Interim report at 30 June 2007

Interim report at 30 June 2007

INTERIM REPORT AT 30 JUNE 2007 I. INTERIM ACTIVITY REPORT... 2 II. CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS... 14 III. STATUTORY AUDITORS' REPORT... 26 IV. RESPONSIBILITY FOR THE INTERIM REPORT... 28 Interim activity report Page 1

I. INTERIM ACTIVITY REPORT Interim activity report 2

INTERIM ACTIVITY REPORT (L. 451-1-2 III of the Monetary and Financial Code. Article 222-4 and following of the AMF's General Regulations) Overall, the Group's main performance indicators showed the following movements: Tonnage: volumes increased by 13.1% in the first half of 2007; acquisitions boosted sales by a further 6.9% relative to 2006. Operating expenses per tonne fell from 300.4 in the first half of 2006 to 292.9 in the first half of 2007. The working capital requirement equalled 32.2% of sales, the same as at 30 June 2006 (30.4% at 31 December 2006). Gearing at 30 June 2007 (calculated for compliance with banking covenants) was 69.8%, as a result of acquisitions carried out during the first-half period and funding of organic growth. ROCE after tax and excluding the windfall effect was 14.3% in the first half of 2007, versus 11.4% in the first half of 2006. First-half 2007 confirmed IMS' stated targets for the period 2006-2008: The updated business volume forecast for 2007 is now 640,000 tonnes (barring further acquisitions in the second half), versus a stated target of 700,000 tonnes in 2008 (including acquisitions). IMS is aiming for operating profit per tonne of 160, excluding the effect of windfall and/or negative windfall effects. Actual operating profit per tonne in the first half of 2007 was 187 excluding the windfall effect. Taking into account seasonal variations in sales and the fact that a large proportion of expenses are fixed, this strong first-half figure does not alter the full-year target. Interim activity report Page 3

1. INTERIM FINANCIAL STATEMENTS - GENERAL PRINCIPLES Accounting standards In accordance with European regulation 1606/2002 of 19 July 2002 on international standards, the consolidated accounts for the IMS Group were prepared in accordance with the IAS/IFRS international accounting standards as approved by the European Union. The accounting principles and methods applied for the period ending 30 June 2007 are identical to those applied for the annual accounts under IFRS. The condensed interim accounts have been prepared in accordance with accounting standards IAS 34. There was no change in estimates during the period liable to affect the 2006 financial statements. Contingent assets and liabilities have not changed since year end 2006. Timetable for financial statement approval and reporting The condensed consolidated financial statements for the first half of 2007 were approved by the Executive Comittee on 29 August 2007. These accounts have been subjected to a limited review by the auditors who have prepared a report without comment based on such review. On 29 August 2007, the Group published a press release on its condensed consolidated interim financial statements. Change in the scope of consolidation between 1 January and 30 June 2007 In the first half of 2007, IMS strengthened its position in Spain by making two acquisitions through Aceros IMS: In March 2007, it completed the acquisition of the business and certain assets of Aceros y Calibrados, a specialist distributor of hot-rolled, cold-drawn mechanical steels. Aceros y Calibrados' sales totalled 3.4 million in 2006. In June 2007, it acquired the business and certain assets of Noracero, a distributor of mechanical steels (cold-finished steel, carbon bars and mechanical tubes). Noracero generated sales of 6 million in 2006 and distributed 6,600 tonnes of steel. The transactions resulted in goodwill of 3.3 million. IMS also strengthened its presence in stainless steel welded tubes and fittings, through the acquisition of Cotubel by IMS France. The Cotubel group operates in France via TRDInox, in Belgium via Cotubel, in the Netherlands via Noxon, in Germany via Asadin and in Switzerland via Trinox. In 2006, the Cotubel group generated sales of around 90 million and distributed 180,000 tonnes of metal. It employed 160 people. This business was consolidated from 1 June 2007, and the acquisition resulted in goodwill of 25.9 million. In May 2007, IMS has acquired a 25% stake in Brescia Acciai, which is specialised in distributing tool steels, through its Italian subsidiary IMS SpA. Brescia Acciai's sales amounted to 18.5 million in 2006. A second 25% stake in Brescia Acciai was acquired on 9 July 2007. IMS SpA has made an undertaking to buy, and Brescia Acciai has made an undertaking to sell to IMS SpA, the remaining 50% in January 2008. Brescia Acciai was accounted under the equity method at 30 June 2007 with a value of 3.0 million. Brescia Acciai's sales will be consolidated from 1 July 2007. Acquisitions during the first half did not result in a change of more than 25% in sales or total assets, and so do not require IMS to publish proforma consolidated financial statements (showing the impact of acquisitions made in the first half of 2007 on 2006 figures). However, to make first-half results easier to understand, comments in this document will relate to proforma figures unless otherwise stated. Interim activity report Page 4

