Company report

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2008: the Tarkett experience

6About Tarkett

8 A story of human endeavour 8 Creating the fl ooring experience10 A global organization

12More room for quality of life

14 Home15 Leisure and retail16 Education17 Health18 Offi ces19 Sport

20Sustainability in all its dimensions

22 Sustainable growth24 Social responsibility28 Environmental commitment

32Performance 2008

34 Financial comments36 Income statement37 Balance sheet38 Cash fl ow39 Corporate governance

Summary

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We believe that fl oors have a measurable impact on how people experience the places in which they live, work and play – bringing tangible benefi ts such as comfort, safety, productivity, motivation and well-being.

This belief – that everyone should live a unique fl ooring experience – drives our business. With a wide range of solutions and specialists serving local markets across the world, Tarkett ensures that every customer receives a solution that fi ts his or her needs and tastes. We call this approach ‘balanced choice’ – as it ensures every customer gets the fl oor that works best for each project, environment and budget.

Our aim is to be the preferred partner for our customers, the preferred investment for our shareholders, the preferred company of our employees and communities in which we work. To live up to this ambition, in 2008 we have taken strategic decisions that have helped strengthen our business performance in a diffi cult economic context. For example investing further in our sports business to gain 100% equity of FieldTurf Tarkett and the acquisition of Beynon Sports Surfaces to reinforce our full sports surfacing offer in North America.

The past year has been challenging for everyone – from manufacturers, suppliers, distributors, retailers, to those in construction, home owners and consumers. But challenging conditions can often be a catalyst for change. Throughout 2008 Tarkett has tightened its

strategic and operational focus in order to become more resilient and reactive to changing global markets.

In this adverse environment, Tarkett achieved a stable sales performance at 2.1 billion and recurrent profi tability has continued to improve with EBITDA of 230m representing 11.1% of sales. The Group overall

has seen signifi cant growth in Eastern Europe and has expanded its Sports division across track, fi eld and indoor surfaces. Tarkett has maintained a solid balance sheet and increased its recurrent operating cash to an unprecedented level of 191m.

All this was achieved by the real forces behind Tarkett – the loyalty of our customers and suppliers, the dedication of our people and the strong and stable support of our shareholders. I would like to thank our employees for their renewed commitment in delivering an outstanding Tarkett experience to our customers, partners and communities worldwide.

Michel Giannuzzi, Chief Executive Offi cer

2008: the Tarkett experience4

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About Tarkett

flooring for people in

veryday life

pectful

professionalrofess

esourceful

globlocal

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pattern and texture in the places where they work, live or play.

Headquartered near Paris, France, Tarkett is owned by two shareholders – the Deconinck family (heirs of the Allibert family and active in the Group for many generations) and private equity investor Kohlberg, Kravis & Roberts since January 2007.

Rich in over 120 years’ experience, the story of Tarkett merges with the history of the fl ooring industry through many of the fi nest brands that have helped to shape fl ooring from the past century until today.

Like all enduring brands, Tarkett is rooted in its people, their expertise and ambition. From the Group’s early entrepreneurs who began parquet in Sweden, linoleum in Canada to felt making in France and textiles in Eastern Europe, the Group has grown to incorporate industry leaders such as Allibert, Azrock, Domco, FieldTurf, Johnsonite, Sintelon, Sommer, Tarkett.

The pioneers of these companies have instilled many of the values which continue in the Group today.

Respectful – of the needs of customers and the environment; Professional – with in-depth expertise and reliability; Resourceful – through the empowerment and accountability of its people.

Tarkett’s people, from a diversity of backgrounds, have been constantly innovating since the Group’s early days across materials, technologies and design, to make people’s lives safer, more comfortable, more productive - inspiring them through the colour,

A story of human endeavour

Creating the fl ooring experience

and safety regulations and budgets are all different – because each customer is unique and has highly individual needs. No matter whether the project is a public, commercial, residential or sports facility installation, new construction or renovation, it’s the combination of a worldwide expertise, a broad product portfolio across vinyl, linoleum, rubber, laminate, parquet and sports surfaces and an intimate understanding of customers’ requirements that enables Tarkett to create a better fl ooring experience.

Tarkett provides unique fl ooring, speciality and sports surface solutions to professionals and end-users that measurably enhance both people’s quality of life and building facilities’ life-time return.

Everyday, people experience their lives in hospitals, schools, public buildings, sports, leisure activities and at home through a Tarkett fl oor.

Each and every fl ooring solution is distinct. The space, how it’s used, design choices, building norms, health

1942 introduction of 3 layer hardwood fl ooring, minimizing hardwood use to protect forests

1952 invention of fi rst vinyl fl ooring offering durability and a wider choice in decoration for interiors

1957 recycling of vinyl tile to reduce waste in landfi lls

1966 development of vinyl wall coverings for better interior hygiene

1975 launch of PUR surface treatment minimizing water and detergent for easier maintenance

1978 fi rst loose lay fl ooring eliminating adhesives for better indoor air quality

1980 product life-cycle cost assessments for better understanding of overall economic impact

1994 launch of artifi cial turf reducing injuries for athletes, water and pesticides use in upkeep

1996 rubber products made from post-consumer tires

2003 post installation recycling in North America to reduce landfi ll waste

2006 new surface treatment for linoleum to minimize water and detergent consumption

VinylLinoleum 58%

Wood 9%

Laminate 9%

Sport 13%

Rubber 6%

Various 5%

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Tarket 2008 sales by product type

Christoph StettlerEVP Marketing & Environment

Worldwide organization

At Tarkett, 8,600 people at 28 production sites and over 50 sales and marketing companies serve customers in over 100 countries. The Group is highly decentralized, giving teams the autonomy and accountability to develop fl ooring solutions for local needs and tastes.

