Recylex : 07.09.2017 Recylex 2017 interim results

• Strong improvement in the Group's operating performance
• Improved earnings in the Lead and Zinc segments despite maintenance shutdowns
• Positive consolidated net income €6.7 million

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

2 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.

3 Cash net of drawn credit lines.

Recylex -6, place de la Madeleine - F -75008 Paris

Administrative office: 79, rue Jean-Jacques Rousseau - F-92158 Suresnes Cedex

Tel: +33 1 58 47 04 70 - Fax: +33 1 58 47 02 45 - www.recylex.fr / Twitter:@Recylex

The Recylex Group's full 2017 Interim Financial Report may be downloaded from the Company's website (www.recylex.fr (English version) - Shareholders/Investors - Regulated Information - Interim Financial Report).

1. Trend in metals prices in Euros in the six months to June 30, 20174

   Average metals prices for the six-month period to end-June were as follows:

   (€ per tonne)	First-half 2017 average	First-half 2016 average	Change (%)
   Lead price	2,052	1,552	+32%
   Zinc price	2,487	1,611	+54%

   4 Source: London Metal Exchange 2017 - See the press release of July 27, 2017.

2. Consolidated results and key balance sheet figures at June 30, 2017

   • Income statement key figures

     Consolidated sales in the first six months of 2017 came to €218.3 million, up 30% on the level posted in the same period of 2016, chiefly as a result of higher lead and zinc prices. Restated2(to include the Group's share of 50%-owned Recytech's sales) consolidated sales for the six

     months to June 30, 2017 totaled €230.0 million, up 31% compared with the same period of 2016.

     During the first half of 2017, consolidated EBITDA under IFRS came to €9.6 million. This represented a very significant improvement on the first-half 2016 EBITDA loss of €0.1 million. Over the same period, restated consolidated EBITDA came to €17.4 million, up from

     €3.7 million in the first half of 2016.

     Despite the unfavorable base of comparison given the major scheduled maintenance shutdowns in the Lead and Zinc segments during the second quarter of 2017 (vs. no shutdown in 2016), the Group's operating performance improved significantly, chiefly owing to the far higher profitability of the Lead and Zinc segments in the first half of 2017 as a result of:

     • the strong rise in lead and zinc prices in the first half of 2017 compared with the first half of 2016,

     • Recylex's continued pursuit of its selective purchasing policy in the Lead segment, which is paying off,

     • a solid production performance with high volumes produced and sold.

       Accordingly, the Group recorded a positive operating income before non-recurring items of

       €6.3 million, a very strong improvement of €9.5 million compared to the €3.2 million loss in the first six months of 2016. Restated2operating income before non-recurring items totaled

       €13.7 million, compared with a near breakeven performance in the first half of 2016.

       The good performances posted by the Lead and Zinc segments-their results were significantly better than in the first half of 2016-offset the impact of the major maintenance shutdowns in the first half of 2017 and of the losses recorded by the Special Metals segment and by the Other (Holding and Environment) segment, with the Plastics segment breaking even.

       In addition, the Group recorded a €1.4 million gain under Other non-recurring income and expenses, including €1.2 million on the disposal of the FMM SA subsidiary's site in Belgium.

       From a financial perspective, the Group recorded a rise in its Net interest expense to

       €2.7 million, from €1.8 million in the first half of 2016 as a result of interest payments on its increased credit lines and the use of the borrowing facilities arranged in Germany during December 2016. Other financial income and expense showed a net expense of €2.3 million, compared with net income of €0.1 million in the first half of 2016. The key factor behind this was a reclassification for accounting purposes linked to hedging transactions covering the trading

       risk associated with fluctuations in lead prices5- this has no impact on the Group's 2017

       results.

       Taking all these factors into account, Recylex's consolidated net income attributable to equity holders of the parent came to €6.7 million in the first half of 2017, a significant improvement of

       €11 million on the first-half 2016 loss of €4.2 million.

       • Balance sheet key figures

     The Group's net cash position (after deduction of drawn credit lines) went from negative

     €7.0 million at December 31, 2016 to negative €8.5 million at June 30, 2017. A strong, but temporary increase in the Group's recurring working capital requirement (reflecting the increase in the inventory of secondary materials linked to the maintenance shutdown at the Nordenham smelter) accounted for the €1.5 million in cash used by the Group.

     Cash flow from operating activities came to negative €4.8 million in the first half of 2017, compared with positive €4.7 million in the same period of 2016.

     Even so, the Group's gross cash remained almost stable at €6.5 million at June 30, 2017, compared with €6.2 million at December 31, 2016, owing to the use of all its available credit lines, i.e. a total of €15 million. At December 31, 2016, the Group had €15.0 million in credit lines, €13.2 million of which were drawn down.

     The Group's net debt totaled €83.6 million at June 30, 2017, up from €27.1 million at December 31, 2016 chiefly as a result of:

     • the €21.7 million drawdown on the borrowings arranged in December 2016 to finance investments by the German subsidiaries, including construction works on the Lead segment's new reduction furnace,

     • the conversion of existing provisions into debt, including €26.6 million linked to the European Commission's fine and €7.8 million linked to the 187 rulings handed down by the Douai Appeal Court on January 31, 2017,

     Overall, the Group's provisions declined sharply to €28.2 million at June 30, 2017 from

     €64.2 million at December 31, 2016.

     Net non-current assets increased by €17.9 million to €62.4 million at June 30, 2017, from

     €44.5 million at December 31, 2016. This increase was chiefly attributable to investment in the new reduction furnace currently under construction.

     Consolidated equity came to negative €18.4 million at June 30, 2017. This represented an improvement of €12.6 million on its level at December 31, 2016, owing chiefly to the positive impact of the €6.7 million in first-half 2017 consolidated net income and the €4.4 million in capital raised from Recylex SA's equity line.

     5 See Note 5.5 to the condensed consolidated financial statements at June 30, 2017.

3. Consolidated first-half 2017 results by segment (excluding holding companies and environment)

   • Lead segment (69% of consolidated sales)

The Lead segment's first-half 2017 sales totaled €151.4 million, up 27% compared with the first half of 2016.

Despite an unfavorable base of comparison linked to the maintenance shutdown of the smelter in the first half of 2017 (vs. no maintenance shutdowns in 2016), the segment posted a good performance thanks to the rally in lead prices and a robust level of lead production in the first half of 2017.

The plants in France and Germany recycled 68,800 tonnes of used lead-acid batteries (ULAB) - a 30% increase on the 53,000 tonnes in the same period of 2016, thanks to the increased availability of materials for recycling by comparison with the first half of 2016.

In this context, the Group continued to pursue its selective purchasing policy, which helped to improve its margins.

Production by the Weser-Metall GmbH smelter reached 57,358 tonnes in the first half of 2017, an increase of 10% on the 52,011 tonnes recorded in the same period of 2016, despite the smelter's maintenance shutdown during the first half of 2017.

The Lead segment's operating income before non-recurring items under IFRS rose sharply in the first half of 2017, to €3.8 million, compared with a loss of €4.1 million in the first six months of 2016. Restated operating income before non-recurring items2for the same period came to

€4.8 million, compared with a loss of €3.9 million in the first half of 2016.

The upturn in lead prices and higher battery volumes processed helped to improve the segment's margins over the period.

Thanks to the bank loans arranged in December 2016, the Group began the construction in January 2017 of the Weser-Metall GmbH subsidiary's new reduction furnace in Germany.

The aim of this investment of approximately €40 million is to restore the Lead segment's profitability over the long term by recovering more of the lead content from the input materials.

Work continues on schedule, and the furnace is expected to be commissioned in the first half of 2018.