euros

Gross inventory Note 30 June 2017 31 December 2016

Raw materials 34 765 21 248Consumables 577 251Work in progress 7 129 5 406Finished goods 89 519 88 063Goods in transit 3 712 5 035

135 702 120 003

Amounts written off Note 30 June 2017 31 December 2016

Amounts written off raw materials -3 063 -2 527Amounts written off consumablesAmounts written off work in progressAmounts written off finished goods -3 194 -3 003Amounts written off goods in transit

-6 257 -5 530

Net inventory Note 30 June 2017 31 December 2016

Raw materials 31 702 18 721Consumables 577 251Work in progress 7 129 5 406Finished goods 86 325 85 060Goods in transit 3 712 5 035

1.1 129 445 114 473


Amounts written of inventory 31 December 2016 Writedown Reversal

Exchange rate

differences

(Other) movements

or adjustments 30 June 2017

5 530 985 -162 -96 6 257

Amounts written of inventory 31 December 2015 Writedown Reversal

Exchange rate

differences

(Other) movements

or adjustments 31 December 2016

6 726 578 -1 806 32 5 530

Gross inventories (excl. write-off) increased by EUR 15.7 million or 13.1%, mainly due to the acquisitions.

Obsolescence reserves on inventories increased compared to 31 December 2016 and amount to EUR 6.3 million at the end of the reporting period compared with EUR 5.5 million at the end of 2016. Obsolescence reserves are recorded on the basis of a detailed aging and rotation analysis per unit.


2.16. Provisions | in thousands of euros

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269 -27 243

Provisions for other liabilities and charges

2 152 11 -1 104 -44 1 015

Total provisions 2 421 11 -1 131 -44 1 257

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188 54


969 46

Total provisions 1 157 100 1.1


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353 81 -164 -1 269


2 063 1 095 -521 -504 2 16 2 152

Total provisions 2 416 1 176 -685 -506 2 16 2 421

More than one year Within one year


188 81


2 043 109

Total provisions 2 231 190 1.1

The carrying amount of the provisions reflects the net present value of future liabilities discounted at the weighted average cost of capital, applicable for the operating unit.

The provisions for environmental issues consist of a provision relating to the sanitation of land in the coating division. The risks were identified during the periodical environmental check-up of the sites.

The provisions for other liabilities and charges mainly relate to a provision for property taxes.

The most significant movement in 2017 is the reduction arising from the payment of restructuring provisions.


2.17. Borrowings

Long-term

The Sioen Industries Group is financed by two long term bank loans:

- A EUR 50.0 million bullet loan which is due on 20 April 2026 with a fixed interest rate.

- A EUR 15.5 million instalment loan, which has to be repaid via twenty bi-annual instalments (10 year loan with last instalment on 29 March 2026) with a EURIBOR based variable interest rate. The non-current part of this loan at 30 June 2017 is EUR 12.4 million.

Next to those, Manifattura Fontana SPA in Italy (acquired in 2016) holds multiple external loan agreements which expire gradually in the coming years. The Group intends to phase out these local loans. On 30 June 2017, the long term part of these local loans was EUR 2.0 million.

The Group is subject to financial covenants on its EUR 50 million and EUR 15.5 million bank loans: the total net leverage (ratio of the Net Financial Debt at the end of a period to the EBITDA on continuing operations over that period) may not exceed 3.50. In case there would be a breach of the financial covenants, a twelve month remediation period is applicable. Apart from these financial covenants, no other material covenants apply, except for general terms and conditions applicable to general finance agreements in Belgium.

Short-term

As per 30 June 2017, short-term loans amounted to EUR 95.4 million:

- Straight loans in USD and EUR amounted to USD 1.7 million and EUR 90.0 million respectively, with a weighted average interest rate of 0.39%.

- Manifattura Fontana SPA in Italy (see also above paragraph on long term loans) has a EUR 0.5 million short term credit facility (backed by trade receivables) and a EUR 0.4 million short term portion of long term debts

- The Ursuit Group in Finland (also acquired in 2016) has EUR 1.4 million short term loans

- The current part of the EUR 15.5 million instalment loan: EUR 1.55 million

As per 31 December 2016, short-term loans amounted to EUR 23.7 million:

- Straight loans in USD and EUR amounted to USD 0.9 million and EUR 17.0 million respectively, with a weighted average interest rate of 0.39%.

