2015 INTERIM FINANCIAL REPORT

Transcription

1 2015 INTERIM FINANCIAL REPORT (Article L III of the French Monetary and Financial Code and Article et seq. of the AMF s General Regulation) Table of contents Statement by the person responsible for the Interim financial report p. 2 Interim management report for 2015 p. 3 Condensed consolidated financial statements at June 30, 2015 p. 10 Statutory Auditors report on the 2015 interim financial report p. 44 This 2015 Interim Financial Report is a free translation of the official Rapport Financier Semestriel 2015 issued in French language and is made available for information purposes only. In case of any discrepancy between this 2015 Interim Financial Report and the Rapport Financier Semestriel 2015, the latter will prevail. 1

2 STATEMENT BY THE PERSON RESPONSIBLE FOR THE 2015 INTERIM FINANCIAL REPORT I hereby certify that to the best of my knowledge the condensed financial statements for the six-month period have been prepared in accordance with the applicable accounting standards and give a true and fair view of the assets, liabilities, financial position and results of operation of the Company and of all the undertakings included in the consolidation, and that the accompanying interim management report includes a fair review of the significant events that occurred during the first six months of the year, their impact on the financial statements, the main related-party transactions and a description of the main risks and uncertainties in the remaining six months of the financial year. Suresnes, August 31, 2015 Yves Roche Chairman and Chief Executive Officer 2

3 MANAGEMENT REPORT - FIRST HALF OF 2015 Interim 2015 results (consolidated financial statements) At its meeting on August 31, 2015, the Board of Directors of Recylex SA reviewed and approved the condensed consolidated interim financial statements for the six months to June 30, 2015 of the Recylex Group (hereinafter the Group ). Consolidated sales in the first half of 2015 came to million, representing a fall of 10% compared with the same period of Consolidated EBITDA under IFRS showed a loss of 2.8 million compared with a loss of 5.2 million in the first half of That said, restated consolidated EBITDA 1 came to 4.5 million in positive territory, compared with 2.5 million in the first half of This profitability improvement was driven chiefly by higher earnings in the Zinc segment following the rise in zinc prices stated in euros. The Lead segment s performance also improved despite an unfavorable base of comparison following the maintenance shutdown of the Weser-Metall GmbH smelter in the second quarter of No maintenance shutdown took place in the first half of The Group recorded an operating loss before non-recurring items under IFRS of 7.4 million in the first half of 2015 compared with an operating loss before non-recurring items of 8.3 million in the corresponding period of The restated operating loss before non-recurring items 1 came to 0.7 million in the first half of 2015, compared with a loss of 2.2 million in the same period of The strong business performance posted by the Zinc segment did not fully offset the operating loss recorded by the Lead segment and other activities (holding company). Even so, business trends in the Lead segment picked up sharply despite an unfavorable base of comparison following the maintenance shutdown of the Weser-Metall GmbH smelter in the second quarter of No maintenance shutdown took place in the first half of In addition, Recylex SA set aside a provision for contingencies of around 3.5 million in the financial statements at June 30, 2015 (see the Legal proceedings involving Metaleurop Nord section below). Accordingly, Recylex recorded a consolidated net loss attributable to equity holders of the parent of 8.8 million in the first half of 2015 compared with a loss of 8.0 million in the corresponding period of Using the LIFO method to measure the lead inventories (not permitted under IFRS) and continuing to consolidate its investment in Recytech SA proportionally. (Note 4 to the condensed consolidated financial statements) 3

4 Key figures In millions of euros First-half 2015 (six months to June 30, 2015) First-half 2014 (six months to June 30, 2014) Consolidated sales EBITDA 2 (IFRS) (2.8) (5.2) Restated 1 EBITDA 2 (LIFO and equity associates) Operating income before nonrecurring items (IFRS) Restated 1 operating income before non-recurring items (LIFO and equity associates) (7.4) (8.3) (0.7) (2.2) Consolidated net income (IFRS) (8.8) (8.0) In millions of euros At June 30, 2015 At December 31, 2014 Total equity Net cash 3 (0.1) (3.7) 1 When assessing the performance of its Lead operating segment, the Group uses the LIFO ( Last in first out ) method in its internal reporting to measure inventories for its main lead smelter in Nordenham, which is not permitted under IFRS. When assessing the performance of the Zinc operating segment, the Group continues to consolidate its investment in Recytech SA proportionally. Note 4 to the condensed consolidated financial statements shows the effects of these restatements. 2 Operating income before non-recurring items and before additions to and reversals from amortization, depreciation, provisions and impairment losses. 3 Cash net of bank overdraft facilities. Group cash position and external financing The Group s net cash position (after deduction of bank overdraft facilities) was negative at million at June 30, 2015, compared with million at December 31, 2014, representing an improvement of 3.6 million over the first half of The main factors contributing to this improvement in the cash position were the 7.1 million in positive cash flows generated by operating activities that helped to cover capital expenditures and interest expense in the first half of The Group s credit lines totaled 13.5 million at June 30, 2015, 8.4 million of which was drawn down at same date. The Group s credit lines totaled 11.3 million at December 31, 2014, 9.1 million of which was drawn down at same date. The cash forecasts prepared by the Group in June 2015 showed an additional financing requirement in the short term of around 10 million. This amount is needed to cover the working capital requirement of its operations in Germany. In this context, talks are ongoing in order to secure additional credit lines to cover the Group s German subsidiaries full working capital requirements and to finance the project to build a new production tool in the Lead segment. Given the current decline in commodity prices and its potential knock-on effects on cash flow from operating activities, the Group needs to complete its search for additional credit lines during the second half of 2015 (see section F of Note 1 to the condensed consolidated financial statements at June 30, 2015, and Note 32 - Liquidity risk to the consolidated financial statements for the year ended December 31, 2014, with regard to the risks to its going concern status, should it fail to gain additional financing). 4