Tarkett is organized in four Divisions:• Western Europe (including Middle East,

Asia, Australasia and South America) • Eastern Europe• North America• Sports (worldwide).

A global organization

Management team

Tarkett is a multi-cultural Group and its diversity extends to all levels of its organization. Tarkett has a highly international management team with broad industry expertise.

sales/marketing offi ces

production sites

centres for recycling collection

international training centres

Michel Giannuzzi Chief Executive Offi cer

308 million mnn mm222

of fl ooringggsold in 2008

Patrick Mathieu President Western Europe

Dragan Zarkovic President Eastern Europe

Jeff ButtittaPresident North America

Joe FieldsPresident Sports (FieldTurf)

Fabrice BarthélemyChief Financial Offi cer

Vincent LecerfEVP Group HR Director

Thomas AhrensEVP Operations

28 production sitest ii ste8 pp uoduuucctpr22828288 prpp8 prrodro8 itteeuctctti n t

8,600 employeesplloyeesloyees

sales in over 100 countries01rrennnnnnniiiiis in inn over 1100 countries

Pierre Philippe Simphlet Secretary to the Board

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More room for quality of life

confideformant

motivatednspired

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As part of an ambitious ‘eco-plan’ targeting environmental performance, leading UK retailer Marks and Spencer (M&S) has worked with Tarkett on fl ooring for the remodelling of 260 stores. Tarkett has supplied a range of fl oors, including a specially designed Granit IQ, that meet M&S requirements for quality and durability for heavy footfall and with top environmental credentials (BREEAM A rating). Thanks to a special polyurethane layer which minimizes the use of water or chemicals for cleaning, choosing Tarkett fl ooring has enabled M&S to reduce its maintenance and cleaning workload by up to 30%. To reduce landfi ll waste generated by the refurbishment of M&S stores, Tarkett has developed a scheme to recycle old fl ooring into traffi c cones across the UK.

Following research with customers on their perceptions of hotel interiors, global hotel group Accor worked with Tarkett to renovate a number of its motels across North America. To provide better design, comfort and acoustics, Accor chose a new aesthetic and functional approach – for the fi rst time combining fl oors in vinyl and laminate in bedrooms and bathrooms with existing carpets in hallways. Tarkett provided a matching seagrass design solution in FiberFloor and laminate with a coordinating transition that delivers a consistent visual fl ow within the hotel’s interior ensemble. Over 60 Accor motels were refurbished during 2008.

Leisure and retail

The best fl ooring innovations meet everyday needs – for example, improving underfoot comfort, sound insulation, easing installation. In 2008 Tarkett expanded its range with a textile-backed vinyl for stable, yet simple to lay fl ooring with the added benefi t of improved sound absorption. Tarkett’s TexstyleTM system, available in wide range of wood and stone-inspired designs, has proved a popular choice for home refurbishment in France, Germany, Scandinavia and Australia. In addition to levelling surfaces, making it easier to install, Texstyle improves comfort, sound and thermal insulation for home interiors.

To help Russian consumers make an informed choice on environmentally responsible products, Tarkett worked with the Global Ecolabelling Network to certify a number of its best selling vinyl ranges. The green leaf accreditation from the Ecological Union of St Petersburg is given for products that demonstrate a lower environmental

impact – from design to production and throughout their lifecycle. Three of Tarkett’s product ranges have been awarded the green leaf ecolabel – Moda, a high end semi-commercial design solution, Idilia, bringing consumers better warmth, comfort and stability and Discovery, a range providing ultimate durability across a wide palette of wood and nature designs. Tarkett is the fi rst resilient fl ooring producer in Russia to receive this independent accreditation helping consumers better understand the health and environmental aspects of fl ooring.

When people choose a wood fl oor, it’s for the appearance and atmosphere that it can bring to their home. Many

European consumers will carefully choose a particular species of wood for the environmental aspects of its origin and production. Tarkett has evolved its heat treatment process to develop new ranges creating dark wood fl ooring using locally sourced European wood species like birch, ash and oak which are quicker to renew compared with exotic wood often transported from tropical forests. The Group has 70 years’ experience in a three layer parquet technique that minimizes the use of slow-growing wood species. By choosing Tarkett’s heat treated fl ooring, consumers can buy dark wood parquet with no impact on tropical forests and enjoy environmentally sustainable wood fl ooring that will last for generations.

Home

To create a lasting and measurable experience for people, each and every fl ooring solution has to be unique. Floors can create individual experiences in different spaces, accentuating feelings of comfort, confi dence, calm or well-being, inspiring energy in everyday work and living and bringing effi ciency for those who are measured by productivity. Here are some 2008 examples of unique fl ooring experiences from Tarkett.

Marks & Spencer: IQ Granit vinyl

Accor: Seagrass FiberFloor and laminate

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Health

Colour plays a special role in the building conception of EHPAD SILOE – a specialist unit for people with Alzheimer’s in Ostwald France. Tarkett supplied six different types of fl ooring in twenty colours designed to aid the visual orientation of residents who can sometimes wander several kilometres a day round the facility. From a range of neutral and contrasting colours, architects used Tarkett designs to create interior comfort and zoning within the facility. Tarkett also provided a coordinated wall and fl ooring shower room system to enhance the safety and confi dence of residents through its studded anti-slip surface.