- Manifattura Fontana SPA in Italy had a EUR 2.0 million short term credit facility (backed by trade receivables) and a EUR 1.1 million short term portion of long term debts

- The Ursuit Group in Finland has EUR 1.1 million short term loans

- The current part of the EUR 15.5 million instalment loan: EUR 1.55 million


2.18. Obligations under finance leases

There were no new commitments for the acquisition of intangibles and property, plant and equipment at the end of the reporting period.

2.19. Share capital & shareholder structure

On 30 June 2017, the share capital amounted to EUR 46 million, represented by 19 779 933 shares.

Ownership of the Company's shares was as follows:

Notifying partyDate of

notificationNumber

of shares

% of total number

of shares

Sihold NV (1) and companies/parties under the influence of the family Sioen

7 March 2014 12 906 212 65.25%

Total 1.2.1 12 906 212 65.25%

(1) Sihold NV is controlled by Sicorp NV, which is controlled in turn by the Dutch foundation Stichting Administratiekantoor Midapa. This foundation is controlled by Mrs. Sioen.

There were no movements in the issued capital of the Company in either current or the prior interim reporting periods.


2.20. Financial instruments | in thousands of euros

30 June 2017 31 December 2016Fair value hierarchy

Nominal value Fair value Nominal value Fair value

FX derivatives 6 826 (1) - 297 30 947 (1) 394 2Interest rate swaps 65 500 - 513 65 500 - 219 2

Nominal value (1) Fair value Nominal value (1) Fair value

Finance leases 5 338 6 282 6 690 3Bank loans 159 803 159 750 90 122 3

Total 165 142 166 032 96 812

Financial risk management

The Group manages a portfolio of derivatives to hedge against risks relating to exchange rate and interest rate positions arising as a result of operating and financial activities. It is the Group’s policy to avoid engaging in speculative transactions or transactions with a leverage effect and not to hold derivatives for trading purposes.

Fair value

Financial instruments are recognized at fair value. The fair value is determined based on one of the following levels of the fair value hierarchy:

- Level 1: measurement is based on quoted market prices in active markets

- Level 2: measurement is based on (externally) observable information, either directly or indirectly

- Level 3: measurement is based either fully or partially on not (externally) observable information

Non-derivative financial liabilities

The fair value of non-derivate financial liabilities is calculated based on commonly-used valuation techniques (i.e. net present value of future principal amounts and interest charges discounted at market rate). These are based on

market inputs from reliable financial information providers. Fair values determined by reference to prices provided by reliable financial information providers are periodically checked for consistency against other pricing sources.

Interest risk management

On 21 April 2011, the Group entered into a cash flow hedge to hedge, within certain limits, the interest rate risk on highly probable future debt to be issued in March 2016 for a term of 10 years, for a principal amount of EUR 50 million. For this purpose, the Group entered into a forward starting interest rate collar for a nominal amount of EUR 50 million. A collar is a derivative financial instrument by which the buyer of the instrument receives / executes payments at the end of the reference period in which the interest rate evolves out of the agreed upon borders (upper and lower border / tunnel. The forward starting interest rate collar was settled in cash on 14 March 2016 (EUR 18.1 million, which represents the fair value of the forward starting interest rate collar on that date). The effective part of the loss on the derivative will be amortized to profit or loss over the term of the hedged debt (ie. over a term of 10 years).


The fair value of the forward starting collar as of 31 December 2015 was EUR -15.4 million and changed to EUR -18.1 million (gross of tax) on the settlement date (14 March 2016).

The effective part of the total change in fair value of the derivative until the settlement date (14 March 2016), of EUR 1.7 million (net of tax), was recognized in other comprehensive income (cash flow hedge reserve). On the settlement date the total effective part of the loss on the derivative (recognized in other comprehensive income) was EUR 11.2 million (net of taxes):

- EUR 17.0 million gross of taxes

- EUR - 5.8 million tax effect

The amount gross of taxes will be expensed via financial charges over the term of the hedged debt (i.e. over a 10 year period starting from 20 April 2016, the starting date of the new EUR 50 million loan). The amount of financial charges which was transferred from other comprehensive income to profit and loss during the first half of 2017 was EUR 0.7 million (cost).