Changes in consolidated shareholders' equity A dividend payment of 14.4 million ( 0.82 per share, excluding treasury stock) was made on 31 May 2007. Apart from purchases and sales under the liquidity agreement, IMS did not buy any of its own shares in the first half of 2007. 0.3 million of own shares were sold when stock options, granted as part of plans initiated in 2004, were exercised. Interim activity report Page 5

2. INTERIM MANAGEMENT REPORT Activity Consolidated sales totalled 748.1 million in the first half of 2007, an increase of 53.5% compared with first half year 2006. The sales grew by 46.6% on a like-for-like basis, i.e. excluding Alura, Hoselmann and Cotubel sales from reported first-half 2007 sales. The breakdown of sales and tonnage by product line was as follows: H1 2006 ( '000) H1 2006 (%) H1 2007 ( '000) H1 2007 (%) Change Change at constant scope 231,159 47.4% 383,680 51.3% 66.0% 61.6% 75,331 15.5% 91,268 12.2% 21.2% 21.2% 181,539 37.2% 258,293 34.5% 42.3% 32.4% -668-0.1% 14,824 2.0% n.m. n.m. Total 487,361 100.0% 748,065 100.0% 53.5% 46.6% H1 2006 (t) H1 2006 (%) H1 2007 (t) H1 2006 (%) Change Change at constant scope (1) Stainless steel Wearresistant products Engineerin g products Others and adjustments (1) Stainless steel Wearresistant products Engineering products Others and adjustments (1) 61,154 22.5% 65,512 18.9% 7.1% 2.6% 44,645 16.4% 52,996 15.3% 18.7% 18.7% 166,194 61.0% 211,134 60.8% 27.0% 17.2% 380 0.1% 17,370 5.0% n.m. n.m. Total 272,373 100.0% 347,012 100.0% 27.4% 16.4% The rise in "Other" sales is the result of Hoselmann's direct factory sales being included in this item, following the acquisition of Hoselmann in August 2006. Sales from Hoselmann's storage and distribution business are included under Engineering Products. The increase in sales was the result of: - Strong volume growth of 13.1% in the first half of 2007. After a 15.8% increase in the first quarter, volumes rose by 11.1% in the second quarter due to slower growth in stainless steel sales. First-half volume growth in the various product lines was as follows: stainless steel 3%, wearresistant products 19.9%, engineering products 21.5%. Interim activity report Page 6

- A 33.5% increase in prices, mainly driven by higher average stainless steel selling prices. Prices rose by 58.7% in stainless steel, 10.9% in engineering products and 1.3% in wear-resistant products. Average stainless steel selling prices rose from 3,900 per tonne in the second quarter of 2006 to more than 6,000 in the second quarter of 2007. This was principally down to a sharp increase in nickel prices. Average spot nickel prices were $15,000 in Q1 2006, $20,000 in Q2 2006, $29,000 in Q3 2006, $33,000 in Q4 2006, $41,000 in Q1 2007 and $48,000 in Q2 2007. This resulted in a major windfall effect (see Profitability section below). - A 6.9% boost from acquisitions. Interim activity report Page 7

The breakdown of sales by country was fairly stable. However, the acquisition of Cotubel in Belgium, Noxon in the Netherlands and Trinox in Switzerland pushed up the proportion of sales coming from "Other European countries" by half a percentage point: H1 2007 H1 2007 (%) 2006 (%) ( '000) Germany 180,304 24.1% 23.6% Italy 136,233 18.2% 17.6% France 117,797 15.7% 16.4% Central Europe 106,978 14.3% 14.6% Spain 83,742 11.2% 11.3% Other Europe 84,119 11.2% 10.6% Other 38,892 5.3% 5.9% Total 748,065 100.0% 100.0% Profitability Gross profit totalled 188.3 million in the first half of 2007, up by 59.6% compared with the first six months of 2006. Gross margin rose by 1 percentage point, from 24.2% in the first half of 2006 to 25.2% in the first half of 2007. Gross profit per tonne and by product line was as follows: 1,600 1,500 1,400 Gross profit per tonne by product line ( 1,300 1,200 1,100 1,000 Stainless steel Wear-resistant products Engineering products 0,900 0,800 0,700 0,600 0,500 0,400 0,300 0,200 0,100 0,000 Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Interim activity report Page 8

