Jacquet Metals — Interim / Quarterly Report 2017

Sep 6, 2017

Activity report

JUNE 30, 2017

A European leader in the distribution of specialty steels

— Euronext Paris Compartment B

Press release dated September 6, 2017 – First half 2017 results

>	Sales	€911 million (+8.5% vs H1 2016)
>	EBITDA	€60.7 million (6.7% of sales)
>	Net income (Group share)	€27.7 million

On September 6, 2017 the Board of Directors chaired by Éric Jacquet examined the consolidated financial statements for the period ended June 30, 2017, which were subject to a limited review by the Statutory Auditors.

€m	Q2 2017	Q2 2016	H1 2017	H1 2016
Sales	445.7	417.0	910.7	839.5
Gross margin	114.2	101.5	236.0	195.6
% of sales	25.6%	24.3%	25.9%	23.3%
EBITDA1	29.5	15.4	60.7	24.2
% of sales	6.6%	3.7%	6.7%	2.9%
Operating income before non-recurring items 1	23.2	10.0	50.1	14.1
% of sales	5.2%	2.4%	5.5%	1.7%
Operating income	22.1	10.1	49.2	14.5
Net income (Group share)	12.4	3.4	27.7	2.3

¹ Adjusted for non-recurring items. The business review includes a definition of non-IFRS financial indicators and explains the methods used to calculate them.

First half 2017 sales and earnings

Group sales amounted to €911 million, +8.5% compared to first half 2016, including the following effects:

• Volumes sold -1.8% (Q2: -5.2%);

• Price: +10.3% (Q2: +12.1%).

Gross margin amounted to €236 million or 25.9% of sales (Q2: 25.6%) compared to 23.3% in H1 2016.

EBITDA came to €60.7 million (Q2: €29.5 million), amounting to 6.7% of sales compared to 2.9% in H1 2016.

Operating income before non-recurring items amounted to €50.1 million (5.5% of sales) compared to €14.1 million (1.7% of sales) in H1 2016.

Net income (Group share) amounted to €27.7 million (3% of sales) compared to €2.3 million (0.3% of sales) in H1 2016.

Financial position

The Group generated operating cash flow of €48 million during H1 2017. As of June 30, 2017, operating working capital amounted to €389 million, including inventories of €387 million, and represented 23.4% of sales, stable compared to year end 2016.

As of June 30, 2017, Group net debt stood at €172 million, compared with shareholders' equity of €313 million, resulting in a net debt to equity ratio of 55% (69% as of December 31, 2016).

First half 2017 earnings by division

	Stainless steel and wear resistant quarto plates		Long stainless steel products			Engineering steels
€m	Q2 2017	H1 2017	Q2 2017	H1 2017	Q2 2017	H1 2017
Sales	97.8	195.9	114.4	240.6	232.1	472.7
Change vs 2016	16.2%	15.9%	7.5%	11.0%	3.2%	4.2%
Price effect	13.3%	13.3%	18.2%	16.3%	8.8%	6.4%
Volume effect	2.8%	2.6%	-10.7%	-5.3%	-5.6%	-2.3%
EBITDA1 2	6.4	13.5	7.0	16.7	12.6	26.5
% of sales	6.6%	6.9%	6.1%	6.9%	5.4%	5.6%
Operating income before non-recurring items 2	3.9	8.9	6.3	15.8	10.1	22.6
% of sales	4.0%	4.5%	5.5%	6.6%	4.4%	4.8%

¹ Non-division operations contributed €3.4 million to Q2 2017 EBITDA and €4.0 million to H1 2017 EBITDA.

² Adjusted for non-recurring items. The business review includes a definition of non-IFRS financial indicators and explains the methods used to calculate them.

JACQUET – Abraservice This division specializes in the distribution of stainless steel and wear-resistant quarto plates. Jacquet and Abraservice have separate sales networks. The division generated 72% of its business in Europe and 18% in North America.

Sales amounted to €195.9 million, +15.9% from €169.1 million in H1 2016: volumes sold +2.6% (Q2: +2.8%), prices +13.3% (Q2: +13.3%).