5 Cash position of the parent company, Recylex SA The Company has prepared cash forecasts for 2015 and 2016 based on the information currently available to it, including the final installment of 4.3 million due to creditors by November 2015 under its continuation plan and forecast expenditure relating to its commitments to remediate its former mining sites and its L Estaque site. The impact of the Group s German operations on the cash situation and the risks threatening the going concern status of the parent company and consolidating entity Recylex SA are outlined in Note 32 - Liquidity risk to the consolidated financial statements at December 31, To recap, to cover the projected cash requirements identified for 2015 and 2016 arising from implementation of the continuation plan and claims for dismissal without fair cause lodged in 2010 and 2013 by former Metaleurop Nord SAS employees, currently at appeal, the Company: - secured agreement from certain creditors under its continuation plan, including Glencore International AG, to defer until 2019 (i.e. after expiration of the plan scheduled in 2015) repayment of the outstanding amount due to them under this plan totaling around 7.9 million (prior to the elimination of intragroup loans) (see Notes 18 and 32 to the consolidated financial statements at December 31, 2014); - signed a loan agreement for a maximum amount of 16 million with Glencore International AG. Drawdowns may be made on this loan, in particular so that Recylex SA can honor the final two installments due under its continuation plan. The Company drew down 4.3 million on November 23, 2014 to cover payment of the ninth and penultimate installment under its continuation plan; - arranged an equity line with Kepler Cheuvreux. The purpose of this contingent line of financing is to strengthen coverage of Recylex SA s ongoing cash requirements. In addition, the Company continues its search for dedicated financing to complete rehabilitation work at its L Estaque site. A request to defer the completion date for the rehabilitation work at this site, currently set at December 31, 2015, has been filed with the relevant authorities during the third quarter The risks to Recylex SA s going concern status are described in section F of Note 1 to the condensed consolidated financial statements at June 30, 2015, and Note 32 - Liquidity risk to the consolidated financial statements for the year ended December 31, Activities and key events of the first half of 2015 Market conditions during the first half of 2015 Between January 2 and June 30, 2015, lead prices rose by 2.5% overall, but trends were highly volatile. Zinc prices fell 1.5% over the same period. In addition, the average lead price during the first half of 2015 was 10% higher than in the first half of The average zinc price was 28% above its level in the same period of Average lead and zinc prices during the first six months of the year were as follows: Average ( /tonne) First-half 2015 First-half 2014 FY 2014 Lead price 1,680 1,533 1,579 Zinc price 1,913 1,497 1,634 5

6 Business activities of the Group s companies during the first half of 2015 In millions of euros First-half 2015 Sales From sales to operating income before non-recurring items (1) First-half 2014 Restated operating income before nonrecurring items 1 Restatements 2 First-half 2015 First-half 2014 First-half 2015 First-half 2014 Operating income before nonrecurring items (IFRS) First-half 2015 First-half 2014 Lead (3.8) (3.4) (2.3) (4.0) (6.1) (7.4) Zinc (4.4) (2.1) Special Metals (0.8) (0.3) (0.8) (0.3) Plastics Other (2.1) (2.2) (2.1) (2.2) TOTAL (0.7) (2.2) (6.7) (6.1) (7.4) (8.3) 1 When assessing the performance of its Lead operating segment, the Group uses the LIFO ( Last in first out ) method in its internal reporting to measure inventories for its main lead smelter in Nordenham, which is not permitted under IFRS. When assessing the performance of the Zinc operating segment, the Group continues to consolidate its investment in Recytech SA proportionally. Note 4 to the condensed consolidated financial statements shows the effects of these restatements. 2 Differences arising from use of the AWC rather than the LIFO method to measure Lead segment inventories and from continued use of the proportionate consolidation method for its investment in Recytech SA in the Zinc segment. Note 4 to the condensed consolidated financial statements shows the effects of these restatements. The Lead segment generated 71% of the Group s consolidated sales, Zinc 19%, Special Metals 5% and Plastics 5%. Lead segment The Lead segment s first-half 2015 sales totaled million, down 16% on the first half of As a result of an unfavorable base of comparison, the increase in lead prices did not fully make up for the fall in volumes produced and sold. The segment s first-half 2015 sales were affected mainly by the volume shortfall arising from the three-week scheduled maintenance shutdown at the Nordenham smelter in the second quarter of 2015 (no maintenance shutdown in 2014) and by the continued policy of selective purchases of scrap batteries to restore the segment s margins. In addition, to reduce Weser-Metall GmbH s working capital requirement following this shutdown, a portion of the volumes upon resumption of its activity were handled under the tolling agreement set up in the second half of In the first half of 2015, these volumes accounted for 19% of the subsidiary s total purchases. The Group s first-half 2015 output totaled 55,771 tonnes of lead compared with 71,001 tonnes in the first half of 2014, representing a decrease of 21%. Compared with the first six months of 2014, the smelter s maintenance shutdown gave rise to a volume shortfall of around 11,000 tonnes and the shift in the purchasing mix to less leadrich materials resulted in a shortfall of some 4,000 tonnes. The treatment plants in France and Germany recycled a total of 65,500 tonnes of scrap batteries, down 9% on the 71,700 tonnes recycled in the first six months of This decline is explained by the continued policy of selective purchases of materials for recycling aiming at restoring the segment s margins given the still too high levels of scrap battery prices. The segment s restated IFRS operating loss before non-recurring items for the first half of 2015 came to 6.1 million, compared with a loss of 7.4 million in the same period of The main factors behind this improvement were the more selective purchasing policy and the rise in lead prices over the period. The restated operating loss before non-recurring items came to 3.8 million, compared with a loss of 3.4 million in the first half of The slight fall of 0.4 million on the first six months of 2014 was chiefly attributable to the smelter s maintenance shutdown in the second quarter of On a like-for-like basis (excluding maintenance costs and adding back volumes lost during the shutdown), the Lead segment s performance in the first half of 2015 would have been an estimated 5.0 million higher. 6