To give a more accurate view of IMS' performance, proforma figures have been prepared. They include the following adjustments: - 2007 income statement figures are translated using 2006 exchange rates; - 2006 figures are restated (relative to published 2006 figures) by one month of activity at Alura (consolidated from February 2006), 6 months of activity at Hoselmann (consolidated from 1 September 2006) and one month of activity at Cotubel (consolidated from 1 June 2007). In millions of euros: (six months period ending 30 June) H1 2007 proforma H1 2007 actual H1 2006 proforma H1 2006 Actual Sales Gross profit Operating profit 746.9 187.9 86.1 748.1 188.3 86.7 520.9 125.5 38.6 487.4 118.0 36.2 Net profit from continuing operations 51.3 51.8 23.2 21.7 Proforma gross profit rose by 49.7%. The 2006 and 2007 income statements show a significant windfall effect, i.e. the boost to sales resulting from invoicing stock at a higher price than the price at which it was acquired. Adjusted for this windfall effect, operating profit was as follows: In millions of euros: (six months period ending 30 June) 2007 proforma 2007 actual 2006 proforma 2006 actual Sales Operating profit <Positive> / negative windfall effect Adjusted operating profit Adjusted operating profit (1) 746.9 86.1 (22.3) 63.8 8.8% 748.1 86.7 (22.3) 64.4 8.9% 520.9 38.6 2.9 41.5 7.9% 487.4 36.2 2.9 39.1 8.0% (1) Adjusted operating profit = (operating profit windfall effect) / (sales windfall effect) Net operating expenses were as follows: in millions of euros : (six months period ending 30 June) 2007 proforma 2007 actual 2006 proforma 2006 actual Other operating expenses Tonnage distributed Operating expenses / tonne ( ) 101.74 347,012 293.1 Operating expenses rose by 17.1% on a proforma basis. 101.65 347,012 292.9 86.86 298,123 291.4 81.81 272,373 300.4 Interim activity report Page 9

Variable expenses increased by 15.8% proforma, in line with growth in tonnage sold. These variable expenses include the cost of transportation and consumables required to ship materials. Variable expenses made up 21.6% of total expenses in the first half of 2007. Fixed expenses rose by 17.5% proforma relative to the first half of 2006. The increase was due to: - Personnel costs, which rose by 10.4 million (25.7% proforma), from 40.1 million in H1 2006 to 50.5 million in H1 2007. The rise in personnel costs resulted from: the 2.2 million cost of the bonus share plan set up in September 2006, for which no expenses were recognised in the first half of 2006; higher provisions for bonuses than in 2006, due to the sharp increase in earnings (around 2.7 million for the Düsseldorf hub, which accounts for most of the Group's stainless steel sales); a 7.0% increase in headcount to 1,726 (excluding Cotubel) towards 1,613 at 30 June 2006 (active employees at end of month, constant scope); general and individual wage increases, estimated at 3% on average across the Group. - Other operating expenses, which rose by 13.8% proforma from 27.9 million to 31.7 million. These expenses break down as follows: In millions of euros: H1 2007 proforma H1 2006 proforma Change Leasing, depreciation and amortisation, maintenance and energy Fees Other Total 16.55 3.56 11.61 31.72 15.78 2, 16 9.93 27.87 +4.9% +64.8% +16.9% +13.8% The sharp increase in fees resulted mainly from: - survey costs related to a property sale and leaseback transaction, - audit costs relating to Stratix software, - cost of rolling out the new IRIS IT management system, - advisory fees on acquisition projects subject to a probability of non-finalization. Coverage of operating expenses (actual scope) improved due to higher sales volumes: operating expenses per tonne distributed fell from 300.4 in the first half of 2006 to 292.9 in the first half of 2007. Besides, the sale of the Mitry Mory warehouse, net of releases from previously booked provisions, generated a 2.1 million gain. Operating profit totalled 86.7 million (11.6% of the consolidated sales). Interim activity report Page 10

Net financial expenses rose from 3.2 million in the first half of 2006 to 4.2 million in the first half of 2007, mainly due to the increase in average debt levels. Pre-tax profit came to 82.5 million, up by 132.5% compared with the first half 2006 proforma. The Group's average tax rate came to 37.1% compared to 34.2% in the first half 2006. This 2.9-point increase resulted from the higher proportion of profit coming from Germany, where the nominal tax rate in 2007 is 39%. Net profit was 51.8 million, up 138.5% with respect to the first half of 2006. Net profit attributable to equity holders of the parent is identical to the net profit of the consolidated whole, since all companies are 100% owned. Consolidated financial position At 30 June 2007, total consolidated non-current assets amounted 171.5 million, up from 133.3 million at 31 December 2006. Of this 38.2 million increase, 13.4 million are related to intangible and fixed assets and 29.2 million to goodwill on acquired companies. The working capital requirement ( WCR ) came to 370.5 million, up by 35.4% compared to 273.6 million at 31 December 2006. Acquisitions realized during the first half 2007 have contributed mainly to this increase, representing an operating WCR of 41.1 million at 30 June 2007. On a like-for-like basis, i.e. adjusted for the Cotubel, Noracero and Aceros y Calibrados acquisitions, movements relative to 30 June 2006, each component of the WCR variance to relative to 30 June 2006 were as follows: (in millions of euros) 30/06/2007 like-for-like 31/12/2006 30/06/2006 Net inventories 349.3 270.0 208.9 Net trade receivables 295.6 213.4 219.7 Trade payables (236.1) (171.8) (146.8) Operating WCR 408.8 311.6 281.9 Operating WCR (% of sales *) 32.2% 30.4% 32.2% Other receivables 9.4 11.9 14.3 Other payables (89.1) (49.8) (43.5) Non-operating WCR (79.7) (37.9) (29.3) Total WCR 329.1 273.7 252.6 WCR/sales (annualised) 26.0% 26.7% 29.2% (*) Rolling 12-month sales Inventories The net value of inventories came to 388.4 million compared to 270.0 million at 31 December 2006, i.e. an increase of 43.9%. Higher purchase prices have contributed to 20.2 points to the increase in inventory value. Interim activity report Page 11