The gross margin rate rose 1.4 percentage points to 30.9% of sales, while gross margin came to €60.5 million compared to €49.9 million in H1 2016.

EBITDA amounted to €13.5 million (Q2: €6.4 million), representing 6.9% of sales, compared to €4.6 million (2.7% of sales) in H1 2016.

STAPPERT This division specializes in the distribution of long stainless steel products in Europe. It generated 41% of its sales in Germany, the largest European market.

Sales amounted to €240.6 million, +11% from €216.7 million in H1 2016: volumes sold -5.3% (Q2: -10.7%), prices +16.3% (Q2: +18.2%).

The gross margin rate rose 3 percentage points to 23.3% of sales, while the gross margin came to €56.1 million compared to €44.1 million in H1 2016.

EBITDA amounted to €16.7 million (Q2: €7 million), representing 6.9% of sales, compared to €6.7 million (3.1% of sales) in H1 2016.

IMS group IMS group specializes in the distribution of engineering steels, mostly in the form of long products. The division generated 47% of its sales in Germany, the largest European market.

Sales amounted to €472.7 million, +4.2% from €453.8 million in H1 2016:volumes sold -2.3% (Q2: -5.6%), prices +6.4% (Q2: +8.8%).

The gross margin rate rose 2.8 percentage points to 24.7% of sales, while the gross margin came to €116.7 million compared to €99.3 million in H1 2016.

EBITDA amounted to €26.5 million (Q2: €12.6 million), representing 5.6% of sales, compared to €9.4 million (2.1% of sales) in H1 2016. S+B Distribution contributed €10.2 million (3.8% of sales) to EBITDA, compared to €1 million in H1 2016.

Key financial information

Results

€m	H1 2017	H1 2016
Sales	910.7	839.5
Gross margin	236.0	195.6
% of sales	25.9%	23.3%
EBITDA1	60.7	24.2
% of sales	6.7%	2.9%
Operating income before non-recurring items 1	50.1	14.1
% of sales	5.5%	1.7%
Operating income	49.2	14.5
Net income (Group share)	27.7	2.3

¹ Adjusted for non-recurring items. The activity report includes a definition of non-IFRS financial indicators and explains the methods used to calculate them.

Balance sheet

€m	30.06.2017	31.12.2016
Goodwill	68.4	68.5
Net non-current assets	144.8	147.6
Net inventory	387.2	376.2
Net trade receivables	230.6	171.3
Other assets	92.4	91.7
Cash	66.4	73.0
Total assets	989.9	928.3
Shareholders' equity	312.7	296.5
Provisions (including provisions for employee benefit obligations)	105.6	112.3
Trade payables	229.1	176.4
Borrowings	242.2	281.2
Other liabilities	100.3	61.8
Total equity and liabilities	989.9	928.3

Cash flow

H1 2017	2016
49.2	45.3
(1.5)	(2.2)
47.7	43.1
(8.0)	(18.3)
0.6	1.2
—	(9.5)
(5.4)	(9.6)
(2.2)	1.3
32.8	8.3
205.3	213.5
172.5	205.3

Activity report

JUNE 30, 2017

	The Group	_ 02
1	— A leading distributor of specialty steels	_ 02
2	— Brand management	_ 03
3	— Stock market information	_ 04
4	— Shareholder structure at June 30, 2017	_ 04
5	— Financial communication schedule	_ 05

Activity report - June 30, 2017

1	— Group sales and earnings	_ 06
2	— Sales and earnings by division	_ 08
3	— Consolidated financial position	_ 10
4	— Summary interim consolidated financial statements	_ 14
5	— Report of the Statutory Auditors	_ 24
6	— Statement by the person responsible for the half-year financial report	_ 26

_ 06

The Group

1 A leading distributor of specialty steels

• Sales €911 million > Staff 3,317

• Distribution centers 109

• Countries of operation 26

Breakdown of sales*

Jacquet Metal Service is a European leader in the distribution of specialty steels, and is also active in Asia and North America.

A global player

2 Brand management

Jacquet Metal Service operates in high value-added niche markets and is a European leader in the distribution of specialty steels through its portfolio of four brands organized into three divisions, each of which targets specific customers and markets.