7 Zinc segment* Against the backdrop of a strong rise in zinc prices, the Zinc segment s first-half 2015 sales came to 36.9 million, representing a rise of 9% on the 33.7 million recorded in the first half of Restated to include the Group s share of 50%-owned Recytech SA s sales, the segment s sales grew by 13% to 45.9 million. Zinc scrap recycling sales grew 12% on the back of the strong rise in zinc prices. With the purchasing of materials for recycling persistently posing major difficulties, Norzinco GmbH processed 10,940 tonnes of zinc-rich materials, down 13% from 12,520 tonnes in the first half of Recytech SA s electric arc furnace dust recycling plant in France and Harz-Metall GmbH s in Germany processed 73,900 tonnes of dust in the first half of 2015, down 7% on the 79,400 tonnes processed in the first half of This fall is mainly due to the German subsidiary s shutdown for maintenance in the second quarter of 2015 (no shutdown in 2014). The Zinc segment recorded operating income before non-recurring items of 1.5 million in the first half of 2015, compared with income of 1.4 million in the equivalent period of Restated from the impact of IFRS 10 and 11, first-half 2015 restated* operating income before non-recurring items came to 5.9 million, up from 3.5 million in the first six months of The Zinc segment s operating performance improved in the first half of 2015 despite an unfavorable base of comparison following the maintenance shutdown at Harz-Metall GmbH. The rise in zinc prices stated in euros per tonne compared with the first half of 2014 helped to make up for the contraction in volumes caused by the scheduled maintenance shutdown of Harz-Metall GmbH and less supportive commercial conditions for Norzinco GmbH (as the rise in selling prices did not fully keep pace with the increase in zinc prices). *The Group s investment in Recytech SA (50%-owned by Recylex), previously accounted for using the proportionate consolidation method (a method not permitted from January 1, 2014 onwards), is now accounted for under the equity method. As a result, the Group s consolidated financial statements no longer reflect the interest held in Recytech, except for the Share in income from associates and Investments in associates lines. That said, the Group decided to continue using the proportionate consolidation method for Recytech SA in the segment information presented for the Zinc segment, which merely comprises income statement items (See Note 4). This shows the Zinc segment s business and industrial performance in line with the data analyzed in its internal reporting by sector of activity. Special Metals segment The Special Metals segment recorded a 6% increase in its first-half 2015 sales to 11.3 million. This increase was chiefly driven by the increase in germanium selling prices compared with the first half of the previous year. Due to persistently tough market conditions, volumes sold remained at relatively low levels. As a result, the segment failed to breakeven at operating level before non-recurring items despite higher sales. It posted a loss of 0.8 million in the first half of 2015, compared with a loss of 0.3 million in the first six months of Plastics segment The Plastics segment s first-half 2015 sales totaled 9.5 million, an increase of 4% on the level posted in the first half of Volume growth in Germany and stable sales in France made up for the impact of lower selling prices during the period. Owing to the time lag between trends in purchasing price indices and those in selling price indices, the Plastics segment recorded first-half 2015 operating income before non-recurring items of 0.1 million, compared with 0.2 million in the first half of

