RECYLEX SA: FULL-YEAR 2016 RESULTS

• Restated¹ EBITDA² at €19.3 million, up €19 million and Operating cash flow at €11.2 million, a strong increase for the second year in a row
• Operating income before non-recurring items (IFRS) at breakeven point and positive restated¹ operating income before non-recurring items² of €9.0 million
• Strong reduction in the net loss to €10.1 million including the negative impact of the European Commission's fine (€26.7 million), to be paid in installments
• Start of construction work in early 2017 on the new reduction furnace following the financing raised by the German subsidiaries in December 2016

Suresnes, May 24, 2017: Recylex SA is publishing its consolidated full-year results for the 2016 financial year, which were approved today by its Board of Directors on a going concern basis. The Recylex 2016 Financial Report was filed today with the Autorité des Marchés Financiers (AMF) and may be consulted on the company's website www.recylex.fr (Shareholders/Investors - Regulated Information - Annual Financial Report).

Yves Roche, Chairman and Chief Executive Officer of the Recylex Group, commented:

"There was a strong improvement in our performance between the first and second half of 2016. Recylex reaped the benefit of the 2016 rally in metals prices, especially during the fourth quarter. The measures we took to guide the Group back to profitability, such as our selective purchasing strategy in the Lead segment and our productivity efforts over the past few years, also paid off. As a result, restated operating income, a measure of our overall industrial and business performance, delivered a very healthy increase and became positive at €9 million. This encouraging operating performance also reflects the commitment of all our teams in Germany and France to our goal of returning to profitability. Our net result showed a strong improvement, even though we posted a loss of €10.1 million owing to the impact of the European Commission's fine. On May 18, 2017, we announced an agreement with the European Commission and our main financial partners to a payment plan for the fine. Thanks to this agreement, we can now look to the future again and concentrate on operational execution. Our top priority is to complete the construction of our new reduction furnace in Germany, the only one of its type in Europe."

¹ To assess the performance of its Lead segment, the Group uses the LIFO ("Last in first out", not permitted under IFRS) method in its internal reporting to measure inventories for its main lead smelter in Nordenham. To assess the performance of the Zinc segment, the Group also releases restated financial data including the contribution from 50%-owned Recytech SA consolidated proportionately, even though this method is not permitted under IFRS. See note 19 to the 2016 consolidated financial statements.

² Operating income before non-recurring items and before additions to and reversals from amortization, depreciation, provisions and impairment losses (non-IFRS indicator).

1.     Consolidated key figures (audited figures)

³ Cash net of drawn credit lines.

2.     Metals prices in euros and €/$ exchange rates in the year to December 31, 2016

Between January 4, 2016 and December 30, 2016, lead prices rose 17%, while zinc prices increased 71%. These gains came at the end of a solid upturn in the second half of 2016, particularly during the fourth quarter.

After holding relatively firm in the first half of 2016, lead prices recorded a strong rise late on in the year, while zinc prices moved higher throughout the year, with the rise accelerating in the second half of 2016.

Because of the base of comparison in 2015-with high prices in the first half but sharply lower prices in the second half-the average lead price in 2016 was 5% higher than the 2015 average, while the average zinc price in 2016 was 9% higher than the 2015 average. Average prices in the year to December 31 were thus as follows:

Between January 4 and December 30, 2016, the euro/dollar exchange rate went from 1.0909 to 1.0541, representing a decrease of around 3% over the period.
In addition, the average €/$ exchange rate for 2016 remained stable at 1.1066 compared with 1.1097 in 2015, with strong appreciation in late 2016.

3.     Consolidated statement of income for the year to December 31, 2016

Recylex's 2016 sales came to €382.1 million, down just 1% on their 2015 level. The Group's fourth-quarter sales recorded a strong increase of 28% versus the same period of 2015 to reach €117.0 million.

2016 IFRS operating income before non-recurring items was practically at breakeven point. It showed a very small loss of €0.1 million. This represented an improvement of over €19 million on the previous year's figure. Restated operating income before non-recurring items came to €9.0 million, compared to the 2015 loss of €10.4 million, an improvement of the same order as the IFRS figure.

Thanks to a favorable base of comparison (given the absence of the major maintenance shutdowns in 2016 in the Lead and Zinc segments) and also higher metals prices, the significant improvement in the Group's financial performance was chiefly attributable to:

• the Lead segment's improved profitability, with a return to positive territory in 2016, with a contribution of €3.7 million
• an improvement in the Zinc segment's contribution to €6.9 million in 2016.