Each division is run by an operating manager, who is in charge of developing the relevant brand(s) in accordance with the strategic options and goals defined by the Group.

Central functions, the negotiation of purchasing terms, financial and legal affairs, information technology, credit insurance and communications are managed by Jacquet Metal Service SA, in close collaboration with the specialists from each division.

3 Stock market information

General features of shares and market capitalization

source: Jacquet Metal Service

>	Main indices:	CAC® All Shares, CAC® All-Tradable, CAC® Basic Materials, CAC® Mid &	>	Code or ticker: JCQ
		Small, CAC® PME, CAC® Small, Next 150	>	ISIN code:	FR0000033904
>	Market:	Euronext Paris - Compartment B	>	Reuters:	JCQ.PA
>	Listed on:	Euronext Paris	>	Bloomberg:	JCQ : FP

24,028,438	24,028,438
557,219	476,003
28,23	20,63
19,45	10,02
23,19	19,81
28,389	23,718

source : Euronext

As of June 30, 2017, the Jacquet Metal Service ("JCQ") share price was €23.19, +17% from the December 31, 2016 closing price. As of September 5, 2017, the share price stood at €25,34.

Jacquet Metal Service shares are tracked by Société Générale SGCIB and Oddo Securities.

• Société Générale: Mr. Belanger

• Oddo Securities: Mr. Garnier

4 Shareholder structure at June 30, 2017

Breakdown of share capital Breakdown of voting rights

Éric Jacquet and JSA (which he controls) held 40.32% of the share capital and 54.03% of the voting rights in the Company at June 30, 2017.

The Group did not sell or buy any treasury stock (outside the scope of the liquidity agreement) during H1 2017.

5 Financial communication schedule

Results for the nine months ended September 30, 2017: November 15, 2017

2017 Full year results: March 2018

Investors and shareholders may obtain complete financial information from the Company's website at: www.jacquetmetalservice.com

Investor relations

Jacquet Metal Service Thierry Philippe Chief Financial Officer comfi@jacquetmetals.com > NewCap Julien Perez +33 1 44 71 94 94 jacquetmetalservice@newcap.eu

> Activity report JUNE 30, 2017

1 Group sales and earnings

Results for the six months ended June 30, 2017 are compared to the full-year results for 2016, which may be consulted in the 2016 Registration Document filed with the Autorité des Marchés Financiers (or AMF, French market regulator) on April 4, 2017 (filing No. D.17-0319).

€000	Q2 2017	Q2 2016	H1 2017	H1 2016
Sales	445,728	416,966	910,685	839,527
Gross margin	114,182	101,515	235,995	195,640
% of sales	25.6%	24.3%	25.9%	23.3%
Operating expenses	(85,716)	(87,870)	(176,965)	(175,340)
Net depreciation and amortization	(5,840)	(5,171)	(10,970)	(10,369)
Net provisions	(565)	1,572	995	4,435
Gains/(losses) on disposals of non-current assets	72	78	162	143
Non-recurring income and expenses	—	—	—	—
Operating income	22,133	10,124	49,217	14,509
Net financial expense	(3,613)	(1,997)	(6,212)	(4,923)
Income before tax	18,520	8,127	43,005	9,586
Corporate income tax	(5,393)	(4,345)	(13,585)	(6,349)
Consolidated net income	13,127	3,782	29,420	3,237
Net income (Group share)	12,431	3,438	27,716	2,347
Earnings per share in circulation (€)	0.52	0.14	1.15	0.10

Operating income	22,133	10,124	49,217	14,509
Non-recurring items and gains /losses on disposals	1,067	(100)	839	(421)
Operating income before non-recurring items	23,200	10,024	50,056	14,088
% of sales	5.2%	2.4%	5.5%	1.7%
Net depreciation and amortization	5,840	5,171	10,970	10,369
Net provisions	565	(1,572)	(995)	(4,435)
Non-recurring items	(139)	1,735	674	4,169
EBITDA	29,466	15,358	60,705	24,191
% of sales	6.6%	3.7%	6.7%	2.9%

Sales

Group first half sales amounted to €911 million, +8.5% from first half 2016, including:

• Volumes sold -1.8% (Q2: -5.2%),

• A price effect of +10,3 % (Q2: +12.1%).

