Recticel : Annual Report 2020 - Full version (spreads) PDF - 6.53 MB

Transforming the future

2020

annual report

Committed to sustainability

Over the lifetime of their use, the insulation products we sold in 2020 will offset 46 times our carbon footprint for the year.

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Sustainable Innovation

Plan (2025 objectives)

CLIMATE ACTION PLAN

CLIMATE-POSITIVE	RECTICEL CARBON	CARBON INTENSITY
MULTIPLE	FOOTPRINT	-25%
75	-40%
(ratio between avoided	in 2030 (scope 1, 2, 3 in tonnes	(scope 1, 2 in tonnes of
emissions and carbon footprint	CO2e vs 2013, target in line with	CO2e/million EUR revenue
over the complete value chain)	EU Green Deal -55% vs 1990)	vs 2020 (50 tonnes))
TRANSITION TO A CIRCULAR ECONOMY
5,000	10%	PUReSmart
		2023: successful
		completion of the
TONNES
of post-consumer polyurethane	production with lower CO2e	project, a breakthrough in
foam from recycled mattresses	raw material in % of total raw	chemical recycling of flexible
	material consumption	polyurethane foam

INNOVATION FOR SOCIETAL NEEDS

People Priority Plan

(2025 objectives)

SUSTAINABLE PARTNERSHIPS

WE COMMIT TO

reporting on %	reinforcing R&D	continuation and
suppliers compliant	partnerships with	expansion of long-term
with the Recticel	customers, knowledge	partnerships for social
Supplier Sustainability	institutes, universities	projects
Requirements and	and strategic suppliers on
audited based on risk	sustainable development
assessment
LOWER HS&E IMPACT OF OUR ACTIVITIES AND PRODUCTS
FREQUENCY 1		FREQUENCY 2
LOST TIME ACCIDENTS	≤2	LOST TIME ACCIDENTS	≤5
[Lost Time Accidents	+ RESTRICTED WORK
CASES + MEDICAL
representing the average on
TREATMENT CASES
Group level for all our plants]

WE COMMIT TO

the pursuit of zero chemical hazard impact of our activities and products

AN INSPIRING AND REWARDING PLACE TO WORK

80%	≥3
OF R&D PROJECTS CLASSIFIED	SUSTAINABLE R&D PROJECTS BROUGHT
AS SUSTAINABLE	TO MARKET EACH YEAR

25%

gender diversity in senior

management by 2030

WE COMMIT TO

maximising e-learning for our employees

implementation in 2022 of a personal sustainability objective for senior managers connected to the Sustainability Strategy

follow-up and reporting on well-being scores through annual Employee Performance Management Discussion (EPMD)

progress reporting on workforce engagement

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A message from the Chairman of the Board of Directors and the Chief Executive Officer

Johnny Thijs	Olivier Chapelle
Chairman of the Board of Directors	Chief Executive Officer

Brussels, April 30th, 2021

Dear Employee,

Dear Customer,

Dear Shareholder,

Dear Reader,

Despite a business environment dominated by the COVID-19 pandemic outbreak and the subsequent chemical raw material supply shortage, 2020 was the year in which the transformation of our Group materialised.

Its favourable market positioning meant that our Group performed well in these adverse circumstances. Its strong financial position at the end of 2019 allowed us to seize highly complementary strategic acquisition opportunities.

The transformation of Recticel has led to a renewed and ambitious Sustainability Strategy, with a new set of aggressive objectives for the 2025 horizon.

Over the last 24 months, Recticel has dramatically transformed its business portfolio through five major strategic transactions. The process started in February 2019 with the closing of the two-step divestment of our 51% participation in Proseat to Sekisui Plastics Co. This was followed in June 2020 by the closing of the two-step divestment of our Automotive Interiors division to the German firm Admetos. In mid-2019, it emerged that the Swiss conglomerate Conzzeta wanted to divest its FoamPartner division, a business highly complementary and appealing to Recticel. We therefore decided to approach Greiner AG, our partner in the Eurofoam joint venture, with the aim of divesting our 50% participation. This was a necessary and mandatory step in order to secure the acquisition of FoamPartner, both from a competition authorities standpoint and a financial point of view. In June 2020 we closed the divestment of our 50% participation in Eurofoam, and in March 2021 we successfully closed the acquisition of FoamPartner, leading to the birth to our Engineered Foams business line. In the same month, we signed the acquisition of Gór-Stal,

an insulation board provider ideally positioned in Poland to complement our building insulation activities.

This broad strategic overhaul, and the decision to focus the development of our Group on Insulation and Engineered Foams, led to the decision to divest our Bedding business line. The aim is to sign a deal by the end of 2021. The future of Recticel will be based upon two strong pillars providing high value-added solutions and very well positioned in growing markets. Moreover, they will provide a natural hedge for the future: Engineered Foams being a global player in speciality/niche industrial markets, while Insulation is essentially a European player in construction markets. We aim to use the proceeds from the divestment of the Bedding business line to accelerate the growth of our two pillars, both organically and through M&A.