8 Legal proceedings concerning Metaleurop Nord SAS The claims lodged against Recylex SA by former employees of Metaleurop Nord SAS a Recylex SA subsidiary in liquidation and also concerning the liquidators of Metaleurop Nord SAS are still ongoing. A document summarizing the developments in legal proceedings concerning Recylex SA and Metaleurop Nord SAS can be found on the Group s website ( News Legal proceedings schedule). On July 21, 2015, the Douai Administrative Appeal Court confirmed the registration of Metaleurop Nord SAS site in Noyelles-Godault on the list of those eligible for the ( ACAATA ) early retirement allocation for asbestos workers. However, it shortened the eligibility period from January 1, 1962 until December 31, 1989, rather than until December 31, 1996, as was previously the case. Recylex is considering an appeal before the Conseil d Etat. Following this administrative decision, a provision for contingencies of 3.5 million was set aside in the financial statements at June 30, 2015 in view of the claims for damages for the prejudice of anxiety and disruption to their livelihood lodged by 455 former Metaleurop Nord SAS employees. Recylex intends to challenge both the admissibility and merits of these claims. European Commission inquiry into the lead recycling sector On June 24, 2015, the Directorate General for Competition of the European Commission sent a statement of objections to Recylex SA and its subsidiaries purchasing scrap lead batteries. A statement of objections is a preliminary stage in official inquiries by the Directorate General for Competition of the European Commission, which informs the relevant parties in writing of the complaints made against them. The fact that a statement of objections has been sent does not prejudge the final outcome of the procedure, as the decision is made after a review of the responses made by the parties to which it is sent. The Group will issue a response to the European Commission within the allotted period, i.e., during the second half of Pursuant to Article 23 of Regulation no. 1/2003/EC, the final amount of any fine may not in any event exceed 10% of the total sales recorded during the financial year preceding the European Commission s decision, i.e. 42,153,700 based on consolidated sales in the year ended December 31, 2014, prior to application of any reductions that may be requested under the European Commission rules on leniency and/or a business inability to pay in a specific social and economic environment. Given the tremendous uncertainty concerning the size of any fine that Recylex may ultimately receive at the end of this procedure, Recylex did not set aside any provisions for contingencies in its financial statements at June 30, 2015 (see Note 8 to the condensed consolidated financial statements at June 30, 2015). Outlook - Expected developments Given the recent figures from China, especially concerning consumption slowing down, commodity prices metals prices notably continued to decline at the beginning of the second half of At August 30, 2015, lead and zinc prices stated in US dollars were below their average level in the first half of This pressure on metal prices should continue during the next few months. Lead segment The Group will continue to be more selective in its purchases of materials for recycling in a bid to protect its margins in this segment. Since 2014, the Group has successfully taken measures to reduce the Lead segment s working capital requirement. In addition, a portion of the volumes upon the resumption of activity at Weser-Metall GmbH s lead smelter following its maintenance shutdown was handled under the tolling agreement set up in the second half of Other measures, including cost savings, are still being considered. Furthermore, the Group is actively pursuing its plan to set up an additional production facility to process internally the lead-rich by-products from Weser-Metall GmbH s smelter. This plan, which was approved by Recylex SA s Board of Directors in accordance with the Group s internal procedures, aims to deliver a sustained turnaround in the Lead segment s profitability. This segment s financial performance will depend on the evolution of the lead price during the second half of

9 Zinc segment After rising to $2,400 per tonne at the beginning of May 2015, zinc prices dropped back to $1,955 per tonne by the start of the second half of 2015 and remained highly volatile throughout August In both activities, financial performance will depend on the zinc price evolution during the second half of Harz-Metall GmbH s second-half 2015 industrial performance in recycling electric arc furnace dust (Waelz oxide production) is expected to show an improvement on the first half of 2015 when production was reduced by the shutdown of the smelter for maintenance, provided that the availability of materials for recycling remains comparable to the situation in the first six months of In the scrap zinc recycling sector (zinc oxide production), Norzinco GmbH s business should again benefit from the current strength of the chemicals industry, particularly in Germany, albeit in a more challenging pricing environment in the tires industry, among others. Special Metals segment Whether the Special Metals segment recovers will be determined by trends in semiconductor industry demand and to a lesser extent by trends in the euro/yen exchange rate, which favored PPM Pure Metals GmbH s rivals outside the euro zone in the first half of Plastics segment Based on the order backlog at June 30, 2015, this segment is expected to maintain its current sales momentum. As every year, the annual 3-week maintenance shutdown took place at the Group s two plants in July and August Search for financing In 2014, the Recylex Group launched a search for financing to cover the working capital requirements of its operations in Germany. Talks are ongoing in order to secure additional credit lines to cover the Group s German subsidiaries full working capital requirements and to finance the project to build a new production tool in the Lead segment. Given the current decline in commodity prices and its potential knock-on effects on cash flow from operating activities, the Group needs to complete its search for additional credit lines during the second half of 2015 (see section F of Note 1 to the condensed consolidated financial statements at 30 June 2015). As a reminder, these searches for financing do not cover treasury requirements potentially arising from an unfavorable outcome to the aforementioned legal proceedings, i.e., any sums payable in connection with the claims for damages for the prejudice of anxiety and disruption to livelihood or in connection with any fine payable following the European Commission s investigation into the lead recycling sector. Should Recylex SA receive a financial penalty following an unfavorable outcome in one of the aforementioned proceedings, its projected cash position would not suffice to cover all of these projected needs. Barring an asset disposal or an injection of additional financing, Recylex SA would then have to declare that it is in cessation of payments. Principal related-party transactions The principal related-party transactions are shown in Note 9 to the condensed consolidated financial statements at June 30, 2015, accompanying this report. Statement of changes in equity Changes in equity are shown in the condensed consolidated financial statements at June 30, 2015 accompanying this report. 9

10 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AT JUNE 30, 2015 STATEMENT OF FINANCIAL POSITION 12 CONSOLIDATED INTERIM INCOME STATEMENT 13 STATEMENT OF COMPREHENSIVE INCOME 14 STATEMENT OF CHANGES IN CONSOLIDATED EQUITY AT JUNE 30, CONSOLIDATED CASH FLOW STATEMENT 16 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 17 NOTE 1: INFORMATION ON THE COMPANY AND SIGNIFICANT EVENTS OF THE FIRST HALF 17 NOTE 2: BASIS OF PREPARATION New standards Estimates 24 NOTE 3: SCOPE OF CONSOLIDATION 24 NOTE 4: OPERATING SEGMENTS 24 NOTE 5: NOTES TO THE INCOME STATEMENT 31 Note 5.1. External costs 31 Note 5.2. Depreciation, amortization and impairment losses 31 Note 5.3. Other non-recurring operating income and expense 31 Note 5.4. Net interest expense 32 Note 5.5. Other financial income and expense 32 Note 5.6. Income taxes 32 Note 5.7. Earnings per share 34 NOTE 6: INFORMATION ON THE FINANCIAL POSITION 34 Note 6.1. Intangible assets, property, plant & equipment, and goodwill 34 Note 6.2. Impairment testing 35 Note 6.3. Other non-current financial assets 35 Note 6.4. Inventories 35 Note 6.5. Trade receivables 36 Note 6.6. Other current assets 36 Note 6.7. Cash and cash equivalents 37 Note 6.8. Total equity 37 Note 6.9. Interest-bearing borrowings 39 Note Provisions 40 Note Other current and non-current liabilities 40 Note Other financial instruments 41 NOTE 7: CONTRACTUAL OBLIGATIONS, COMMITMENTS AND CONTINGENCIES 42 10