€m	Q2 2017	Q2 2016	H1 2017	H1 2016
Sales	445.7	417.0	910.7	839.5
Change vs 2016	6.9%		8.5%
Price effect	12.1%		10.3%
Volume effect	-5.2%		-1.8%

The various effects are calculated as follows:

• Volume effect = (Vn Vn-1) × Pn-1, where V = volumes and P = average sale price converted into euros at the average exchange rate;

• Price effect = (Pn Pn-1) × Vn;

• The exchange rate effect is included in the price effect. Changes in exchange rates did not have a material impact on first half 2017;

• Change in consolidation/current year acquisitions and disposals

• Acquisitions: change in consolidation corresponds to the contribution (volumes and sales) of the acquired entity since the acquisition date;

• Disposals: change in consolidation corresponds to the contribution (volumes and sales) made by the sold entity in the year preceding disposal from the date falling one year before the disposal date until the end of the previous year;

• Change in consolidation/previous year acquisitions and disposals

• Acquisitions: change in consolidation corresponds to the contribution (volumes and sales) of the acquired entity in the current year from January 1 until the anniversary of the acquisition;

• Disposals: change in consolidation corresponds to the contribution (volumes and sales) of the sold entity from January 1 the previous year until the date of disposal.

Gross margin

Gross margin amounted to €236 million or 25.9% of sales (Q2: 25.6%) versus 23.3% in H1 2016.

€m	Q2 2017	Q2 2016	H1 2017	H1 2016
Sales	445.7	417.0	910.7	839.5
Cost of goods sold	(331.5)	(315.5)	(674.7)	(643.9)
Incl. purchases consumed	(332.7)	(315.9)	(670.0)	(644.3)
Incl. inventory impairment	1.2	0.5	(4.7)	0.4
Gross margin	114.2	101.5	236.0	195.6
Gross margin rate	25.6%	24.3%	25.9%	23.3%

Operating income

Operating expenses before non-recurring items (including net depreciation, amortization and provisions) in H1 2017 amounted to €185.9 million, up from €181.6 million in H1 2016. This €4.4 million change is mainly due to:

• +€6.6 million on the scope of consolidation excluding S+B Distribution related to the increase in activity and profitability

• -€2.2 million on the S+B Distribution scope of consolidation.

EBITDA came to €60.7 million (Q2: €29.5 million), amounting to 6.7% of sales versus 2.9% in H1 2016.

Operating income before non-recurring items amounted to €50.1 million (5.5% of sales) compared to €14.1 million (1.7% of sales) in H1 2016.

First half 2017 EBITDA is restated by an amount of €1.7 million mainly consisting of non-recurring expenses for which provisions were reversed for the period.

Net financial expense

First half 2017 net financial expense came to €6.2 million, compared to a €4.9 million net expense in H1 2016.

€m	Q2 2017	Q2 2016	H1 2017	H1 2016
Net cost of debt	(1.9)	(1.7)	(3.7)	(3.4)
Other financial items	(1.7)	(0.3)	(2.6)	(1.5)
Net financial expense	(3.6)	(2.0)	(6.2)	(4.9)

Net income

Net income (Group share) amounted to €27.7 million (3% of sales) versus €2.3 million (0.3% of sales) in H1 2016.

€m	Q2 2017	Q2 2016	H1 2017	H1 2016
Income before tax	18.5	8.1	43.0	9.6
Corporate income tax	(5.4)	(4.3)	(13.6)	(6.3)
Income tax rate	29.1%	53.5%	31.6%	66.2%
Consolidated net income	13.1	3.8	29.4	3.2
Minority interests	(0.7)	(0.3)	(1.7)	(0.9)
Net income (Group share)	12.4	3.4	27.7	2.3
% of sales	2.8%	0.8%	3.0%	0.3%