Most of the increase was related to stainless steel inventories. At 30 June 2007, inventories totalled 212,638 tonnes towards 177,702 tonnes at 31 December 2006. The increase in inventories resulting from changes in the scope of consolidation (Cotubel, Noracero and Aceros y Calibrados) was 9,214 tonnes. Inventories were up 14.5% at constant scope relative to 31 December 2006, while tonnage sold rose by 30.3% between the second half of 2006 and the first half of 2007. On a rolling 12-month basis, inventories represented 124.5 days of sales on a volume basis at 30 June 2007, compared to 121 days at 31 December 2006 and 122 days at 30 June 2006, giving turnover of 2.9 times, 3 times and 2.9 times per year respectively. Trade receivables Trade receivables equalled 61 days of sales at 30 June 2007, 3% lower than the figure at 31 December 2006 (63 days) and the 65 days ratio at 30 June 2006. Trade payables Trade payables equalled 56 days of purchases at 30 June 2007, compared to 55 days at 31 December 2006 and 58 days at 30 June 2006. Overall, and at constant scope, operating WCR equalled 115 days of sales at 30 June 2007, which is unchanged relative to 30 June 2006 and compares with 110 days at 31 December 2006. Total shareholders' equity amounted to 319.4 million, equal to 34.4% of total assets. Provisions for contingencies fell by over 0.2 million to 3.3 million, while provisions for employment-related liabilities rose by 0.7 million to 23.9 million. Net debt ended the period at 189.0 million, equal to 59.2% of consolidated shareholders' equity, compared with 94.7 million and a debt to equity ratio by 33.8% at 31 December 2006. Net debt breakdown is set out as follows: (in millions of euros) 30 June 2007 31 December 2006 Cash and cash equivalents (25.6) (24.2) Available-for-sale assets (1.5) (0.1) Forward currency contracts (0.9) (0.2) Current interest-bearing loans and borrowing (1) Non-current interest-bearing loans and borrowing 133.7 50.1 83.3 69.1 TOTAL 189.0 94.7 (1) 82.8 million of the facility arranged in early February 2007 (maximum amount of 100 million including a 40 million part repayable over 5 years) was used at 30 June 2007. The increase in net debt was the result of IMS' activities and acquisitions in the first half of the year. The Group complies with the limits set by its banking covenants, particularly as regards: - gearing (consolidated net debt divided by shareholders' equity), which was 69.8% at 30 June 2007 after adding back factored trade receivables; the limit set by the banking covenants is 70%. Interim activity report Page 12

- leverage (consolidated net debt divided by EBITDA) which amounted 1.42 at 30 June 2007. The limit set by the banking covenants is 3. Cash flow Net debt increased by 94.3 million between 1 January and 30 June 2007. Cash flow from operations totalled 59.5 million, up from 27.8 million in the year-earlier period. They were used as follows: - to carry out acquisitions ( 41.3 million) and assume debt from acquired companies ( 23.3 million); - to finance the Group s organic growth, with a 69.7 million increase in the working capital requirement resulting from volume growth (volumes up by 13.1% compared to the first half 2006) and the impact of higher stainless steel prices on the WCR; and to finance investments in property, plant and equipment and intangible assets by 8.4 million. The change in the "long-term borrowings" caption (repayment of 39.2 million), new borrowings ( 82.8 million) and changes in short-term debt ( 29.5 million) are the result of the Group's refinancing in February 2007. Outlook Taking into account acquisitions made at the end of the first half of 2007, the Group has increased its distributed tonnage target to 640,000 tonnes in 2007 (barring further acquisitions), and has raised its target for operating profit per tonne to 160 (excluding windfall or negative windfall effects). The nickel price has fallen since early June, and so the Group expects a negative windfall effect in the second half of 2007. Interim activity report Page 13

II. CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS Condensed consolidated interim financial statements 14

Consolidated profit and loss accounts (in thousands of euros) 30/06/2006 30/06/2007 Change Q2 2006 Q2 2007 Change Sales from storage and distribution activities 487 323 730 068 49,8% 248 573 377 354 51,8% Sales from trading activities 38 17 997 NS 22 7 864 ns Income from ordinary activities 487 361 748 065 53,5% 248 595 385 218 55,0% Storage and distribution purchases -370 267-624 006-68,5% -186 642-317 921-70,3% Trading purchases -15 830 NS 0-7 049 ns Net change in inventories 906 80 095 NS 272 35 277 12869,5% Gross profit 118 000 188 324 59,6% 62 225 95 525 53,5% Other operating income and reversal of provisions 2 557 5 319 108,0% 799 3 503 338,4% Personnel costs -37 655-50 331-33,7% -19 187-25 241-31,6% Additions to depreciation and amortisation -4 972-5 659-13,8% -2 504-2 989-19,4% Additions to provisions -1 886-2 806-48,8% -569-330 42,0% Other expenses -39 855-48 177-20,9% -19 855-25 285-27,3% Total expenses -84 368-106 973-26,8% -42 115-53 845-27,9% Operating profit 36 189 86 670 139,5% 20 909 45 183 116,1% Net financial expenses -3 233-4 226-30,7% -1 653-1 968-19,1% Share in the net profit of equity-accounted companies 7 0 7 Profit before tax 32 956 82 451 150,2% 19 256 43 222 124,5% Taxes -11 227-30 627-172,8% -7 050-16 669-136,4% Net profit from continuing ordinary operations 21 729 51 824 138,5% 12 206 26 553 117,5% Profit from discontinued operations 0 0 0 0 Consolidated net profit 21 729 51 824 138,5% 12 206 26 553 117,5% attributable to equity holders of the parent company 21 729 51 824 138,5% 12 206 26 553 117,5% attributable to minority interests Net attributable profit per share issued (in euros) 1,20 2,87 138,5% 0,68 1,47 117,5% Net attributable profit per share excluding treasury shares (in euros) 1,23 2,95 139,2% 0,69 1,51 118,2% Condensed consolidated interim financial statements 15

Consolidated balance sheet (in thousands of euros) 30/06/2007 31/12/2006 Depreciation / Gross provisions Net Net ASSETS Goodwill 82 121 82 121 52 927 Intangible assets 13 454 8 054 5 400 4 745 Tangible fixed assets 147 050 82 244 64 806 57 866 Equity investments 41 41 40 Other long term assets 2 984 2 984 Assets available for sale 1 551 1 551 51 Shares in equity-accounted companies 6 145 918 5 227 6 050 Deferred tax assets 9 393 9 393 11 594 Total non-current assets 262 739 91 216 171 523 133 273 Inventories 396 659 8 253 388 406 270 012 Trade receivables 339 017 8 675 330 342 213 359 Other receivables 9 705 9 705 11 228 Corporate income tax due from tax authorities 84 84 646 Derivative instruments 988 988 83 Embedded interest-rate derivatives 856 856 268 Cash and cash equivalents 25 627 25 627 24 235 Total current assets 772 936 16 928 756 008 519 831 Assets held for sale 0 230 Total assets 1 035 675 108 144 927 531 653 334 LIABILITIES AND SHAREHOLDERS' EQUITY SHAREHOLDERS' EQUITY Share capital 27 528 27 528 Consolidated reserves 238 989 193 725 Foreign-exchange translation differences 1 024 1 563 Net profit 51 824 57 068 Minority interests 0 Total shareholders' equity 319 365 279 884 Interest-bearing non-current liabilities 83 349 50 115 Deferred tax liabilities 5 351 5 101 Provisions for liabilities and charges 1 204 1 225 Pension provisions 23 905 23 231 Other non-current liabilities 222 728 Total non-current liabilities 114 031 80 400 Trade payables 263 181 171 804 Other payables 56 589 31 781 Corporate income tax due 38 298 18 044 Interest-bearing current liabilities 133 712 69 129 Derivative instruments 308 20 Current provisions for liabilities and charges 2 047 2 272 Total current liabilities 494 135 293 050 LIABILITIES HELD FOR SALE Total liabilities 927 531 653 334 Condensed consolidated interim financial statements 16

Consolidated cash flow statement ( in thousands of euros ) 30/06/2007 30/06/2006 Net cash at start of period Cash and cash equivalents 13 570 24 235 Operating activities Net profit 21 729 51 824 Depreciation and amortisation 4 972 5 659 Change in provisions 1 116 1 902 Other items 2 236 Gains (losses) on asset disposals -28-2 103 Cash Flow from operations 27 789 59 518 Total change in WCR -1 236-69 737 Cash flow from operating activities 26 553-10 219 Investing activities Financing activities Investments in intangible assets and property, plant and equipment (excluding finance leases) -3 542-8 389 Divestments of intangible assets and property, plant and equipment 43 2 439 Financial investments -6 854-41 336 Net cash of companies acquired or reclassified under IFRS 5 312 Other financial divestments 14 1 664 Cash flow from investing activities -10 339-45 310 Capital increase Treasury stock 815 352 Dividends paid -12 289-14 398 New medium- and long-term borrowings (excluding finance leases) 221 82 752 Repayment of medium- and long-term borrowings (excluding finance leases) -5 799-39 197 Repayment of finance leases -1 238-1 231 Change in other debt -6 0 Change in short-term debt 8 077 29 468 Assets available for sale 0 Other -149-506 Cash flow from financing activities -10 368 57 240 Change in cash position 5 846 1 711 Foreign exchange translation differences 321-319 Net cash at end of period 19 737 25 627 Cash and cash equivalents 19 737 25 627 Condensed consolidated interim financial statements 17

Statement of changes in debt Condensed consolidated interim financial statements Page 18