Recylex's 2016 net loss came to €10.1 million, a major improvement of €29.3 million on the loss of €39.4 million recorded in 2015⁴. The 2016 net loss was attributable to:

• an operating loss before non-recurring items of €0.1 million,
• €20.2 million in net other operating expenses, reflecting:

• a €26.7 million provision for the fine handed down to the Recylex Group by the European Commission on February 8, 2017⁵,
• a €5.0 million net reversal of provisions for impairment of assets,
• a €2.2 million reversal of a provision for Recylex SA following the rulings handed down by the Douai Appeal Court on January 31, 2017,

• the €6.0 million share in income from equity affiliates,
• net financial expense of €0.9 million,
• a tax benefit of €5.0 million owing to the recognition of deferred taxes from the businesses in Germany.

⁴ See press release dated July 12, 2016.

⁵ See press releases dated February 8, 2017 and May 18, 2017.

4.     Results by segment in the year to December 31, 2016 (excluding holding company)

• Lead segment (73% of 2016 sales)

Recylex's recycling plants processed 111,000 tonnes of scrap batteries in 2016, down 7% on the 2015 volume of 120,000 tonnes.
Weser-Metall GmbH's smelter produced 117,014 tonnes of lead in 2016, also down 7% from 125,506 tonnes in 2015.
In spite of a favorable base of comparison owing to the maintenance shutdown in the first half of 2015 (no maintenance shutdowns took place in 2016) and the uptrend in lead prices, particularly in the second half of 2016, this decline was chiefly attributable to the slower pace of production in 2016 owing to the evolution of the feeding mix and the Group's selective purchasing policy.

Despite these factors, the Lead segment recorded an IFRS operating income before non-recurring items of €3.7 million in 2016, compared with a loss of €13.5 million in 2015. The Lead segment's restated¹ 2016 operating income before non-recurring items came to €3.2 million, compared with a loss of €11.2 million in 2015.

This strong improvement in the segment's financial performance largely reflected (in descending order of importance):

• the non-cash effects arising from differences between the value of the lead sold (indexed to the lead price at the time of the sale) and its carrying amount in the inventories (indexed to the average lead price since the beginning of the year)
• the positive impact arising from the absence of maintenance shutdown at Weser-Metall GmbH in 2016 (no shutdown in 2016 compared with one shutdown in 2015),
• improvement in the segment's margins.

Overall, the earnings improvement in the second half of 2016-especially during the fourth quarter-more than offset the operating loss recorded in the first half of 2016.

Given the segment's performance and brighter outlook, the Group reversed €4.9 million in provisions for the impairment of assets.

The Recylex Group finalized in December 2016 a €67 million financing⁶ for its German subsidiaries from a consortium of banks. The purpose of these funds is to cover the identified requirements of the Group's operations in Germany, including construction of the new reduction furnace at Nordenham (Germany). This large-scale production project aims to generate sustained profitability in the Lead segment by significantly increasing the extent to which materials' metal content can be recovered internally. It is scheduled to be commissioned in the second quarter of 2018.

⁶ See the press release dated December 29, 2016.

• Zinc segment (19% of 2016 sales)

With 173,700 tonnes of electric arc furnace dust processed, Waelz oxide production at the Group's two facilities (Harz-Metall GmbH in Germany and 50%-owned Recytech SA in France) totaled 72,600 tonnes in 2016, compared with the 65,900 tonnes of Waelz oxide produced in 2015 from a dust processing volume of 164,300 tonnes. Production volumes rose by 10% from their 2015 levels owing to a favorable base of comparison linked to the maintenance shutdown at Harz-Metall GmbH's smelter in 2015 (no such shutdown in 2016).
Zinc oxide production by the Norzinco GmbH subsidiary totaled 23,780 tonnes in 2016, up 4% from 22,940 tonnes in 2015.

Its IFRS operating income before non-recurring items stood at €6.9 million in 2016, up €6.7 million from €0.2 million in 2015. Restated¹ operating income before non-recurring items came to €16.6 million in 2016, a very strong increase of €9.9 million from €6.7 million in 2015.
Overall, the Zinc segment's financial performance improved during the second half of 2016 compared with the first half of 2016 and with 2015 as a result of:

• a favorable base of comparison for production volumes and costs in 2016 as there were no scheduled maintenance shutdown at the Harz-Metall GmbH plant,
• the uptrend in zinc prices throughout 2016, with an acceleration in the second half of 2016 and particularly in the fourth quarter.

Given the segment's firmer performance, the Group reversed €0.9 million in provisions for the impairment of assets.