In 2020, when the COVID-19 pandemic broke out, our primary concern was for the health and safety of our employees. In that context, every precautionary measure was taken to eliminate the risk of as far as possible. After protecting our employees, the next priority was to protect our Group: the impact of lockdowns on many economies led us to significantly curtail production output, temporarily shut down production sites, and swiftly implement a broad range of cost-saving measures. The reactivity, collaborative spirit, transparency and agility displayed by our global teams have enabled us to minimise the impact of the pandemic on our Group. As a result, after a substantial 17.5% reduction in our sales during the first half of the year, we recovered strongly in the second half of 2020 with a sales increase of 7.0% and an adjusted EBITDA increase of 10.0%. The pandemic has also affected our raw material suppliers, which have not been in a position to respond to post-lockdown increases in demand, leading to a raw material supply shortage. This situation has not yet been resolved and is being used by our suppliers to increase prices at unprecedented pace and levels.

Our commercial teams have confirmed their ability and commitment to passing these increases through to customers with limited lead times. As a consequence of the strategic and business circumstances in 2020, Recticel had no debt left at the end of the year, and with after-tax earnings of €63.2m, supported by the profit made on the divestments, the Board of Directors proposes increasing the dividend to €0.26 per share.

Having completed our 2015-2020 Sustainable Development journey with important and decisive successes, we defined our new ambitions in 2020, with the aim of contributing to a more sustainable world by 2025. These are articulated around the following four themes, which are further detailed in this Annual Report along with KPI's, targets and timelines:

• Already a "green" company, mainly due to the positive impact of our Insulation activities, we intend to substantially increase our positive contributions.
• In addition, we aim to further decrease our carbon footprint.
• Having first successfully defined and proven solutions for the circularity of our business propositions, we now want to scale up fast, and enable a second life for end-of-life products.
• Last but not least, we are committed to increasing the well-being and engagement of all our employees.

With regard to 2021, and after a strong first quarter, the focus is now on the successful integration of FoamPartner and Gór-Stal and the divestment of Bedding, in order to start 2022 with a highly efficient operating model.

In this incredibly intense period of development for our Group, we want to express our gratitude to our employees for their contribution in 2020 and their resilience during the COVID-19 crisis. Likewise, we thank our customers for their constructive cooperation in these volatile times, and for their business and forward- looking partnership. We also extend sincere thanks to our shareholders for their continued trust, support, and precious insights. We will strive to continue to deliver enhanced shareholder value in 2021.

Olivier Chapelle	Johnny Thijs
Chief Executive Officer	Chairman of the Board of Directors

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Highlights of 2020 and early 2021

January 2020

March 2020

Insulation - fibre bonded foams

The Recticel Silence collection was developed to meet the growing demand for acoustic insulation in homes. The insulating panels are manufactured from 70% recycled polyurethane foam, limiting

Bedding - imm Cologne trade fair

Recticel had a strong presence at the 2020 edition of the renowned imm Cologne international furniture fair in Germany. Our two booths - Schlaraffia® and Swissflex® - presented

Bedding - Lattoflex®

The Lattoflex® Geltex Wellness mattress was awarded Mattress of the Year by Voted Product of the Year Worldwide in collaboration with Nielsen research company. This annual competition involves an online survey with 5,000

the use of new natural resources and thus environmental impact. In the first year since the collection was launched, 1,059 tonnes of PU foam were recycled.

The Recticel Silence collection was recently awarded the first Prix Journal de la Maison 2021 (France) in the 'Interior design and comfort' category, for its innovative and sustainable qualities.

a range of new bedding products. The fair was also a perfect showcase for our sustainable approach to bedding products, including several eco-designed concept products.

consumers and a user test with 120 consumers across Belgium.

Corporate - Electricity Sustainability Roadmap (ESR 2020-2025)

April 2020

Corporate - international headquarters

In order to improve working conditions, the Group decided to move its international headquarters to a new location that better suits the needs of the streamlined organisation.

Bourgetlaan 42 Avenue du Bourget 1130 Brussels, Belgium

Schlaraffia® celebrated its 111th anniversary at imm Cologne 2020 furniture fair, showcasing some of its innovative and sustainable solutions with the theme: "Better sleeping for a better life - for 111 years".

Recticel introduced its Electricity Sustainability Roadmap, an ambitious action plan to reduce CO2 impact related to electricity usage by 75% by 2025. This target will be reached by following three paths in parallel:

1. Build up and implement an energy saving plan at each plant
2. Develop smart efficient lighting
3. Selectively implement solar panel and windmill projects to generate green electricity

Automotive Interiors - divestment

Recticel announced that it had entered into a binding agreement to bring its Automotive Interiors business into a new joint venture under the control of Munich-based privately owned investment company Admetos GmbH. Under the terms of the agreement, the Automotive Interiors business was transferred to a new joint venture holding company controlled by Admetos which now owns 51% of its shares, with Recticel retaining the other 49%.

The deal was closed on 30 June 2020. Since April 2021, the joint venture has been called ASCORIUM Industries.

Flexible Foams - Eurofoam

Recticel announced that it had reached a binding agreement with Greiner AG to divest its 50% participation in the Eurofoam joint venture.

The transaction was closed on 30 June 2020. The divestment of the Proseat activities in 2019, the divestment of Automotive Interiors and the closing of the Eurofoam deal would enable Recticel to fundamentally refocus on its higher value-added activities while providing greater flexibility to pursue strategic development opportunities.

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