11 NOTE 8: LITIGATION AND CONTINGENT LIABILITIES 43 NOTE 9: RELATED-PARTY TRANSACTIONS 43 NOTE 10: SUBSEQUENT EVENTS 43 11

12 STATEMENT OF FINANCIAL POSITION At June 30, 2015 Assets Notes June 30, 2015 December 31, Non-current assets Property, plant and equipment ,355 55,917 Intangible assets Financial assets... 1,587 2,017 Derivatives Other non-current assets ,221 3,291 Investments in associates... 6,422 7,374 Deferred tax assets ,731 7,986 74,129 77,412 Current assets Inventories ,455 52,207 Trade receivables ,393 24,999 Current income tax assets Other current assets ,589 7,563 Derivatives Cash and cash equivalents ,312 5,388 80,739 90,297 Non-current assets held for sale ,739 90,297 TOTAL ASSETS 154, ,709 Equity and liabilities 6.8 Issued capital... 31,826 48,222 Share premiums Reserves attributable to equity holders of the parent... (15,137) (8,582) Net income attributable to equity holders of the parent... (8,814) (23,940) Translation adjustments... 1,427 1,427 Share premiums and reserves attributable to equity holders of the parent... 10,171 17,996 Non-controlling interest Total equity 10,171 17,996 Non-current liabilities Interest-bearing borrowings ,799 8,570 Provisions ,661 25,154 Employee benefits... 36,071 37,011 Other non-current liabilities ,197 12,068 Deferred tax liabilities ,728 82,803 Current liabilities Interest-bearing borrowings ,169 10,872 Provisions ,211 10,304 Employee benefits... 1,982 2,276 Trade payables... 23,995 30,771 Current tax liabilities Derivatives Other current liabilities ,088 12,162 59,969 66,910 Non-current liabilities held for sale - - Total liabilities 144, ,713 TOTAL EQUITY AND LIABILITIES 154, ,709 12

13 CONSOLIDATED INTERIM INCOME STATEMENT At June 30, 2015 Notes First-half 2015 First-half Sales of goods and services , ,542 Total sales 198, ,542 Purchases used... (144,949) (170,770) Staff costs... (22,432) (22,618) External costs (22,088) (22,036) Taxes other than on income... (914) (824) Depreciation, amortization, additions to/(reversals from) provisions and 5.2 impairment losses... (4,649) (3,071) Changes in work-in-progress and finished goods... (10,810) (9,509) Other operating income and expense Operating income before non-recurring items (7,413) (8,255) Other non-recurring operating income and expense (3,796) (1,887) Operating income (11,209) (10,142) Share in income of associates... 2,678 1,277 Operating income after share in income of associates operating in the same area of business as the Group (8,531) (8,865) Interest income from cash and cash equivalents Gross interest expense... (1,061) (843) Net interest expense 5.4 (1,047) (823) Other financial income and expense Income taxes Net income before non-controlling interest (8,814) (8,049) Non-controlling interest... Net income attributable to equity holders of the parent... (8,814) (8,049) Earnings per share: (in euros) (in euros) - basic (0.37) (0.34) - diluted (0.36) (0.33) 13

14 STATEMENT OF COMPREHENSIVE INCOME First-half 2015 First-half 2015 First-half 2014 Net income... (8,814) (8,049) Translation adjustments... 4 (1) Cash flow hedges Deferred tax on cash flow hedges Actuarial gains and losses on pension liabilities Deferred tax arising from adoption of the revised IAS Income and expenses recognized directly in equity Total other comprehensive income to be reclassified subsequently in net income... 4 (1) Actuarial gains/(losses) (*)... 1,387 (2,356) Deferred taxes on actuarial gains/(losses)... (401) 673 Share of associates in items not to be reclassified subsequently in net income, net of tax... Total other comprehensive income not to be reclassified subsequently in net income (1,683) Comprehensive income... (7,824) (9,733) Of which: Attributable to equity holders of the parent (7,824) (9,733) Non-controlling interest - - (*) This amount reflects recognition of the impact of the change in the actuarial rate (from 1.7% at December 31, 2014, to 1.95% at June 30, 2015). The provisions for employee benefits shown on the statement of financial position were thus adjusted by this amount. 14