Good products are made to last. That’s why after over 40 years’ continuous use and daily cleaning, Tarkett’s

IQ Granit fl oors are still meeting the daily requirements of hygiene and durability at the Karlshamm hospital in Blekinge, Sweden. The hospital has again selected Tarkett’s IQ concept for its design and functional performance for the new fl ooring for its public areas, surgical rooms, and general wards. The PUR surface treatment, invented by Tarkett in 1975, reduces water and detergent consumption and contributes to a clean, sterile, safe and comforting environment at Karlshamm for patients and staff.

The design and functional benefi ts of fl ooring were of prime importance to the Hagibor Project, an award-winning development for the Jewish senior community in Prague in the Czech Republic. The architects chose a number of different fl ooring solutions from Tarkett to provide underfoot comfort, softer acoustics, safer anti-slip surfaces and easier maintenance. Tarkett’s wide range of vivid colours was an important factor in the interior design aimed at contributing to the security and well-being of the Hagibor community residents. The project was completed following specialist installation training from Tarkett.Creating a wider learning environment

for its students is the vision of the Science and Technology Magnet School of New London, Connecticut USA. Tarkett’s Azrock resilient tile provided the design and installation fl exibility to connect a variety of spaces aimed at enhancing exploration and discovery - from walls, lighting, to stairwells and common areas. The project received a StarNet Design Award in 2008.

For an extension to the Falletsche School south of Zürich, Swiss architect Rolf Mühlethaler chose Tarkett linoleum fl ooring to meet the challenge of preserving the character of the natural surroundings in which the school is situated. Made from natural and renewable raw materials, linoleum was chosen to bring design and spatial variety to the school interiors. As many classrooms and several corridors access directly outside, a hard wearing, scuff and scratch resistant fl ooring was essential. The rich colour spectrum of the Tarkett linoleum range is showcased

in the light infused corridors enhancing the feeling of well being and proximity to the outdoors for those who pass through them.

The Indio Teen Center, in California USA, was developed to provide local teenagers with a leisure and learning facility offering exercise, classes, computer lab and recording studio. WWCOT architects, who received an AIA citation for the project, chose Johnsonite’s innovative Bamboo rubber tile texture throughout the facility. The combination of texture with vibrant custom colors allowed WWCOT to create an interior that resonated with the teen population that uses the space, as well as a fl ooring that is long lasting, durable, safe and easy to maintain.

Fallestche School: linoleum

Karlshamm hospital: IQ Granit vinyl

Hagibor Project: vinyl

EHPAD SILOE: vinyl design

Education

Science & Technology Magnet School: VCT

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Artifi cial turf fi elds

For top level footballers, the quality and performance of the playing surface all year round is critical in minimizing injuries and ensuring a competitive game. For the Beijing Olympics in August 2008 Tarkett installed 4 artifi cial fi elds, used for training by the Chinese football squad and other teams competing in the Games. Providing the same playing conditions through all seasons and weather, the fi elds also contribute to the environment by reducing water consumption and eliminating the many tonnes of fertilizers and herbicides used each year to maintain natural grass pitches.

Athletic tracks

The Hayward Stadium (IAAF certifi ed), University of Oregon, installed by Beynon Sports, hosted the 2008 USA Olympic track and fi eld trials

where several high school, collegiate and American records were broken including sprinter Tyson Gay’s fastest US 100m ever run in any conditions. The track

surface at Hayward Field is designed to be the world’s fastest athletic surface providing athletes with maximum return of energy, superior shock absorption and allowing daily training without stress injuries.

Indoor

In 2008 Tarkett became the offi cial partner of professional handball in France, providing the French National Handball League an exclusive portable parquet fl oor that is taken up and relaid for key matches. The solution brings athletes an optimal surface for high impact play, simplifi es set-up for facilities managers with quicker installation time and improves viewing for spectators with a dedicated handball court marking. Tarkett is also working with the League to explore the interaction of surface, shoes and players to improve the technical performance of its fl oors.

Multi sports systems

To enhance its exercise and rehabilitation facilities for athletes, Aurora BayCare Medical Centre, USA, called on Tarkett to design a series of customized surfaces integrating a range of workout and training areas from weight room to indoor track and golf. The centre, used all year round by recovering athletes, features several different high performance fl oors that support the physical movements used in sport and rehabilitation activities. From the running track, wood fl oor, exercise area to the indoor turf fi eld, all are specifi cally designed for professional players to minimize impact and protect body joints.

Sports Design and fl exibility were key factors in creating the new dynamic working environment at the EU Integration Offi ce in Belgrade. Tarkett provided a unique loose lay Space vinyl tile solution in a range of textile inspired designs. This signifi cantly simplifi ed installation and now provides easy access for underfl oor cabling and fl exibility in case single tiles need to be replaced. With no glue and a new-generation surface treatment, this solution contributes to a better air quality and brings the EU’s teams a safe and effi cient offi ce space.

Companies are looking for working environments that motivate and inspire their teams - because it’s recognized that well-thought out design for interior space can increase collaboration and productivity within a working environment. Johnsonite has developed Circulinity, an innovative collection of fi ve rubber tile textures that can be used together to create a limitless number of unique interior environments. This rubber component system comes with an online visualizer that enables designers to mix textures in any pattern and test the overall effect to scale within different room settings.

