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Sequana : Slight improvement in pro forma operating performance in the first-half of 2017

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• Pro forma sales of €1,444 million, down 2.8% (down 1.0% at constant exchange rates) on H1 2016 at a constant reporting structure for Arjowiggins
• Pro forma EBITDA up 3.2% to €58 million ; pro forma EBITDA margin up 0.2 points to 4.0% o Antalis : EBITDA up 2.1% to €43 million and EBITDA margin up by 0.3 points to 3.6%, thanks notably to an enhanced gross margin rate in Packaging and Visual Communication o Arjowiggins : Pro forma EBITDA down slightly by 2.8% to €21 million ; pro forma EBITDA margin stable at 6.3%, mainly reflecting the decline in fine paper volumes and higher raw material prices towards the end of the period
• Sales and EBITDA as reported came in at €1,459 million (down 5.2%) and €49 million (down 10.5%), respectively
• Net profit of €3 million
• Net debt stands at €342 million ; the financial leverage ratio was 3.38 o Antalis : €34 million reduction in net debt to €269 million o Arjowiggins : €8 million increase in net debt to €41 million

Pro forma consolidated sales were €1,444 million for the period, down 2.8% (and down 1.0% at constant exchange rates) on H1 2016 at a constant reporting structure for Arjowiggins. This decrease mainly reflects the decline in printing paper volumes on the production and distribution sides of the business, partially offset by resilient performances in Antalis’ Packaging and Visual Communication businesses and in Arjowiggins’ specialty businesses. The acquisitions completed by Antalis in late 2016 added €13 million to H1 2017 sales. The negative forex impact (mainly attributable to sterling), which essentially affected Antalis, amounted to €27 million.
Pro forma EBITDA rose by 3.2% to €58 million, compared to €56 million in H1 2016 at a constant reporting structure for Arjowiggins. Pro forma EBITDA margin rose by 0.2 points to 4.0%. The decline in printing paper volumes and unfavourable forex impact were offset by the higher gross margin rate and lower overheads for Antalis, and by the improved product mix in Arjowiggins’ Graphic division.
Pro forma current operating income grew by 16.8% to €41 million versus €35 million for H1 2016 at a constant reporting structure for Arjowiggins. It includes a €2 million gain arising on a change to a pension plan carried on Antalis’ books. The current operating margin came in 0.5 points higher at 2.9% of sales.
Sequana recorded net non-recurring expenses of €13 million in the first six months of the year, mainly for costs related to the Antalis IPO and refinancing, and for restructuring costs. Proceeds from disposals (sale & leaseback operations reported by Antalis) amounted to €6 million.
After deducting net finance costs and taxes, net profit attributable to owners was €3 million for the period, compared with a net loss of €29 million for the six months to 30 June 2016.
Consolidated net debt stood at €342 million at end-June 2017, €6 million less than at 30 June 2016. The financial leverage ratio was 3.38.
A limited review is currently being performed on the consolidated financial statements. The Statutory Auditor’s report will be issued once procedures have been completed (by the end of September).

Outlook
In light of first-half 2017 performances and the full-year outlook, Antalis’ should report a low single-digit decrease in sales (excluding acquisitions and at constant exchange rates) compared with the sales achieved for FY 2016 and its EBITDA margin should come in at between 3.4% and 3.8%. In the second-half of the year, Arjowiggins’ business should remain at similar levels to those reported in H1 2017, however performances will be impacted by higher raw material prices, partially offset by higher selling prices.
Given the changes to Arjowiggins’ reporting structure in 2017 and in 2016, the operating results are commented on a restated data basis without the contribution of Arjowiggins Security BV and Arjowiggins Healthcare, sold in July 2017 and in June 2016, respectively.

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