15 STATEMENT OF CHANGES IN CONSOLIDATED EQUITY AT JUNE 30, 2015 (in thousands of euros, except per share data) Number of shares Share capital Share premiums Hedging reserves Consolidated reserves Total equity, attributable to eq. holders of parent Total equity Equity at January 1, ,975,982 47, (7,753) 5,343 46,408 46,408 Net income for the year (8,049) (8,049) (8,049) Other comprehensive income Change in hedging reserves net of tax Changes in translation adjustments Actuarial gains and losses on pension liabilities net of (1,683) (1) (1,684) (1,684) tax Total other comprehensive income (1,683) (1) (1,684) (1,684) Comprehensive income for the period 23,975,982 47, (1,683) (1) (9,733) (9,733) Share-based payment Increase/reduction in capital Equity at June 30, ,975,982 47, (9,436) (2,707) 36,675 36,675 Equity at January 1, ,110,982 48, (12,499) (18,596) 17,996 17,996 Net income for the year (8,814) (8,814) (8,814) Other comprehensive income Change in hedging reserves net of tax Changes in translation adjustments Actuarial gains and losses on pension liabilities net of tax Total other comprehensive income Comprehensive income for the period (8,810) (7,824) (7,824) Share-based payment Increase/reduction in capital - (16,395) , Equity at June 30, ,110,982 31, (11,513) (11,011) 10,171 10,

16 CONSOLIDATED CASH FLOW STATEMENT First-half 2015 First-half 2015 First-half 2014 Non-recurring income (7,413) (8,255) Depreciation, amortization and impairment losses 4,649 3,071 EBITDA (2,764) (5,184) Change in current working capital requirement 7, Inventories 12,638 11,492 - Trade receivables 605 (8,060) - Trade payables (6,776) (10,522) - Other current assets and liabilities 897 7,153 Current non-cash income and expenses 162 (180) - Elimination of stock option impacts Gains or losses on disposals of non-current assets Employee benefit obligations 151 (256) Cash flow from recurring operating activities before tax 4,761 (5,301) Income tax expense (402) (252) Cash flow from recurring operating activities after tax 4,359 (5,553) Other non-recurring operating income and expense (149) (68) Other income and expense relating to rehabilitation of sites (695) (2,569) Change in non-current working capital requirement Other exceptional income and expense on operating activities (228) (385) Currency gains and losses Factoring costs (378) (495) Other financial income and expense (24) 76 Change in liabilities under the continuation plan Dividends received 3,719 2,679 Cash flow from operating activities 7,077 (5,763) Changes in the scope of consolidation - - Purchases of property, plant and equipment, and intangible assets (1,992) (3,154) Disposals of property, plant and equipment, and intangible assets Cash flow from investing activities (1,633) (3,148) Increase in borrowings - - Repayment of borrowings (832) (1,088) Other items relating to financing activities - 73 Interest income/(expense) on financial assets (1,025) (823) Other movements in the share capital - - Cash flow from financing activities (1,858) (1,838) Impact of changes in accounting methods - - Changes in cash and cash equivalents 3,587 (10,749) Opening cash and cash equivalents (3,692) 5,273 Closing cash and cash equivalents (*) (106) (5,476) Changes in cash and cash equivalents 3,587 (10,749) (*) see Note

17 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the six-month period ended on June 30, 2015 NOTE 1: INFORMATION ON THE COMPANY AND SIGNIFICANT EVENTS OF THE FIRST HALF A. Information on the company With operations in France, Germany and Belgium, Recylex is a European group specialized in lead and plastic recycling (mainly from automotive and industrial batteries), in zinc recycling (from electric arc furnace dust and scrap zinc) and in the production of very high-purity special metals. The Group has close to 680 employees (including the headcount of 50%-owned Recytech SA) and posted 422 million in consolidated sales in Recylex SA is a Société Anonyme (joint-stock corporation) registered in France and listed on Euronext Paris (RX - ISIN code: FR ). On August 31, 2015, the Board of Directors approved and authorized publication of Recylex SA s condensed consolidated interim financial statements for the six-month period ended on June 30, B. Significant events during the first half of 2015 The average lead price stated in euros per tonne during the first half of 2015 was 9.6% higher than in the equivalent period of 2014 and 6.4% higher than in 2014 as a whole. These increases were chiefly attributable to trends in the euro-dollar exchange rate. In the first half of 2015, the US dollar appreciated by 18.6% against the euro compared with the same period of 2014, while lead prices per tonne stated in US dollars declined by more than 10% compared with the same period of Zinc prices stated in euros per tonne were also given a major lift by appreciation in the US dollar against the euro. The average price in the first half of 2015 was 1,913 per tonne, compared with an average of 1,497 per tonne in the first six months of 2014, representing an increase of 28%. Over the same period, zinc prices stated in US dollars went up 4% over the period. Average lead and zinc prices during the first six months of the year were as follows: Average ( /tonne) First-half 2015 First-half 2014 Full-year 2014 Lead price 1,680 1,533 1,579 Zinc price 1,913 1,497 1,634 C. Consolidated first-half 2015 results by sector of activity (excluding holding companies and environment) The Lead segment generated 71% of the Group s consolidated sales, Zinc 19%, Special Metals 5% and Plastics 5%. In the first half of 2015, consolidated EBITDA under IFRS showed a loss of 2.8 million a significant improvement on the first-half 2014 loss of 5.2 million. Over the same period, restated consolidated EBITDA 2 came to 4.5 million in positive territory, compared with 2.5 million in the first half of Despite an unfavorable base of comparison in both of the Group s major activities owing to the scheduled maintenance shutdowns in the first half of 2015 at the Weser-Metall GmbH lead smelter and Harz-Metall GmbH s electric arc dust recycling furnace in the Zinc segment, the Group s operating performance improved. Recylex primarily benefited from the initiatives taken to reduce further the Lead segment s operating loss and from the strong growth in zinc prices over the period. 2 Using the LIFO method to measure the lead inventories (not permitted under IFRS) and continuing to consolidate its investment in Recytech SA proportionally. (Note 4 to the condensed consolidated financial statements) 17