To hedge its interest rate risks and to take advantage of the current market interest rates, the group entered into new interest rate derivatives together with the new loan agreements:

- Interest Rate Swap (IRS) on the new EUR 50 million bullet loan to change the contractual fixed interest rate to a variable interest rate with a floor of 0% and a cap of 2.5%

- Interest Rate Swap (IRS) on the new EUR 15.5 million instalment loan to change the contractual variable interest rate to a fixed interest rate. The nominal amount of the IRS is decreasing in line with the loan agreement.

At 30 June 2017, the fair value of these interest rate swaps was EUR -513 307 (fair value through profit & loss). This fair value is determined by Sioen on a quarterly basis, based on market value reports delivered by the issuing financial institute.

2.21. Related party transactions | in thousands of euros

Nature of transaction Six months ended 30 June 2017 Six months ended 30 June 2016

Inch Sale 250 144Verba Purchase 59

These transactions consist of commercial transactions and are done on an ‘at arm’s length’ basis.

Other transactions with related parties, other than Directors, are not included given, the negligible amount (under EUR 25 000).


2.22. Acquisitions and disposal of subsidiaries | in thousands of euros

2017

Verseidag Ballistic Protection

On 19 December 2016, the Group announced the acquisition of Verseidag Ballistic Protection OY, a Finnish manufacturer of ballistic protection.

Sioen Industries acquired 100% of the shares in Verseidag Ballistic Protection OY.

Operating under the motto “Life-saving design” Verseidag Ballistic Protection is a fully integrated manufacturer of armour products (a full range of vests, both overt and covert, tactical vests, EOD suits and shields). Verseidag Ballistic Protection OY has manufacturing facilities in Finland and sales forces in Finland, Germany and the UK. The key to their success and good reputation is based on continuous product development, adoption of the highest quality standards and customized solutions. Through this acquisition Sioen Armour Technology and Verseidag Ballistic Protection will become one of the leading companies on the European market offering a wide range of ballistic solutions to their customers.

The agreed upon pricing formula contained a specific clause regarding the financial position as at 31 December 2016. Depending on the outcome, the transaction could be reconsidered. As a consequence, the Verseidag figures are included in the figures of the Sioen Group as from 1 January 2017 onwards.


The following table summarizes the consideration paid and the amounts of assets and liabilities at the acquisition date:

Verseidag Ballistic Protection

Intangible assets 2 836

Property, plant and equipment 215

Total non-current assets 3 051

Inventories 4 023

Trade receivables 3 478

Other current assets 181

Cash and cash equivalents 54

Total current assets 7 736

Borrowings 333

Deferred tax liabilities 633

Total non-current liabilities 966

Trade and other payables 1 780

Borrowings 337

Other current liabilities 766

Total current liabilities 2 884

Total net assets acquired 6 937

Consideration (paid in cash) 18 000

Total acquisition cost 18 000

Goodwill 11 063

Direct costs attributable to the acquisition amount to EUR 36 thousand at the end of June 2017. They have been included in the line item services and other goods in the income statement by nature and in administrative expenses in the income statement by function. Accounting for the acquisition is not yet complete.

Until June 2017, Verseidag has contributed 6 months of net sales and EBITDA: EUR 11.5 million to the total net sales of the Group, contributing to the net result (EUR 1.8 million EBITDA).


2017

UCS

On 9 January 2017, the Group announced the acquisition of U.V. Curable Systems BVBA, a company active in the development, production and sale of radiation curing primers, inks and varnishes for industrial applications. Radiation curing is a process of chemical ‘drying’ under the influence of light. This is a promising and future oriented technology as the markets evolve more and more to inks, primers and varnishes without solvents.

Sioen Industries acquired 100% of the shares in U.V. Curable Systems BVBA.

The final share purchase agreement was signed on 9 January 2017 (date on which effective control was transferred). As a consequence, the UCS figures are included in the figures of the Sioen Group as from 1 January 2017 onwards.



UCS


Property, plant and equipment 29


Inventories 191

Trade receivables 114


Cash and cash equivalents 38

Total current assets 346

Borrowings 15

Deferred tax liabilities 395

Total non-current liabilities 409

Trade and other payables 88

Borrowings 131


Total current liabilities 236

Total net assets acquired 892

Upfront consideration (paid in cash) 642

Fair value variable deferred consideration 250

Total acquisition cost 892

Accounting for the acquisition is complete.