( in thousands of euros) 30/06/2007 30/06/2006 Net debt at start of period Cash and cash equivalents -13 570-24 235 Assets available for sale -51-51 Derivative instruments -268 Interest-bearing current liabilities 56 154 69 129 Interest-bearing non-current liabilities 60 804 50 115 Total 103 337 94 690 Operating activities Net profit 21 729 51 824 Depreciation and amortisation 4 972 5 659 Change in provisions 1 116 1 902 Other items 2 236 Gains (losses) on asset disposals -28-2 103 Cash Flow from operations 27 789 59 518 Change in simplified WCR -14 979-101 730 Change in other WCR items 13 743 31 993 Total change in WCR -1 236-69 737 Cash flow from operating activities 26 553-10 219 Investing activities Investments in intangible assets and property, plant and equipment (excluding financing leases) -3 542-8 389 Divestments of intangible assets and property, plant and equipment 43 2 439 Financial investments -6 854-41 336 Debt of companies acquired or reclassified under IFRS 5 0-23 299 Proceeds from the sale of consolidated securities, net of cash 0 Other financial divestments 14 1 664 Financing activities Cash flow from investing activities -10 339-68 921 Capital increase Treasury stock 815 352 Dividends paid -12 289-14 398 New finance leases -117-346 Other -155-506 Cash flow from financing activities -11 746-14 898 Changes in debt -4 468 94 038 Foreign exchange translation differences -965 299 Net debt at end of period 97 904 189 027 Cash and cash equivalents -19 737-25 627 Assets available for sale -51-1 551 Derivative instruments -856 Interest-bearing current liabilities 63 459 133 712 Interest-bearing non-current liabilities 54 233 83 349 Condensed consolidated interim financial statements Page 19

Change in equity attributable to equity holders of the parent company ( in thousands of euros) Shareholders' equity Share capital Issue premium Treasury stock Attributable foreign exchange translation differences Attributable cumulative results Attributable total Minority interests At 1 January 2006 235 963 27 528 28 287-4 122 1 684 182 586 235 963 Equity dividends -12 289-12 289-12 289 Net profit for the period 21 729 21 729 21 729 Foreign currency translations -1 102-1 102-1 102 Treasury shares 815 815 815 Bonus share issue 0 Other -207-207 -207 Net change over the period 8 946 0 0 815-1 102 9 233 8 946 0 At 30 June 2006 244 909 27 528 28 287-3 307 582 191 819 244 909 0 At 1 January 2007 279 884 27 528 28 287-6 141 1 563 228 647 279 884 Equity dividends -14 398-14 398-14 398 Net profit for the period 51 824 51 824 51 824 Foreign currency translation -539-539 -539 Bonus share issue 352 352 352 Other 0 0 Traesury shares 2 242 2 242 2 242 Net change over the period 39 481 0 0 352-539 39 668 39 481 0 At 30 June 2007 319 365 27 528 28 287-5 789 1 024 268 315 319 365 0 Condensed consolidated interim financial statements 20

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 1. ACCOUNTING POLICIES In accordance with European regulation 1606/2002 of 19 July 2002 on international standards, the consolidated accounts of the IMS Group were prepared in accordance with the IAS/IFRS international accounting standards as approved by the European Union. The accounting principles and methods applied for the period ending 30 June 2007 are identical to those applied for preparing annual accounts under IFRS. The condensed interim accounts have been prepared in accordance with accounting standard IAS 34. The Group's consolidated accounts were prepared using the historical cost principle, except for the financial derivative instruments and assets available-for-sale, which were assessed at their fair value. The book value of the assets and liabilities which are hedged against their fair value is adjusted to take into account changes in fair value attributable to the hedged risks. The preparation of financial statements implies that the management of the Group or its subsidiaries make estimates and use assumptions that affect the amounts of asset and liability items included in the consolidated balance sheet, as well as the information relating to any contingent assets and liabilities on the date this financial information was prepared and the amounts disclosed as income and expenses for the year. Management regularly reviews these estimates and appraisals based on past experience and various other factors that are deemed to be reasonable. These estimates constitute the basis for its assessments of the book value of the assets and liabilities. The actual results could differ considerably from the estimates based on different assumptions or conditions. 2. PARTICULARITIES OF PREPARING INTERIM ACCOUNTS The condensed consolidated accounts for the first six months of 2007 were prepared on the basis of rules used for the 2006 year end, with the following exception concerning income tax: In the interim financial statements, current and deferred tax charges are calculated by applying the average annual tax rate estimated for the current tax year for each entity or tax group to the accounting result before tax for the period. Condensed consolidated interim financial statements 21