Offi ces

Loose lay Space vinyl tiles

Athletes line up on the Hayward Stadium track, USA: Beynon Sports

National teams compete on Tarkett’s FIFA 2 star fi eld

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Sustainability in all its dimensions

preparin the fu

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ourceewardship

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Preparing for the future

Tarkett’s innovation is centred on how solutions can contribute to quality of life by making environments safer, more sustainable and better adapted for people living in and using them. This combines R&D projects to improve design and function of products as well as transversal programs that will have a major impact on the fl ooring industry. For example, Tarkett has launched programs exploring better materials - from both renewable resources and through innovation in raw materials in partnership with suppliers. A key innovation in 2008 included the new stain and scratch resistant welding rod for Tarkett’s linoleum xf range. Offering a new patented formula with high natural resistance, it enables perfect joints and contributes to improved hygiene for fl oors in education, health and public buildings.

Developing industry expertise

Tarkett has continued to invest in the professionalism of fl ooring in the building industry. In 2008 the Group opened two new Tarkett Academies in the UK and China, increasing to eight its network of international centres of expertise providing support, advice and training to the construction industry. These centres aim to educate all those involved in the building chain, in the technical aspects of fl ooring and strategic considerations from quality, security, comfort, maintenance and sustainability. Tarkett also contributed to accredited training for architects, designers and facility managers in the United States through certifi ed education modules focused on industry topics such as safety, design, fl ooring specifi cations. Some 3,000 customers benefi ted from Tarkett training in 2008..

Implementing Retail Excellence

In the fast-growing Eastern European market, Tarkett has looked to broaden business activity, profi tability and fl ooring knowledge in the retail community. Over the past two years, Tarkett has put in place a retail program to better support distributors and develop their business with generalist and specialist outlets across the Russian Federation, with over 1500 visits each month. Showcasing its different types of fl ooring, Tarkett is able to train retail staff and other professionals on the choice and technical performance of resilient and hard fl ooring and advise them on merchandising - ultimately fostering higher sales growth in the mid and high-end fl ooring solutions.

Delivering value to customers

In a fast changing world, one essential has not changed for Tarkett: its absolute dedication to meeting customers’ needs. In everything the Group does, from innovation to sustainable production, from advice on installation to technical support and customer care, the primary focus is on satisfying expectations of architects, contractors, facility owners and the distributors and retailers who supply them. Global presence and local involvement – with sales and productions teams tightly connected to the markets they serve - enables Tarkett to demonstrate its ambition to be the preferred partner for customers.

To measure the Tarkett experience, in 2008 the Group extended its customer survey, consulting with over 1300 specifi ers, contractors, end-users and distributors who together account for over 50% of Group revenue. This process is as important as the result itself - helping Tarkett measure and improve according to the expectations of different customers in relation to the dynamics of their business. In the economic context of 2009/2010, this will enable Tarkett to prioritize improvements that will deliver value to customers and focus on what really matters to their business.

Increasing fl exibility

Early in 2008 Tarkett began optimizing its industrial organization for better fl exibility – adapting rhythm of temporary staffi ng, developing staff skills across several industrial processes and improving operational productivity. These and other measures have helped the Group to react in the face of an international market that slowed, particularly in the second half of the year. Tarkett has optimized its planning and scheduling to reduce its inventory levels while still improving its availability levels and customer service – to over 95%.

Investing for growth

Investments in 2008 have focused on strengthening the Group’s geographic reach and portfolio of fl ooring solutions, particularly in growing markets such as Eastern Europe and sports. In April 2008 – Tarkett acquired Beynon Sports Surfaces - the US-based specialist provider of high performance athletic tracks. This acquisition reinforced Tarkett’s position as a one-stop-shop for all sports surfacing requirements. Following the purchase in 2007 of Defargo, another tracks specialist, Tarkett is now the largest North American provider of synthetic sports surfaces.

In Eastern Europe, the Group has invested in its production facilities to cater for the growing market for mid to high-end laminate and residential and semi-commercial vinyl fl ooring. This will position Tarkett strongly for once market conditions in the region begin to improve.

Sustainable growth

Tarkett Academy in Shanghai

Tarkett logistics facility, Europe

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Diversity and development

Diversity is the essence of Tarkett – in its products and the experience and talents of its people. People working for the Group are spread across the world: Western Europe (39%), Eastern Europe (34%), North America (26%), rest of the world (Middle East, Asia Pacifi c – 1%)

Because it operates in so many countries worldwide, Tarkett is highly decentralized and can offer people challenging careers that give them autonomy, early responsibility and internal mobility. Key to federating the teams worldwide are Tarkett’s shared values: a positive, customer-centered attitude, team spirit, empowerment and accountability, respect and integrity, and a commitment to the environment.

To achieve a strong culture of performance, Tarkett has established a more systematic approach across the Group to developing its people and their competences. This includes mapping the skills needed in the business, assessing profi les and then supporting and evolving individuals through training and structured career management.

People in all parts of the organization contribute to the experience customers have of Tarkett. All roles are geared to satisfying the customer from R&D, production, logistics, marketing, sales, through to customer service and functional areas such as fi nance and HR.

Tarkett is an offi cial partner of the French National Olympic and Sports Committee (CNOSF). The Olympic spirit is a strong vector of communication for internal teams at Tarkett in developing a high performance culture. It fosters understanding, motivation and open communication and builds on the link between satisfaction and performance.

Tarkett conducted its fi rst Group-wide employee consultation in 2008, with 67% response rate, giving the Group valuable feedback on how to build for the future in today’s diffi cult economic environment. Overall, the results show a strong level of loyalty, commitment and confi dence in Tarkett, positive perception of local management and support for recent changes. This survey has helped to identify areas that need to be improved, and has led to workgroups being set up at local level to improve many internal processes and contribute to growth. By aligning management objectives with the expectations and views of staff, Tarkett believes it will create a positive working environment that results in a better performance for all – our customers, our people, our shareholders.