Until June 2017, UCS has contributed 6 months of net sales and EBITDA: EUR 0.4 million to the total net sales of the Group, contributing to the net result (EUR 0.1 million EBITDA).


2017

James Dewhurst Group

On 23 May 2017, the Group announced the acquisition of the James Dewhurst Group. James Dewhurst is a leading manufacturer of technical textiles and Europe’s largest producer of open construction laid scrims with production facilities both in the UK and the US.

Sioen Industries acquired 100% of the shares of the James Dewhurst Group. The activities of the James Dewhurst Group are concentrated in two operating companies: James Dewhurst Ltd. in the UK and Dewtex in the US(1).

James Dewhurst Group has successfully developed a proprietary manufacturing technology that allowed it to establish a market leading position in the supply of open construction laid scrims. With this acquisition Veranneman Technical Textiles, a division of Sioen Industries, reinforces its position in the market of the reinforcement textiles and completes its product range. The new configuration can offer a full range of woven, laid and laminate scrims and fabrics.

The James Dewhurst Group figures are included in the figures of the Sioen Group as from 1 June 2017 onwards.

(1) Sioen Industries holds the shares in James Dewhurst Ltd. via holding companies Jade Equity Ltd., Emerald Bond Ltd. and Jade Mezzanine Ltd. There is also one dormant subsidiary: James Dewhurst Trustees Ltd.


The following table summarizes the consideration paid and the amounts of assets and liabilities (before fair value assessments) at the acquisition date:

James Dewhurst Group

Property, plant and equipment 9 450

Deferred tax assets 454


Inventories 7 313



Cash and cash equivalents 1 170


Borrowings 40 662

Total non-current liabilities 40 662


Borrowings 2 205

Other current liabilities 1 616


Total net assets acquired -21 370

Consideration (paid in cash) 9 702


Goodwill before purchase price allocation 31 072

Direct costs attributable to the acquisition amount to EUR 0.3 million at the end of June 2017. They have been included in the line item services and other goods in the income statement by nature and in administrative expenses in the income statement by function. Accounting for the acquisition is not yet complete.

Until June 2017, James Dewhurst has contributed 1 month of net sales and EBITDA: EUR 4.2 million to the total net sales of the Group, contributing to the net result (EUR 0.5 million EBITDA).

If the acquisition had taken place at the beginning of the year, the total net sales would have been EUR 24.2 million and the EBITDA for the period would have been EUR 3.9 million.

Disposals

There were no disposals during the first half of 2017.


2016

Fontana

On 4 March 2016, Sioen announced the acquistion of Manifattura Fontana S.p.A., an Italian producer of geotextile non-wovens, serving the European civil engineering market.

In a first phase, Sioen Industries Group acquired 90% of the shares. The other 10% of shares are under escrow and will be acquired by means of a variable deferred cash consideration in 2021, which is capped at EUR 1.5 million. As the transfer of 10% of the shares is irrevocable, a 100% participation in Manifattura Fontana S.p.A. was recognized in the consolidated figures. The variable deferred cash consideration is reflected as a liability in the consolidated statement of financial position.

The acquisition is consistent with the Group strategy, aimed at technology driven, sustainable and profitable growth:

It opens a new and promising market: geosynthetics. This market is driven by the growing global demand for improved infrastructure.

It provides the Group with improved access to (for the Group) new geographical markets.

It contributes to Sioen Industries Group, being an integrated solutions provider for technical textiles, and reinforces its system of vertical integration, where each activity reinforces the other.

It enables the Group to realize growth in turnover and margin.

The final share purchase agreement was signed on 1 April 2016 (date on which effective control was transferred). As a consequence, the Fontana figures are included in the figures of the Sioen Group as from 1 April 2016 onwards.

Manifattura Fontana S.p.A. has a 48% participation in Fontana International GmbH (located in Austria). The remaining 52% of the shares of Fontana International (previously owned by different minority shareholders) were also purchased in the framework of this transaction. As a consequence, Sioen Industries obtained a 100% participation in Fontana International.

We considered the purchases of the shares of Manifattura Fontana and Fontana International as one business (hereafter called ‘Fontana’).