• Plastics segment (4% of 2016 sales)

The Group's two subsidiaries - C2P SAS in France and C2P GmbH in Germany - produced 14,830 tonnes of recycled polypropylene, down 10% on the previous year (16,530 tonnes).

Business trends were again held back by the reduced competitiveness of recycled materials compared with virgin polypropylene as a result of the low level of oil prices. With stable volumes and prices up slightly over the full year, C2P in France displayed encouraging resilience through its policy of pursuing business diversification and moving its products upscale. C2P GmbH in Germany recorded a decline in its sales volumes and selling prices as conditions remained persistently tough.

Even so, the segment's operating income before non-recurring items remained stable at €0.3 million in 2016.

• Special Metals segment (4% of 2016 sales)

The segment's operating loss before non-recurring items came to €3.3 million, compared with a loss of €0.6 million in 2015.
This decline was primarily attributable to a more selective commercial strategy in arsenic in a bid to maintain selling prices, as well as to a cyclical decline in germanium volumes and prices as the market lost momentum.

As a result, an additional asset impairment loss of €0.8 million was recognized.

5. Trends in the Group's financial position at December 31, 2016 (audited figures) and since January 1, 2017 (unaudited figures)

• Cash

For the second year in a row, cash flow generated by operating activities before non-recurring items and tax was positive. It totaled €11.2 million in 2016, an improvement of €3.4 million compared with 2015. Operating activities provided €6.4 million in financing for its net capital expenditures.

The Group's net cash position, after deduction of the drawn credit lines, came to negative €7.0 million at December 31, 2016, compared with negative €5.0 million at December 31, 2015 (identical level to at June 30, 2016). Through strong cash generation by its operating activities, efforts to reduce the working capital requirement at all the Group's subsidiaries and capital expenditures reduced to minimum level, Recylex was able to keep its cash consumption only down to €2 million in 2016, compared with €1.3 million in 2015.
The Group had available credit lines totaling €15 million at December 31, 2016, €13.2 million of which was drawn down at the same date.

In December 2016, Recylex SA arranged an equity line⁶ with Kepler Cheuvreux to increase the cover of the cash requirements arising from its ongoing operations in France. Following the drawings on the line in January 2017, 250,000 new shares were issued, generating net cash proceeds of €933,000 for Recylex SA.

On May 24, 2017, the Group's net cash position was stable compared with at December 31, 2016. This includes full use of the available credit lines amounting to €15 million to cover the Group's working capital requirement.

• Equity

Consolidated equity stood at negative €30.5 million at December 31, 2016, compared with negative €20.1 million at December 31, 2015, representing a decline of €10.4 million. The reduction was caused by the FY 2016 loss and by the recognition of €0.8 million in actuarial gains and losses net of deferred taxes concerning provisions for pensions and post-retirement obligations.

• Debt

The Group's net debt totaled €27.1 million at December 31, 2016, down from €29.8 million at December 31, 2015. This decline was chiefly attributable to repayments of long-term borrowings in Germany.
At December 31, 2016, Recylex SA's financial liabilities relating to the deferred payments (after elimination of intra-group debts and before discounting) totaled €5.1 million. Certain creditors under the continuation plan agreed in 2013 to the deferral to 2019⁶-i.e. beyond the term of the continuation plan-of the repayment of the outstanding balance of liabilities under this plan. Within the scope of the staggered installment plan to pay the fine decided by the European Commission, the repayment of these liabilities was postponed to 2026.
As a reminder, Recylex SA obtained a loan facility⁷ of up to €16 million in 2014. At December 31, 2016, the Company had drawn down €8.5 million of this loan. Within the scope of the staggered installment plan to pay the fine decided by the European Commission, the repayment date of this loan has been deferred to 2024.

At May 24, 2017, the Group's net debt totaled €47.3 million (excluding the European Commission's fine, for which €26.7 million was set aside as a provision in the consolidated financial statements for the year ended December 31, 2016).
This €20.2 million increase was the result of the drawdown on the available facilities to cover ongoing capex and work on the construction of the new reduction furnace, as well as of full use of existing credit lines.

⁷ See note 13 to the 2016 consolidated financial statements.

6. Ongoing legal proceedings concerning Recylex SA⁸

The May 17, 2017 update summarizing the proceedings concerning Metaleurop Nord SAS and Recylex SA is available from the Recylex Group's website at www.recylex.fr - News - Legal proceedings schedule.

^{7 8} See note 1 to the 2016 consolidated financial statements.