18 Lead segment The Lead segment s first-half 2015 sales totaled million, down 16% compared with the first half of As a result of an unfavorable base of comparison, the increase in lead prices did not fully make up for the fall in volumes produced and sold. The segment s first-half 2015 sales were affected mainly by the volume shortfall arising from the three-week scheduled maintenance shutdown at the Nordenham smelter in the second quarter of 2015 (no maintenance shutdown in 2014) and by the continued policy of selective purchases of scrap batteries aiming at restoring the segment s margins. In addition, to reduce Weser-Metall GmbH s working capital requirement following this shutdown, a portion of the lead concentrate volumes upon the resumption of activity were handled under the tolling agreement set up in the second half of In the first half of 2015, these volumes accounted for 19% of the subsidiary s total purchases. The Group s first-half 2015 output totaled 55,771 tonnes of lead compared with 71,001 tonnes in the first half of 2014, representing a decrease of 21%. Compared with the first six months of 2014, the smelter s maintenance shutdown gave rise to a volume shortfall of around 11,000 tonnes and the shift in the purchasing mix to less leadrich materials resulted in a shortfall of some 4,000 tonnes. The treatment plants in France and Germany processed a total of 65,500 tonnes of scrap batteries, down 9% on the 71,700 tonnes processed in the same period of This decline is explained by the continued policy of selective purchases of materials for recycling aiming at restoring the segment s margins given the still too high levels of scrap battery prices. The segment s restated IFRS operating loss before non-recurring items for the first half of 2015 came to 6.1 million, compared with a loss of 7.4 million in the same period of The main factors behind this improvement were the more selective purchasing policy and the rise in lead prices over the period. The restated operating loss before non-recurring items 2 for the same period came to 3.8 million, compared with an operating loss of 3.4 million in the same period of The slight fall of 0.4 million on the first six months of 2014 was chiefly attributable to the smelter s maintenance shutdown in the second quarter of On a like-forlike basis (excluding maintenance costs and adding back volumes lost as a result of the shutdown), performance in the first half of 2015 was an estimated 5.0 million higher. Since 2014, the Group has successfully taken measures to reduce the Lead segment s working capital requirement. A portion of the lead concentrate volumes upon the resumption of activity at Weser-Metall GmbH s lead smelter following its maintenance shutdown was handled under the tolling agreement set up in the second half of Furthermore, the Group is actively pursuing its plan to set up an additional production facility to process internally the lead-rich by-products from Weser-Metall GmbH s smelter. This plan, which was approved by Recylex SA s Board of Directors in accordance with the Group s internal procedures, aims to deliver a sustained turnaround in the Lead segment s profitability. Talks are ongoing in order to secure additional credit lines to cover the Group s German subsidiaries full working capital requirements and to finance the project to build a new production tool in the Lead segment. Given the current decline in commodity prices and its potential knock-on effects on cash flow from operating activities, the Group needs to complete its search for additional credit lines during the second half of Zinc segment* Against the backdrop of a strong rise in zinc prices, the Zinc segment s first-half 2015 sales came to 36.9 million, up 9% on the 33.7 million recorded in the first half of Restated to include the Group s share of 50%-owned Recytech SA s sales, the segment s top line grew by 13% to 45.9 million. Zinc scrap recycling sales grew 12% on the back of the strong rise in zinc prices. With the purchasing of materials for recycling being persistently difficult, Norzinco GmbH processed 10,940 tonnes of zinc-rich materials, down 13% from 12,520 tonnes in the first half of The electric arc furnace dust recycling plants owned by Recytech SA in France and Harz-Metall GmbH in Germany processed 73,900 tonnes of dust, representing a fall of 7% compared with the first half of This fall is mainly due to the German subsidiary s shutdown for maintenance in the second quarter of 2015 (no shutdown took place in 2014). 18