Fontana


Property, plant and equipment 7 348

Other long term assets 298


Inventories 1 706



Cash and cash equivalents 1 027


Borrowings 4 323

Provisions 16

Retirement benefit obligation 855

Deferred tax liabilities 1 021



Borrowings 2 485




Upfront consideration (paid in cash) 4 128

Fair value variable deferred consideration 1 219


Direct costs attributable to the acquisition amounted to EUR 0.1 million at the end of June 2016. They have been included in the line item services and other goods in the income statement by nature and in administrative expenses in the income statement by function. Accounting for the acquisition was not yet complete at 30 June 2016.

Until June 2016, Fontana had contributed 3 months of net sales and EBITDA: EUR 4.7 million to the total net sales of the Group, contributing to the net result (EUR 0.3 million EBITDA).

If the acquisition had taken place at the beginning of the year, the total net sales would have been EUR 8.3 million and the EBITDA as per 30 June 2016 would have been EUR 0.4 million.


2016

Dimension-Polyant

On 28 July 2016, the Group announced the acquisition of Dimension-Polyant, the world market leader in sail cloth.

Sioen Industries acquired 100% of the shares in Dimension-Polyant GmbH. Dimension-Polyant GmbH has 4 fully owned subsidiaries:

- Dimension-Polyant Inc. (US)

- Dimension-Polyant Sailcloth PTY Ltd. (Australia)

- Dimension-Polyant SAS (France)

- Dimension-Polyant (UK) Ltd. (UK)

Dimension-Polyant, established in 1966, is the world market leader in sailcloth manufacturing with a global market share of more than 40%. Being the only vertically integrated manufacturer in the world (weaving, finishing and laminating), the company is in a unique position to deliver solid growth in its core business while continuing to expand in the field of diversified technical fabrics. Sioen Industries and Dimension-Polyant have complementary technologies and will, by sharing know-how, create future synergies.

As per 30 June 2016, the Sioen Group did not have control over this company yet, as a consequence, the Dimension-Polyant Group figures have not been recognized in the June 2016 consolidated financial statements of the Sioen Group. The Dimension-Polyant Group figures were included in the figures of the Sioen Group as from 1 August 2016 onwards.



Dimension-Polyant

Intangible assets 5 189Property, plant and equipment 24 216Other long term assets 14


Inventories 13 376Trade receivables 4 495Other current assets -2 737Cash and cash equivalents 4 455


Retirement benefit obligation 915Deferred tax liabilities 6 107


Trade and other payables 2 402Other current liabilities 2 724



Consideration (paid in cash) 39 528Total acquisition cost 39 528Goodwill 2 668


2016

Ursuit

On 7 December 2016, the Group announced the acquisition of the Ursuit Group, a Finnish manufacturer of dry suits for diving, fishing and professional use in an extreme environment.

Sioen Industries acquired 100% of the shares in Ursuk OY. Ursuk OY has 4 fully owned subsidiaries:

- Kiinteistö Oy Turun Teijonkatu 3 (Finland)

- SG Balticum AS (Estonia)

- SG Investments OÜ (Estonia)

- Arctic Diving AB (Sweden)

and 2 equity accounted companies:

- Tampereen sukelluskeskus OY (Finland)

- Oulun sukelluskeskus OY (Finland. In view of the limited organisational structure of this company, Sioen decided to consolidate this company via the equity method. The impact on the consolidated financial statements is immaterial.)

Ursuk OY (operating under the brand name Ursuit) is active in the development, design, production, marketing and distribution of state of the art dry suits for diving, fishing and professional use in an extreme environment. Ursuit has, amongst those professional users, an outstanding reputation for quality and durability. Their drive and passion for quality and technical advanced solutions have earned them a place amongst the market leaders in this field.

This agreement offers Sioen the opportunity to enter the Scandinavian market with a professional and experienced team to promote the Sioen portfolio of products.

As per 30 June 2016, the Sioen Group did not have control over this company yet, as a consequence, the Ursuit Group figures have not been recognized in the June 2016 consolidated financial statements of the Sioen Group. The Ursuit figures were included in the figures of the Sioen Group as from 31 December 2016 onwards (statement of the financial position as per 31 December 2016 included, no impact on the income statement of 2016).



Ursuit

Intangible assets 12 399Goodwill 350Property, plant and equipment 4 328Interests in associates 63Other long term assets 78


Inventories 3 487Trade receivables 2 485Other current assets 239Cash and cash equivalents 817


Borrowings 1 210Other non-current liabilities 117Deferred tax liabilities 2 748


Trade and other payables 592Borrowings 1 106Other current liabilities 1 091



Consideration (paid in cash) 25 855Total acquisition cost 25 855Goodwill 8 475

Direct costs attributable to the acquisition amount to EUR 47 thousand at the end of June 2017. They have been included in the line item services and other goods in the income statement by nature and in administrative expenses in the income statement by function.