Socialresponsibility

Following experience in the growth of different parts of Tarkett since 2000, Stephanie Couture brings an international outlook to her role as Group Legal Counsel. “While working for Tarkett in America, I supported operations and management on topics such as compliance,” says Stephanie, “and took part in the creation of three joint ventures and the acquisition of FieldTurf.” “Now I liaise with the legal departments of each Division and oversee key Group legal areas such as intellectual property, insurance and mergers and acquisitions,” she adds.

Stephanie’s early career in Tarkett’s North American division gave her precious hands-on operational experience. “Having been in the shoes of the local legal teams, I can have a better understanding of their issues.” Stephanie moved to the Group’s headquarters in France in 2006.

“I’ve seen also the diversity and dynamism of Tarkett in Western and Eastern Europe. Despite Tarkett’s size it is a corporation on a very human scale with a tremendous pool of ideas and energy.”

Miroslav Okuka led an international team in the challenge to create a state-of-the-art parquet production site in Backa Palanka, Serbia, in just 18 months. Miroslav joined Tarkett after qualifying as an electronics engineer. After several years in maintenance and support roles, in 2004 he took on the responsibility of setting up a new wood production facility in Backa Palanka. “We made all the connections from beginning to end, from the building to the machinery, logistics through to the product, sales and support” reports Miroslav. “People really are the key. Once you have the right people, you can build a system that works well around them.”Thanks to transfers of know-how from international colleagues from Sweden and the rest of the Group, the plant began producing parquet in 2005. In its fi rst year of operation, the plant produced 1 million m2, and double that in 2007.

“Sharing expertise is how we’ve developed our managers to deliver an excellent product and great service,” says Miroslav. “I’ve really appreciated the opportunity to develop my experience, responsibility and outlook through the support of an internationally growing Group.”

Miroslav Okuka — WooDirector, Backa Palanka, Serbia

Stephanie CoGroup Legal Counsel, Nanterre

International careers

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Roberto Jacono joined Tarkett in 1995 and has since experienced every business function throughout the company, from marketing, sales, fi nance to the shop fl oor. Roberto’s international career to date has been a formative experience – with positions in Luxembourg, Germany, Italy before being promoted to his US-based current job at Johnsonite, in charge of European commercial products sold in North America.

“I have worked with people from different countries, with different mindsets. Tarkett is a global company, with an extensive product range and values inherent to the diverse range of people you work with and for,” he explains.

Roberto has worked with customers worldwide, learning their needs and expectations and helping build their positive experience of Tarkett. As a product manager, Roberto acts as the link between Production and Marketing, “a very interesting position, involving a lot of contact with all the Group’s divisions and departments. The people at Tarkett are open, professional and cooperative,” outlines Roberto. “This is truly an international company, where people think globally.”Roberto believes that Tarkett is well prepared to face the current economic crisis. “We have a solid foundation, and a customer-centric focus” he adds. “Tarkett knows how to motivate its people and give them pride in belonging to the Group.”

Roberto JaconoProduct Manager, North America

Focusing on people

Safety is a key priority for Tarkett. The Group’s goal is to ensure that Tarkett’s production and logistics facilities provide a safe working environment for its employees, with the highest possible levels of risk prevention as part of ongoing processes. Local managers have set up programs to assess risk, increase safety awareness, training and communication to staff, to ensure continuous improvement in this area. In 2008, Tarkett also implemented a new process for reporting any near-accidents within 24 hours, after which remedial action plans must be implemented within 48 hours.

In its labour relations, Tarkett has always practised open and constructive dialogue with employees and workforce representatives at all levels of the organization. From experience the Group has seen that direct, proactive communication and negotiation is a fundamental building block of staff motivation and ultimately business performance.

Because Tarkett’s organization is highly international and decentralized, the Group aims to develop local solutions that are tailored to the specifi c legal and best working practices in each country, through involving employees and representative bodies in discussions.

Community sports program in Backa Palanka, Serbia

Tarkett promotes dialogue on a local level, and negotiates separate agreements with workforce representatives wherever it operates (be it France, Canada, Serbia, etc.). In 2008, Tarkett signed new agreements in all major countries where the Group is present, covering all aspects of employment, including compensation and benefi ts, working hours, team organization, and restructuring measures. Every aspect of the restructuring currently under way in response to the diffi cult economic circumstances has been preceded by extensive consultation with employees or works councils. As a result, the Group has signed numerous framework agreements on the handling of these processes with maximum sensitivity and respect for the individual, in order to maintain a positive working environment in all parts of the Group.

In touch with the local community

Tarkett believes in playing an active part in the local community. The Group is involved in a wide range of local and international projects as well as sports sponsorship.

For the past fi ve years, Tarkett has been supporting the local community in Backa Palanka, Serbia, by contributing equipment and fi nancial donations for local schools, hospitals, sports clubs and cultural venues.

Tarkett’s production facility in Ronneby, Sweden, funds local sports and cultural activities for young people. The employees decide which causes to support and in 2008, the plant sponsored 25 local organizations.

Tarkett has formed a two-year partnership with SOS Children’s Villages to build new houses and schools in a village in Burundi by recycling old fl ooring into building materials. A donation is made for every kilogram of recycled Tarkett fl ooring. Tarkett is also a long-term investor in

sport through a number of strategic and local partnerships. In addition to being offi cial partner supporting the French Olympic team at the Vancouver and London Olympics in 2010 and 2012, Tarkett supports the French Federation of Disabled Athletes (Fédération Française Handisport) as its offi cial

supplier at high level sports and leisure events, looking to improve its sports surfaces for disabled athletes.