3. CONSOLIDATED SUBSIDIARIES IMS' scope of consolidation changed in the first half of 2007 as follows. IMS strengthened its position in Spain by acquiring, via its Spanish subsidiary Aceros IMS, the activities and certain assets of Aceros y Calibrados in March 2007 and Noracero in June 2007. The transactions resulted in goodwill of 3.3 million. IMS also strengthened its presence in stainless steel welded tubes and fittings, through the acquisition of Cotubel by IMS France. Cotubel was consolidated from 1 June 2007, and provisional goodwill of 25.9 million was recorded, including future earn-out payments. IMS also acquired a 25% stake in Brescia Acciai through its Italian subsidiary IMS SpA in May 2007, followed by a further 25% in July 2007. It has undertaken to acquire the remaining 50% in January 2008. Brescia Acciai was accounted for under the equity method at 30 June 2007 at a value of 3.0 million. The equity method was used because the IMS group did not have effective control over Brescia Acciai at 30 June 2007, as the seller could be released from its obligation to sell the remainder of its stake on payment of an exit indemnity. The undertakings to buy the remaining shares in Brescia Acciai were recognised as current liabilities, given the Group's obligation (probable but not certain at 30 June 2007) to pay to the seller 0.6 million in July 2007 relating to a 25% stake and 1.3 million in January 2008 relating to a 50% stake. The table below sets out simplified income statement data. 2007 proforma income statement figures are calculated using June 2006 exchange rates. By contrast with published first-half 2006 data, proforma figures for the first half of 2006 include 6 months of activity at Hoselmann (acquired in August 2006), one month of activity at Alura (acquired in January 2006) and one month of activity at Cotubel (consolidated from 1 June 2007). In the first half of 2007, Cotubel's consolidated sales amounted to 13.0 million (1 month of activity), and its operating profit was 0.1 million. 1.4 million of Cotubel's profits ( 0.9 million after tax), on the sale of purchased inventories, were recognised directly in shareholders' equity. Cotubel's consolidated sales and operating profit in the first five months of 2007 are estimated at 55.2 million and 5.2 million respectively. The activities of Aceros y Calibrados and Noracero did not have a significant impact on the consolidated financial statements, and so were not restated. In millions of euros: (six months ended 30 June) 2007 proforma 2007 actual 2006 proforma 2006 actual Sales Gross profit Operating profit 746.9 187.9 86.1 748.1 188.3 86.7 520.9 125.4 38.6 487.4 118.0 36.2 Net profit from continuing ordinary operations 51.3 51.8 23.2 21.7 Condensed consolidated interim financial statements 22

The balance sheet impact of the various changes in the scope of consolidation, mainly relating to Cotubel, Aceros y Calibrados and Noracero, broke down as follows: (in millions of euros) Aceros y Calibrados and Noracero Cotubel Total Goodwill 3.3 25.9 29.2 Intangible and fixed assets 10.1 3.5 4.6 Other non-current assets 1.6 1.6 Non-current assets 4.4 31.0 35.4 Inventories 1.4 40.2 41.7 Trade and other receivables 30.9 30.9 Other current debtors 0.4 0.4 Cash & cash equivalents -1.0 0.4-0.7 Current assets 0.4 71.9 72.3 Total assets 4.8 102.9 107.7 Shareholders' equity 46.6 46.6 Non-current interest-bearing liabilities 0.3 0.3 Other non current liabilities Non-current liabilities 0.0 0.3 0.3 Trade and other payables 4.8 25.2 30.0 Other current liabilities 5.9 5.9 Current interest-bearing liabilities 24.9 24.9 Current liabilities 4.8 56.0 60.8 TOTAL LIABILITIES AND EQUITY 4.8 102.9 107.7 4. GOODWILL Changes in goodwill since 31 December 2006 are as follows: Net value at 1 January 2007 52.9 Temporary goodwill on Cotubel (*) 25.9 Goodwill on Noracero 3.3 Net value at 30 June 2007 82.1 (*) The goodwill on Cotubel is based on an initial assessment of previously identified IFRS adjustments required on Cotubel's accounts. 5. ASSETS AND LIABILITIES HELD FOR SALE On 30 June 2007, the storage warehouse held for sale at 1 January 2007 was sold. The sale resulted in a gain of 2.1 million. The gain was recognised under "Other operating revenues and releases from provisions" in the profit and loss accounts, and explains the change in this item. Condensed consolidated interim financial statements 23

6. OFF-BALANCE SHEET COMMITMENTS Factoring IMS has set up factoring programs. At 30 June 2007, 33.8 million of trade receivables had been ceded in Italy, Germany and Spain, and had therefore moved off-balance sheet, since the programme complies with IFRS rules for derecognition. IMS SA's banking covenants Banking covenants, which require IMS to comply with two ratios based on consolidated financial statement data, apply to all of IMS' credit facilities. The first ratio, referred to as leverage, consists in the ratio of net debt to EBITDA; it is calculated as the sum of net debt increased by non-recourse assignment of receivables to EBITDA (operating profit plus depreciation, amortisation and changes in provisions for liabilities and charges), and must remain below 3. The second, referred to as gearing, is calculated as the ratio of net debt (defined as above) to shareholders' equity, and must remain below 70%. IMS SA complied with the banking covenants on its credit facilities at 30 June 2007. Commitments for financial investments As part of the Cotubel acquisition, IMS (through its IMS France subsidiary), undertook to make to the seller Marcegaglia two earn-out payments contingent on movements in the LME nickel price between 1 June 2007 and 31 May 2008, capped at 5 million. Due to the low probability that these payments will be made, based on a current nickel prices, the earn-out payments were not recognised in the acquisition price. IMS SA also granted Marcegaglia a first demand guarantee in the event that IMS France fails to meet its obligations with respect to the earn-out payments, capped at 5 million. 7. INCOME FROM ORDINARY ACTIVITIES IMS' trading activities mainly consist of the direct factory sales carried out by its Hoselmann subsidiary, which was acquired in August 2006. 8. EARNINGS PER SHARE There are two earnings per share figures: Based on total shares in issue: using the total number of shares making up IMS International Metal Service's capital, i.e. 18,057,010, as the denominator; Based on total shares in issue excluding treasury stock: using the total number of shares (18,057,010) minus the number of shares held as treasury stock (498,272), as the denominator. Condensed consolidated interim financial statements 24