Disposals

There were no disposals during the first half of 2016.


2.23. Events after reporting date

No subsequent events occurred which could have a significant impact on the consolidated financial statements of the Group, for the period ended 30 June 2017.

2.24. Contigent assets and liabilities

There were no significant changes in the contingencies of the Company and its subsidiaries from those described above and those disclosed in the consolidated financial statements of the Group for the year ended 31 December 2016.

2.25. Financial risk management

The Group is exposed to risks related to interest rate, exchange rate and market price fluctuations, having an impact on the Group’s assets and liabilities. The goal of the Group’s financial risk management is to limit the impact of these risks related to its operational and financial activities.

The financial risk management objectives and policies are consistent with those disclosed in

the consolidated financial statements as at and for the year ended 31 December 2016.


2.26. Staff

Country 30 June 2017 31 December 2016

Indonesia 1 032 1 090Belgium 904 892Myanmar 695 256Tunisia 448 438Romania 316 300UK 197 9France 174 169US 112 38Germany 110 106Finland 110 71Estonia 95 102Italy 49 44Portugal 16 16China 14 14Ireland 14 14Austria 4 3Australia 3 5The Netherlands 3 4Dubai 3 4Spain 1 1Sweden 1 1Ukraine 1 1

Total 4 302 3 578

Blue collar 3 336 2 400White collar 966 1 178

Total 4 302 3 578


2.27. Approval of interim financial statements

These interim consolidated financial statements have been approved for issue by the Board of Directors on 25 August 2017.

We hereby confirm, to the best of our knowledge, that the consolidated interim financial statements give a true and fair view of the financial position of the Group as at 30 June 2017, as well as of the financial performance and cash flows for the said period, fully in compliance with the accounting standards adopted for use in the EU for interim financial statements (EU adopted IAS 34, Interim Financial Reporting);

M.J.S. Consulting BVBA, represented by Mrs. M. Sioen, CEO Asceca Consulting BVBA, represented by Mr. G. Asselman, CFO


Gross margin % (Net sales ± changes in stocks and WIP – raw materials and consumables used)/Net sales

EBITDA Earnings Before Interest, Taxes, Depreciation and Amortization = Operating result + depreciation + amortization + write off inventories and receivables + provisions for liabilities and charges

EBIT Earnings Before Interest and Taxes = Operating result

Recurring EBIT EBIT without non-recurring result

Recurring EBITDA EBITDA without non-recurring result

EBT Earnings Before Taxes

EAT Earnings After Taxes

NOPAT EBIT - Taxes

EVA NOPAT - cost of capital at start of the period

ROCE NOPAT/Capital employed of the period

Net cash flow Profit (loss) after taxes + depreciation + amortization + write off inventories and receivables + provisions for liabilities and charges

Free operating CF Funds from operating activities - funds from investing activities

Working capital Interests in associates + current assets (minus other financial assets, cash and cash equivalents) – non-financial debt up to one year - accrued charges and deferred income

Capital employed Working capital + intangible assets + goodwill + property, plant and equipment + investment property

Alternative performance measures (APM’s, non-GAAP measures) do not have a standardized meaning prescribed by GAAP and therefore may not be comparable to similar measures presented by other entities.

Definitions


Total

Restructuring components

included in ‘Remuneration,

social security and pensions’

Restructuring components

included in ‘Provisions for

liabilities and charges’

Acquisition costs Recurring


(Recurring) EBIT 23 125 1 078 -1 131 427 23 499

Depreciations 10 337 10 337

Write off inventories and receivables 713 713

Provisions for liabilities and charges -1 120 1 131 11

(Recurring) EBITDA 33 055 1 078 427 34 560


(Recurring) EBIT 26 185 552 -490 26 247

Depreciations 7 323 7 323

Write off inventories and receivables -1 175 -1 175

Provisions for liabilities and charges -650 490 -160

(Recurring) EBITDA 31 683 552 32 235

Reconciliations


SIOEN Fabriekstraat 23B-8850 Ardooie BelgiumBTW BE 0441.642.780RPR Gent, division Brugge

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