U10 : 2016 Half-year Financial Report- abriged version

2016 INTERIM FINANCIAL REPORT

This interim financial report has been drawn up in compliance with paragraph III of article L.451-1-2 of the French Monetary and Financial Code (Code Monétaire et Financier) and articles 222-4 to 222-6 of the General Regulations of the AMF (Autorité des Marchés Financiers).

Figures in this report (excluding tables) expressed as "K€" in the original French document have been rounded accordingly to the nearest thousand (000s).

Translation disclaimer: This document is a free translation of selected excerpts from the French language 2016 interim financial report (rapport financier semestriel) produced solely for the convenience of English speaking readers. This report should consequently be read in conjunction with, and construed in accordance with French law and French generally accepted accounting principles. While all possible care has been taken to ensure that this translation is an accurate representation of the original French document, this English version has not been audited by the company's statutory auditors and in all matters of interpretation of information, views or opinions expressed therein, only the original language version of the document in French is legally binding. As such, the translation may not be relied upon to sustain any legal claim, nor be used as the basis of any legal opinion and the U10 expressly disclaims all liability for any inaccuracy herein.

INTERIM MANAGEMENT REPORT

Basis of consolidation

As of 30 June 2016, the Group consisted of 21 companies. There were no changes in Group structure with respect to consolidation for the six-month period under review.

Subsidiaries and sub-subsidiaries are consolidated on the acquisition date (defined as the date control is acquired) or the creation date.

Business combinations are recognised according to the purchase method of accounting in compliance with IFRS 3. Under this method, identifiable assets as well as liabilities and contingent liabilities assumed are initially measured at their fair value on the acquisition date. Contingent consideration (earn-out payments) is included in the purchase price.

Presentation of the interim condensed consolidated financial statements

The consolidated financial statements have been prepared in compliance with the accounting IFRS rules for recognition and measurement published by the IASB.

Standards and interpretations applied to prepare the consolidated financial statements of 30 June 2016 are those published in the Official Journal of the European Union on 30 June 2016 whose application is mandatory as of this date.

The interim financial statements are prepared and presented in accordance with IAS 34. For the notes to the interim financial statements a condensed version is presented. The accounting methods and procedures for calculation adopted for the interim financial statements for the period ended 30 June 2016 and 30 June 2015 are the same as those used for the annual financial statements for the period ended 31 December 2015, and presented in the annual report of 29 April 2016 with the exception of those described in the paragraph below.

These standards, amendments and interpretations that entered into force in 2016 had no impact or were not applicable. These primarily consist of the 2010-2012 and 2012-2014 annual improvement cycles and the amendment to IAS 1 "disclosure initiative".

The Group has chosen not to apply in advance the standards, interpretations and amendments adopted by IASB and the European Union before the end of the reporting period, or not yet adopted by the European Union, but whose early application was possible, and entering into effect after that date. This concerns mainly amendments to IAS 12 "Recognition of deferred tax assets for unrealised losses" and IAS 7 "Disclosure initiative" Based on analysis in progress, these standards, amendments and interpretations are not expected to have a significant impact on consolidated equity.

There were no standards, amendments and interpretations published by IASB and mandatory in 2016, and not yet in issue at the European level, (and those for which the early application is not possible at the European level) on 30 June 2016.

In addition, the Group has not yet analysed the impacts of IFRS 15 "Revenue from contracts with customers", IFRS 16 "Leases" and IFRS 9 "Financial instruments", voted by the IASB with a first-time application for periods beginning on or after 1 January 2018 for IFRS 15 and IFRS 9, and on or after 1 January 2019 for IFRS 16. These standards have not yet been adopted by the European commission (which is expected by the end of 2016 or 2017, according to the standards), and core issues are pending discussion and expected to be addressed by IASB amendments in the 2016 second half.

As condensed financial statements, they do not include all disclosures required under IFRS to prepare annual financial statements. Disclosures in the notes relate solely to items, transactions and material events that contribute to an understanding of changes in the Group's financial position and performances.