Tarkett also recently signed three-year sponsorship deals with two football clubs, Red Star Belgrade (Serbia) and Dynamo Kiev (Ukraine) to become their offi cial supplier, after synthetic turf pitches were installed at both clubs’ training grounds.

Tarkett is a founding member of the US Soccer Foundation, which funds soccer

facilities in economically deprived neighborhoods. In 2008 the Foundation fi nanced seven new, all-weather pitches, and made sixteen grants to enhance existing facilities.

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Environmental commitment

Tarkett’s approach to sustainability is called Balanced Choice. It is based on the premise that every individual, project and environment is different and requires a customized solution. That’s why the Group has developed the industry’s widest choice of fl ooring so Tarkett can advise customers on the fl oors that work best for their project, their environment and their budget, without confl icting interests. Tarkett has been a leader in environmentally responsible manufacturing and the development of sustainable products for decades. Over the years Tarkett has focused on four areas: developing better materials, consuming fewer resources, creating people-friendly spaces and reclaiming products at the end of their lives.

The Group’s belief is that a fact-based approach is good business practice when it comes to sustainability. That is why Tarkett sets itself targets, measures its progress and reports on outcomes.

Tarkett uses fewer resources, which is good for the environ-ment and the bottom line

Quarterly monitoring of fi ve indicators — water, energy, waste, recycling and emissions — throughout our operations Public reporting of progress

Tarkett makes safer and healthier fl oors that help people heal, work, learn, play and shop better

Indoor air quality: Tarkett systematically evaluates its offering regarding its contribution to indoor air quality, e.g., by using as little detergents as possible

Tarkett uses more recycled content at the start and recycles more product at the end

Tarkett has the largest recycling operation in the industry Nobody collects and converts as much

fl oors as Tarkett does In 2008 the Group diverted over

68,000 tons from landfi lls

The fi gures on page 30 represent Tarkett’s approach to sustainability. The Group monitors environmental indicators across all its production sites and is committed to sharing this data with customers, employees and local communities.

Tarkett uses renewable and natural materials whenever possible

Innovation: share of natural or renewable raw materials is a key evaluation criteria (current threshold: 60%) Existing fl ooring solutions: review to

use more natural or renewable resources (current example: increase from 60 to 75%)

Balanced choice

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2,7

kWh/m2 2005 2006 2007 2008

Energy consumption

Including electricity, gas, fuel oil, biofuel and other sources of fuel.Over the past four years, Tarkett has decreased its overall energy consumption through better production effi ciency and use of self-generated sources of energy such as wood sawdust, a by-product from the parquet manufacturing process.

The US Department of Energy awarded Tarkett’s production facility in Houston, Texas with an energy saver award in 2008 for achieving total energy savings of more than 7.5%. Tarkett worked with the DOE to assess key industrial process systems and identify cost and energy-saving opportunities.

At its industrial site in Backa Palanka, Serbia, Tarkett has invested in a biomass boiler that converts wood waste from the wood production plant to generate over 50% of the thermal energy requirements for both the wood and vinyl manufacturing facilities. Waste sawdust as fuel is a good reusable source and helps to reduce the need for natural energy resources such as gas as well as eliminate waste disposal into landfi ll sites.

1

0,9

0,8

0,7

0,6

0,5

0,4

0,3

g/m2

2005 2006 2007 2008

VOC emissions

Tarkett has worked actively to reduce emissions of volatile organic compounds during its production processes through product development and process control. For example, adjusting temperature profi les during curing of vinyl fl oorings has positively contributed to this achievement.

140

130

120

110

100

90

70

80

g/m2

2005 2006 2007 2008

Waste generation

The fi gures include waste sent for recycling, to landfi ll and hazardous waste. Despite an upward trend in 2007 caused in part by a change in raw materials to prepare for REACH compliance, Tarkett has reversed the trend in 2008 and has reduced its waste generation.

4,2

3,9

3,6

3,3

3

2,7

2,4

2,1

l/m2

2005 2006 2007 2008

Water consumption

Water is a resource used in varying degrees in the Group’s facilities. Overall Tarkett has succeeded in reducing its water consumption signifi cantly over the past three years, due to some targeted measures in 2008. The biggest improvement comes from the linoleum plant in Narni, Italy, where Tarkett has introduced a closed loop system for the majority of its cooling systems, to reduce consumption from natural water resources.

85

80

75

70

65

60

55

50

000s tones 2005 2006 2007 2008

Recycling

Recycled material is the amount of waste from the production process that goes back into production. In Clervaux, Luxembourg, and Ronneby, Sweden, this includes also waste from external production and post consumer waste. Over the past four years Tarkett has gradually increased the absolute amount of recycled material from 55 to 68 thousand tons in 2008.

USASince 2003 Tarkett’s Azrock production facility in Houston, Texas has been increasing its recycling – from samples sent out to architects to the collection of installation waste from contractors – in order to reduce waste in landfi lls. It has enabled Tarkett to incorporate more recycled material as raw material in its manufacturing - reprocessing around 98% of its product. For the 2% that can’t be recycled, Tarkett has worked with a local company to produce it with ground-down tiles that are certifi ed for use in construction projects such as road bases and embankment fi lling. That means that 100% of production waste is now reused – saving over 450 tons from landfi ll.