19 The Zinc segment recorded operating income before non-recurring items of 1.5 million in the first half of 2015, compared with income of 1.4 million in the equivalent period of Restated for the impact of IFRS 10 and 11, the Zinc segment s first-half 2015 restated operating income before non-recurring items came to 5.9 million, up from 3.5 million in the first six months of The Zinc segment s operating performance thus improved in the first half of 2015 despite an unfavorable base of comparison following the maintenance shutdown at Harz-Metall GmbH. The increase in zinc prices stated in euros per tonne compared with the first half of 2014 helped to make up for the volume contraction caused by the scheduled maintenance shutdown of Harz-Metall GmbH and less supportive commercial conditions for Norzinco GmbH (as the rise in selling prices did not fully keep pace with the rise in zinc prices). *The Group s investment in Recytech SA (50%-owned by Recylex), previously accounted for using the proportionate consolidation mtehod (not permitted in financial years beginning on or after January 1, 2014), is now accounted for under the equity method (See Note 3). As a result, the Group s consolidated financial statements no longer reflect the interest held in Recytech, except for the Share in income from associates and Investments in associates lines. That said, the Group decided to continue using the proportionate consolidation method for Recytech SA in the segment information presented for the Zinc segment, which merely comprises income statement items (See Note 5). This shows the Zinc segment s business and production performance in line with the data analyzed in its internal reporting by sector of activity. Special Metals segment The Special Metals segment recorded a 6% increase in its first-half 2015 sales to 11.3 million. This increase was chiefly driven by the increase in germanium selling prices compared with the first half of the previous year. Due to persistently tough market conditions, volumes sold remained at relatively low levels. As a result, despite the growth in sales, the segment s operating income before non-recurring items fell short of breakeven point, recording a small loss of 0.8 million in the first half of 2015, compared with a loss of 0.3 million in the first six months of Plastics segment The Plastics segment s first-half 2015 sales totaled 9.5 million, an increase of 4% on the level posted in the first half of Volume growth in Germany and stable sales in France made up for the impact of lower selling prices during the period. Owing to the time lag between trends in purchasing price indices and those in selling price indices, the Plastics segment recorded first-half 2015 operating income before non-recurring items of 0.1 million, compared with 0.2 million in the first half of D. Legal proceedings Legal proceedings concerning Metaleurop Nord SAS The claims lodged against Recylex SA by former employees of Metaleurop Nord SAS a Recylex SA subsidiary in liquidation and also concerning the liquidators of Metaleurop Nord SAS are still ongoing. A document summarizing the developments in proceedings concerning Recylex SA and Metaleurop Nord SAS can be found on the Group s website ( News Legal proceedings schedule). On July 21, 2015, the Douai Administrative Appeal Court confirmed the registration of Metaleurop Nord SAS site in Noyelles-Godault on the list of those eligible for the ( ACAATA ) early retirement allocation for asbestos workers. However, it shortened the eligibility period from January 1, 1962 until December 31, 1989, rather than until December 31, 1996, as was previously the case. Recylex is considering an appeal before the Conseil d Etat. Following this administrative decision, a provision for contingencies of 3.5 million was set aside in Recylex s financial statements at June 30, 2015 in view of the claims for damages for the prejudice of anxiety and disruption to their livelihood lodged by 455 former Metaleurop Nord SAS employees. Recylex SA intends to challenge both the admissibility and merits of these claims. 19

20 European Commission inquiry into the lead recycling sector On June 24, 2015, the Directorate General for Competition of the European Commission sent a statement of objections to Recylex SA and its subsidiaries purchasing scrap lead batteries. A statement of objections is a preliminary stage in official inquiries by the Directorate General for Competition of the European Commission, which informs the relevant parties in writing of the complaints made against them. The fact that a statement of objections has been sent does not prejudge the final outcome of the procedure, as the decision is made after a review of the responses made by the parties to which it is sent. The Group will issue a response to the European Commission within the allotted period, i.e., during the second half of Pursuant to Article 23 of Regulation no. 1/2003/EC, the final amount of any fine may not in any event exceed 10% of the total sales recorded during the financial year preceding the European Commission s decision, i.e. 42,153,700 based on consolidated sales in the year ended December 31, 2014, prior to application of any reductions that may be requested under the European Commission rules on leniency and/or a business inability to pay in a specific social and economic environment. Given the tremendous uncertainty concerning the eventual amount of any fine that Recylex may receive at the end of this procedure, Recylex SA did not set aside any provision for contingencies in its financial statements at June 30, 2015 (see Note 8 to the condensed consolidated financial statements at June 30, 2015). Recylex regards this procedure as potentially giving rise to a liability not satisfying the criterion for recognition under IAS 37 because a sufficiently reliable estimate could not be made and the need for an outflow of resources was not demonstrated at this stage of the procedure. E. Group cash position and external financing Group s cash position The Group s net cash position (after deduction of bank overdraft facilities) was negative at million at June 30, 2015, compared with million at December 31, 2014, representing an improvement of 3.6 million over the first half of the year. The main factors contributing to this improvement in the cash position were the 7.1 million in positive cash flows generated by operating activities that helped to cover capital expenditures and interest expense in the first half of The Group s credit lines totaled 13.5 million at June 30, 2015, 8.4 million of which was drawn down at same date. The Group s credit lines totaled 11.3 million at December 31, 2014, 9.1 million of which was drawn down. The cash forecasts prepared by the Group in June 2015 showed an additional short-term financing requirement of around 10 million needed to cover the working capital requirement of its operations in Germany. In this respect, talks are ongoing in order to secure additional credit lines to cover the Group s German subsidiaries full working capital requirements and to finance the project to build a new production tool in the Lead segment. Given the current decline in commodity prices and its potential knock-on effects on cash flow from operating activities, the Group needs to complete its search for additional credit lines during the second half of 2015 (see Note 32 Liquidity risk to the consolidated financial statements for the year ended December 31, 2014). Cash position of the parent company, Recylex SA The Company has prepared cash forecasts for 2015 and 2016 based on the information currently available to it, including the final installment of 4.3 million due to creditors by November 2015 under its continuation plan and forecast expenditure relating to its commitments to remediate its former mining sites and its L Estaque site. The impact of the Group s German operations on the financial position and the risks to the going concern status of parent company and consolidating entity Recylex SA are outlined in Note 32 - Liquidity risk to the consolidated financial statements at December 31, As a reminder, to cover the projected cash requirements for 2015 and 2016 under the continuation plan and the claims for damages for dismissal without fair cause brought in 2010 and 2013 by former employees of Metaleurop Nord SAS and currently at appeal, the Company: - secured agreement from certain creditors under its continuation plan, including Glencore International AG, to defer until 2019 (i.e. after expiration of the plan scheduled in 2015) repayment of the outstanding 20