9. SECTOR INFORMATION The breakdown of sales and operating profit by geographical segment is as follows: 30 June 2007 Revenue from ordinary activities Operating profit (thousands of euros) Total sales per zone Interregional sales Sales to external customers Germany 247,462-31,107 216,355 36,473 France 133,117-1,814 131,303 9,761 Italy 150,438-4,111 146,327 14,586 Spain 86,756-2,611 84,145 13,123 Other countries 180,575-10,640 169,935 16,439 Intra-group sales -50,283 50,283-3,712 Total 748,065 748,065 86,670 30 June 2006 Revenue from ordinary activities Operating profit (thousands of euros) Total sales per zone Interregional sales Sales to external customers Germany 139,265-20,630 118,635 10,577 France 93,568-1,226 92,342 5,097 Italy 96,921-1,536 95,385 5,540 Spain 61,293-1,207 60,086 7,223 Other countries 127,724-6,811 120,913 8,509 Intra-group sales -31,410 31,410-757 Total 487,361 487,361 36,189 Condensed consolidated interim financial statements 25

10. INFORMATION ON RELATED PARTIES The only relevant related parties are members of the Management Board and Supervisory Board. As in 2006, relations between the Group and these parties were limited to remuneration paid to and a regulated agreement with Jean-Yves Bouffault governing the terms applicable in the event of his dismissal. 11. CASH FLOW STATEMENT The change in the working capital requirement broke down as follows in the first half of 2007 (in millions of euros): Inventories 77.0 Trade receivables 86.3 Other receivables -2.2 Trade payables -61.6 Other payables -29.8 Total change 69.7 12. POST BALANCE SHEET EVENTS No material event took place after the balance sheet date. Condensed consolidated interim financial statements 26

III. STATUTORY AUDITOR S REPORT Statutory auditors' report 26

This is a free translation into English of the statutory auditor s review report issued in French and is provided solely for the convenience of English speaking readers. This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France. To the Shareholders, In our capacity of statutory auditors and in accordance with the requirements of article L. 232-7 of the French Commercial Law (the Code de Commerce), we hereby report to you on: the review of the accompanying condensed half-year consolidated financial statements of IMS International Metal Service, for the period January 1 to June 30, 2007, the verification of information contained in the half-year management report. These condensed half-year consolidated financial statements are the responsibility of the Board of Directors. Our role is to express a conclusion on these financial statements based on our review. We conducted our review in accordance with professional standards applicable in France. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with professional standards applicable in France and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed half-year consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34 - standard of the IFRS as adopted by the European Union applicable to Interim financial information. In accordance with professional standards applicable in France, we have also verified the information given in the interim half-year financial report commenting the condensed half-year consolidated financial statements subject to our review. We have no matters to report as to its fair presentation and consistency with the condensed half-year consolidated financial statements. Paris and Paris-La-Défense, August 29, 2007 The statutory auditors French original signed by BELLOT MULLENBACH ET ASSOCIES ERNST & YOUNG Audit Jean-Louis Mullenbach François Carrega Statutory auditors' report 27

IV. RESPONSIBILITY FOR THE INTERIM REPORT Person responsible for the interim report Jean-Yves Bouffault, Chairman of the Executive Committee of IMS International Metal Service Responsibility Statement "I hereby certify, to my knowledge, that the condensed consolidated interim financial statements contained in this interim report have been prepared in accordance with the applicable accounting standards and give a true and fair view of the assets, liabilities and financial position of the Group IMS International Metal Service at 30 June 2007, and that the present interim report provides a true and fair view of the information required the Autorité des Marchés Financiers General Regulations, and in particular Article 222-6 thereof." Jean-Yves Bouffault Chairman of the Executive Committee, IMS International Metal Service Responsibility for the interim report 28

IMS International Metal Service Immeuble Le Carillon 5, Esplanade Charles de Gaulle 92733 Nanterre Cedex France Tel. : +33 (0)1 41 92 04 44 Fax: +33 (0) 1 46 24 05 96 Limited-liability corporation governed by an Executive Committee and a Supervisory Board with capital of 27,527,740.73 RCS Nanterre B 311 361 489