EuropeThe vinyl industry is managing the after-life of installed fl ooring – taking responsibility for the entire life-cycle of the product from sustainable production through to recycling and reuse. Tarkett began a system for recycling post installation waste in Sweden in 1997 that has been used by the whole vinyl fl ooring industry in Sweden. This scheme has since expanded to the collection of Tarkett fl ooring in all Nordic countries and Germany and for special projects in Holland, UK, Italy, France and the Baltic states. Tarkett provides a ‘green return’ collection service by the same logistics companies delivering our products to major construction and renovation projects. In 2008 140,000m2 were recycled saving 411 tons from landfi ll sites.

Environmental commitment

Recycling tiles in Houston, USA

Recycling of post installation vinyl, Europe

Biofuel tanks Backa Palanka, Serbia

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Performance 2008

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Stable sales performance in spite of diffi cult economic circumstances

In 2008, Tarkett’s consolidated sales fell by 0.9% to 2.069 billion, due mainly to the euro’s rise against other weaker currencies especially the US dollar. At constant exchange rates, the Group’s consolidated sales actually increased by 1.9% over 2007.

Resistance of the fl ooring segment

At constant exchange rates, net sales of fl ooring decreased by 1.0% year-on-year.

In Western Europe, the slowdown in the pace of residential construction and renovation depressed volumes as of the second quarter, in particular in Spain, the UK and Germany. However, certain segments, particularly the education and health markets, remained buoyant throughout the year, demonstrating Tarkett’s continued strength in these fi elds.

The activity in Eastern Europe benefi ted from double-digit growth until the end of the year, when the global crisis fi nally caught up with the construction markets in the region. As market leader in Eastern Europe, Tarkett was hit by the sudden economic slowdown in Russia and Ukraine in the fourth quarter, but managed to consolidate its market share during that period.

In North America, Tarkett demonstrated a strong resistance to the sub-prime mortgage crisis. This was made possible by the development of a range of vinyl fi ber fl oors manufactured in Tarkett’s facility in Canada, and by the launch of a new collection of laminate fl ooring. Commercial activities continued to perform strongly under the Johnsonite brand.

Strong growth in the Group’s Sport segment

Demand for high-quality artifi cial turf fi elds continued to grow in 2008, especially in the United States, enabling the Sports division to post record-breaking organic sales growth (+21% at constant exchange rates).

Improvement in recurrent EBITDA

Recurrent EBITDA (excluding unusual items such as restructuring charges, impairment charges or capital gains) reached 230 million, i.e. 11.1% of net sales, versus 10.9% the year before. This result refl ected the improved performance of the Group under diffi cult market conditions.

Gross profi t remained stable at 30% of sales, as a result of the Group’s ongoing efforts to adapt its prices to the prevalent raw materials prices in 2008. In the second half of the year, Tarkett reacted promptly to the global economic slowdown and began adapting its operational structure to the lower levels of activity. Temporary shutdowns were introduced in all the Group’s plants.

Negative net result due to non-cash charges of 100 million

Total unusual items amount to 109.8 million, consisting mainly of non-cash charges. Given the deterioration of the residential construction in North America, Tarkett decided to sell its shareholding in the wood panel and laminate joint venture in Clarion, PA. The Clarion facility has become Tarkett’s preferred supplier of laminate fl ooring products in North America. A non-cash charge was incorporated in the 2008 accounts to refl ect the impact of the deal, which was closed in April 2009, and the corresponding assets were classed as held for sale as at December 31st 2008.

The Group is aware that the global economic slowdown will probably delay the profi tability improvement expected from some of its residential operations. Non-cash impairment charges totalling 60 million were posted to refl ect this

situation.

Signifi cant increase in operating cash-fl ow: +32% versus 2007

In 2008, Tarkett focused on optimizing its working capital. The Group set itself the task of scaling down inventories and past-due receivables as a priority. Service rate improvements achieved by the Group’s manufacturing facilities enabled Tarkett to reduce its net inventories by 11% or 35 million in 2008, while reacting swiftly to the economic decline that took place towards the end of the year.

Through increased focus on credit management and customer risk, past-due receivables have been pared down by 20 million compared to 2007, a 30% improvement.

Consequently, operating cash-fl ow, measured before the impact of strategic acquisitions, improved by 46 million or 32% versus 2007.

Continued reduction in net debt

In 2008 the Group fi nanced several strategic projects out of its own funds: the acquisition of the remaining minority stake in FieldTurf Tarkett, to bring this subsidiary under the full ownership of Tarkett; the acquisition of Beynon Sport Surfaces (which specializes in running tracks), and the construction of a laminate factory in Russia.

Tarkett’s net debt amounted to 307 million at the end of 2008,

versus 350 million at the end of 2007, enabling the Group to improve its net debt gearing ratio (net debt / EBITDA) from 1.5 at the end of 2007 to 1.3 at the end of 2008. Tarkett enjoys a robust liquidity, with its main credit lines maturing in 2012.