Seasonal fluctuations have a very limited impact on the Group's activities. For information, in fiscal 2015, the first half accounted for 48% of sales and the second half 52%.

Preparation of financial statements in accordance with IFRS requires the use of certain critical accounting estimates and assumptions. Management is also required to exercise its judgement in the process of applying the Group's accounting policies. The most significant areas with respect to judgements and complexity or involving material assumptions concern notably the valuation of asset impairments.

No significant changes thereto were made in the 2016 first half.

The economic and financial crisis has increased difficulties in respect to valuations and estimates for certain assets and liabilities and the occurrence of unpredictable events with a potential impact on business trends. Estimates made by management are based on data available at the closing date and after taking into account post-closing events in compliance with IAS 10.

The notes to accounting policies are presented below, in the event of adaptations of accounting rules and estimates to the specific features relating to interim reporting, in accordance with IAS 34.

First-half operating highlights

At June 30 2016, first half revenue amounted to €99.7 million, down 12.2%, following the voluntary discontinuation of a portion of the basic Trading activity in Asia.

• In Europe, all businesses registered gains in the period. The Undergarments activity registered an excellent growth of 20.6%.

• In Asia, the discontinuation of basic Trading sales represented a decline of 36.7% in the historic business, while U10 HK has started to record its first orders.

Current operating income registered strong growth, rising from €4,108,000 to €5,034,000.

Operating profit at 30 June 2016 amounted to €4,509,000, up from €3,921,000 one year earlier despite the impact of non- recurring expenses.

Net financial expense decreased 19.6% to€390,000 from €485,000 at 30 June 2015, reflecting lower financing costs.

On that basis, net income for the period rose 10.7% to €2,723,000 for the 2016 first half compared to €2,460,000 at 30 June 2015.

Net financial debt amounted to €29.5 million after taking into account the property lease financing for the new logistics building. Excluding this capital expenditure, net debt would have declined €7.3 million to €18.3 million.

Gearing represented 29% of equity compared to 24.6% at 31 December 2015

Cash flows generated by operating activities amounted inflows of €9,323,000 (compared to €5,163,000 in the 2015 first half and €8,558,000 for the 2015 full year). Cash flows from consolidated companies came to €3,760,000 compared to €3,374,000 in the 2015 first half. Working capital requirements decreased by €5,563,000 in the 2016 first half.

Short-term financial debt (cash and cash equivalents minus current bank facilities and overdrafts) )amounted to €4,770,000, down from €10,138,000 at 31 December 2015, reflecting the improvement in working capital.

Related party transactions

The main related party transactions disclosed in note 5.7 of the 2015 consolidated financial statements remained in force in the 2016 first half. The amount of transactions carried out in the first half is disclosed in note 5.6 of the condensed interim consolidated financial statements of 30 June 2016.

Legal and arbitration proceedings

To the best of the company's knowledge, there are no exceptional items or litigation proceedings that could have or have had in the recent past, a material impact on the financial position, business, earnings and assets of the company or the Group.

Provisions were recorded for litigation proceedings known at the end of the reporting period according to the method described in note 5.2.4 on "Provisions" of the consolidated financial statements for the fiscal year ended 31 December 2015.

Subsequent events

There are no material post-closing events to report.

Outlook

U10 HK's business development by organising a network of sales representatives has also opened up a new avenue for growth for the Europe division: rapid deliveries for exports from French logistics platforms, with certain customers opting for importing by containers whereas others prefer rapid deliveries by trucks within 10 days.

The potential for sales by containers combined with exports incorporating value added services offer U10 a new channel for organic growth in the future.

Risk management

No new risks have been identified in relation to those presented in the 2015 annual report available for consultation atwww.info-financiere.fr and the Company's website,www.u10.fr.

1. CONSOLIDATED BALANCE SHEET 5
2. CONSOLIDATED INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME 6
3. Consolidated income statement 6
4. Statement of comprehensive income 6
5. CONSOLIDATED STATEMENT OF CASH FLOWS 7
6. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 8

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