7.     Environmental rehabilitation work by Recylex SA⁹

Recylex SA secured in February 2016 the deferral by the relevant authorities until December 31, 2018 of the deadline for remediation work at the inactive L'Estaque site. Recylex SA continues its search for dedicated financing to finalize this remediation work and valorization of the site.

⁹ See note 38 to the 2016 consolidated financial statements.

8.     Outlook for 2017

• Metals prices and €/$ exchange rate

A steady uptrend drove metals prices and the euro/US dollar exchange rate higher throughout 2016, with an acceleration in the fourth quarter of 2016. At the beginning of 2017, both were at the same levels recorded in December 2016. Even so, a correction began at the beginning of the second quarter of 2017. In addition, since May 2017, the euro has tended to appreciate against the US dollar (USD).
The outlook for metals prices remains positive given their fundamentals, but consolidation during the year remains a possibility.
In addition, movements in the euro/US dollar exchange rate are likely to reflect macroeconomic statistics, such as the measures taken by central banks in support of their respective economies as well as US, Chinese and European economic policy.

• Lead segment

According to industry analysts, the global lead industry experienced a very slight supply shortfall in 2016. For 2017, these analysts forecast that global consumption will exceed production, giving rise to a shortfall in supply, followed by a small surplus in 2018. These strong fundamentals are expected to underpin trends during the first half of 2017.
In this context, the Group will continue to pursue its selective purchasing strategy in 2017, and its priority will be to complete work on Weser-Metall GmbH's new reduction furnace.
The Lead segment's performance in 2017 will, however, most likely show the effects of an unfavorable base of comparison as a result of the major scheduled maintenance shutdown at Weser-Metall GmbH's smelter in Nordenham that occurred in the second quarter of 2017.

• Zinc segment

A supply shortfall was recorded in the global zinc market in 2016 as a result of solid global demand and decisions by major industry players to shut down mines or cut back on their production. While industry forecasts for zinc prices still point to a positive outlook for 2017 (albeit with a smaller supply shortfall than in 2016), a slight production surplus is expected again in 2018. Average zinc prices have risen to high levels and so they may be in store for a correction during 2017.
In 2017, Norzinco GmbH will continue its initiatives in zinc oxide production to develop and diversify its sources of supply with a view to restoring its margins.
In Waelz oxide production, the Group is set to continue operating at full capacity and will pursue further efficiency improvements. The activity's performance is set to be affected by an unfavorable base of comparison in 2017 owing to the major maintenance shutdown scheduled at the Harz-Metall GmbH plant in the second quarter of 2017.

• Plastics segment

Given the low level of oil prices in 2016 and early 2017 as well as demand trends in the automotive sector, the segment's performance in 2017 will depend on its ability to pass on the effects of these challenging conditions, primarily by paying lower input costs.
For C2P in France and Germany, the operational priorities in 2017 are exactly the same as they were in 2016-consolidating sales volumes in the automotive sector, expanding customer portfolio and diversifying the range of the materials recycled.

• Special Metals segment

Trends in the Special Metals segment during 2017 will depend on the strength of demand in the semiconductors sector, especially in south-east Asia and Japan. The direction of the euro/yen exchange rate will also be a key factor.
PPM Pure Metals GmbH will continue to take steps to improve its production performance in the objective to restore its margins.

9.     Financial agenda for 2017

Next event: Annual General Meeting of the shareholders: 10.00 am on Tuesday, July 11, 2017
Next report: First-half 2017 sales: Thursday July 27, 2017 after the market close

*************************************
Regenerating the urban mines
With operations in France and Germany, Recylex is a European group specialized in lead and plastics recycling (mainly from automotive and industrial batteries), zinc recycling (from electric arc furnace dust and from zinc scrap) and the production of special metals.
A key player in the circular economy with long-standing expertise in urban waste recovery, the Group has more than 660 employees in Europe and generated consolidated sales of €382 million in 2016.
For more information about Recylex Group: www.recylex.fr and on twitter: @Recylex

*************************************

Press/Investor contact:
Gabriel ZEITLIN
+ 33 (0)1 58 47 29 89
gabriel.zeitlin@recylex.fr

Disclaimer: This press release may contain forward-looking statements that do not constitute forecasts regarding results or any other performance indicator, but rather trends or targets. These statements are by their nature subject to risks and uncertainties as described in the Company's annual report available on its website (www.recylex.fr). Further information about Recylex is available on its website (www.recylex.fr). Unless otherwise indicated, all comparisons made in this press release are on a year-on-year basis (2016/2015).