Financial comments

52.1 billion Sales 2008

5230 million EBITDAbefore unusual items

5191 million Operating cashbefore unusual items

Debt / EBITDAratio 1.3

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20085Million

20075Million

Net sales 2,069.3 2,087.2

Cost of sales (1,449.7) (1,465.9)

Gross profi t 619.6 621.3

% of net sales 29.9% 29.8%

Selling expenses (391.0) (378.7)

Research and development expenses (13.0) (15.2)

General and administrative expenses (124.0) (122.5)

Other operating expenses (net) (51.6) 31.7

Operating profi t before fi nancing costs (EBIT) 40.0 136.6

Unusual items (109.8) (12.9)

EBIT before unusual items 149.8 149.5

% of net sales 7.2% 7.2%

Of which depreciation (80.4) (77.4)

EBITDA before unusual items 230.2 226.9

% of net sales 11.1% 10.9%

Net fi nancial costs (40.4) (36.0)

Share of Profi t of Associates (0.4) 0.9

Profi t before tax (0.8) 101.5

Income tax expense (18.3) (28.7)

Profi t for the year (19.1) 72.8

Attributable to:

Equity holders of the parent (21.8) 68.5

Minority interests 2.7 4.3

Income statement

Balance sheet

20085Million

20075Million

ASSETSProperty, plant and equipment 378.0 438.7

Intangible assets 342.3 340.9

Investments in associates 2.6 3.2

Other investments 47.0 45.2

Deferred tax assets 34.1 32.5

Other non-current assets 2.4 2.4

Non-current assets 806.4 862.9

Inventories 253.0 290.7

Trade receivables 239.2 309.7

Other receivables 72.8 84.8

Cash and cash equivalents 115.2 106.9

Assets classifi ed as held for sale 61.1 25.4

Current assets 741.3 817.5

Total assets 1,547.7 1,680.4

EQUITY AND LIABILITIESShare capital 316.1 318.1

Share premium and reserves 119.2 120.2

Retained earnings 129.6 82.8

Net result for the year (21.8) 68.5

Equity attributable to equity holders of the parent 543.1 589.6

Minority interests 29.8 21.3

Total Equity 572.9 610.9

Interest-bearing loans and borrowings 286.5 399.2

Other Financial Liabilities 94.6 102.4

Deferred Tax Liabilities 21.6 35.5

Provisions and other non-current liabilities 83.4 83.9

Non-Current Liabilities 486.1 621.0

Trade Payables 134.2 215.5

Other Liabilities 133.2 149.0

Interest-bearing loans and borrowings 135.6 57.8

Other Financial Liabilities 4.2 0.8

Provisions and other current liabilities 23.3 23.3

Liabilities classifi ed as held for sale 58.2 2.1

Current Liabilities 488.7 448.5

Total equity and liabilities 1,547.7 1,680.4

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CASH FLOWS FROM OPERATING ACTIVITIESNet profi t before tax (0.8) 101.5

Depreciation and amortization 173.6 111.5

Gain (loss) on sale of fi xed assets (5.8) (8.3)

Net fi nancial items 40.4 36.0

Change in provisions and other non-cash items (5.7) (55.1)

Income from associates 0.4 (0.9)

Operating profi t before working capital changes 202.1 184.7

EFFECT OF CHANGES IN ASSETS AND LIABILITIESChange in working capital 239.3 178.7

Cash generated from operations 239.3 178.7

Interest paid (22.7) (25.8)

Income taxes paid (47.0) (43.2)

Other items (4.4) (1.5)

Net cash from operating activities 165.2 108.2

CASH FLOWS FROM INVESTING ACTIVITIESAcquisition of subsidiaries net of cash acquired (45.7) (13.9)

Disposals of subsidiaries net of cash disposed of 14.1 69.5

Acquisition of property, plant and equipment (112.8) (122.0)

Proceeds from sale of property, plant and equipment 17.2 8.0

Dividends received 0.2 0.6

Net cash used in investing activities (127.0) (57.8)

CASH FLOWS FROM FINANCING ACTIVITIESProceeds from issuance of stocks - 18.5

Proceeds from loans 6.5 29.4

Repayment of loans (26.2) (42.7)

Payment of fi nance lease liabilities (4.4) (3.2)

Dividends paid (1.3) (35.2)

Net cash from (used in) fi nancing activities (25.4) (33.2)

Effect of exchange rate fl uctuations on cash held 4.3 (2.9)

Net increase (decrease) in cash 8.3 14.3

Cash balance, beginning of period 106.9 92.6

Cash balance, end of period 115.2 106.9

Cash fl ow

Tarkett SA, the holding entity of Tarkett’s worldwide operations, is a non-listed company headquartered in Nanterre, France. It is fully owned by a private holding company, Société d’Investissement Familiale or SIF. The shareholders of SIF are the Deconinck family (50%) and Kohlberg Kravis Roberts and Co (50%).

The supervisory board of Tarkett comprises 6 members representing the Deconinck family and KKR – Didier Deconinck, Bernard-André Deconinck, Eric Deconinck, Henry Kravis, Jacques Garaïalde and Silke Scheiber. It meets regularly (at least once a month) to review fi nancial results as well as strategic initiatives.

The supervisory board, chaired by Didier Deconinck, also has several ad-hoc committees:• The Audit committee, chaired by Silke

Scheiber• The Selection and Compensation

Committee chaired by Jacques Garaïalde

• The Strategic Committee chaired by Jacques Garaïalde

• The Marketing committee chaired by Eric Deconinck

The management board of Tarkett SA is headed by Michel Giannuzzi. Its members are Fabrice Barthélemy and Vincent Lecerf.

The Group is run by an Executive Management Committee, headed by Michel Giannuzzi. This Committee comprises four division Presidents, four functional Vice-Presidents and the Secretary to the Board.

Tarkett is committed to complying with the highest standards of internal controls and ethics. To this effect, it deployed at the end of 2008 a Code of Ethics covering worldwide business practices and procedures, to ensure that Tarkett continues to work fairly and honestly with its customers, employees, suppliers and partners and the local communities in which it operates.

Corporate governance

Tarkett SA

2, rue de l’ÉgalitéF-92748 Nanterre cedexPhone: +33 (0)1 41 20 40 40Fax: + 33 (0)1 41 20 47 05

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