2 Sales and earnings by division

H1 2017 operations and brand development

		JACQUET – Abraservice		STAPPERT		IMS group
		Stainless steel and wear resistant quarto plates		Stainless steel long products		Engineering steels
€m	Q2 2017	H1 2017	Q2 2017	H1 2017	Q2 2017	H1 2017
Sales	97.8	195.9	114.4	240.6	232.1	472.7
Change vs 2016	16.2%	15.9%	7.5%	11.0%	3.2%	4.2%
Price effect	13.3%	13.3%	18.2%	16.3%	8.8%	6.4%
Volume effect	2.8%	2.6%	-10.7%	-5.3%	-5.6%	-2.3%
EBITDA1 2	6.4	13.5	7.0	16.7	12.6	26.5
% of sales	6.6%	6.9%	6.1%	6.9%	5.4%	5.6%
Operating income before non-recurring items 2	3.9	8.9	6.3	15.8	10.1	22.6
% of sales	4.0%	4.5%	5.5%	6.6%	4.4%	4.8%

¹ Non-division operations contributed €3.4 million to Q2 2017 EBITDA and €4.0 million to H1 2017 EBITDA.

² Adjusted for non-recurring items. The activity report includes a definition of non-IFRS financial indicators and explains the methods used to calculate them.

JACQUET – Abraservice — Stainless steel and wear-resistant quarto plates

This division specializes in the distribution of stainless steel and wear-resistant quarto plates. Jacquet and Abraservice have separate sales networks. The division generated 72% of its business in Europe and 18% in North America.

The gross margin rate rose 1.4 percentage points to 30.9%, while gross margin came to €60.5 million compared to €49.9 million in H1 2016.

Sales amounted to €195.9 million, +15.9% from €169.1 million in H1 2016: volumes sold +2.6% (Q2: +2.8%), prices +13.3% (Q2: +13.3%).

EBITDA was €13.5 million (Q2: €6.4 million), representing 6.9% of sales, compared to €4.6 million (2.7% of sales) in H1 2016.

€m	Q2 2017	Q2 2016	H1 2017	H1 2016
Sales	97.8	84.2	195.9	169.1
Change vs 2016	16.2%		15.9%
Price effect	13.3%		13.3%
Volume effect	2.8%		2.6%
Gross margin	29.4	25.5	60.5	49.9
% of sales	30.0%	30.3%	30.9%	29.5%
EBITDA	6.4	2.7	13.5	4.6
% of sales	6.6%	3.2%	6.9%	2.7%
Operating income before non-recurring items	3.9	0.8	8.9	0.8
% of sales	4.0%	1.0%	4.5%	0.4%

STAPPERT — Stainless steel long products

This division specializes in the distribution of long stainless steel products in Europe. It generated 41% of its sales in Germany, the largest European market.

Sales amounted to €240.6 million, +11% from €216.7 million in H1 2016: volumes sold -5.3% (Q2: -10.7%), prices +16.3% (Q2: +18.2%).

The gross margin rate rose 3 percentage points to 23.3%, while the gross margin came to €56.1 million versus €44.1 million in H1 2016.

EBITDA was €16.7 million (Q2: €7 million), representing 6.9% of sales, compared to €6.7 million (3.1% of sales) in H1 2016.

€m	Q2 2017	Q2 2016	H1 2017	H1 2016
Sales	114.4	106.4	240.6	216.7
Change vs 2016	7.5%		11.0%
Price effect	18.2%		16.3%
Volume effect	-10.7%		-5.3%
Gross margin	25.7	22.6	56.1	44.1
% of sales	22.5%	21.2%	23.3%	20.4%
EBITDA	7.0	4.1	16.7	6.7
% of sales	6.1%	3.9%	6.9%	3.1%
Operating income before non-recurring items	6.3	3.5	15.8	5.7
% of sales	5.5%	3.3%	6.6%	2.7%

IMS group — Engineering steels

IMS group specializes in the distribution of engineering steels, mostly in the form of long products. The division generated 47% of its sales in Germany, the largest European market.

Sales amounted to €472.7 million, +4.2% from €453.8 million in H1 2016: volumes sold -2.3% (Q2: -5.6%), prices +6.4% (Q2: +8.8 %).

The gross margin rate rose 2.8 percentage points to 24.7%, while the gross margin came to €116.7 million versus €99.3 million in H1 2016.

EBITDA was €26.5 million (Q2: €12.6 million), representing 5.6% of sales, compared to €9.4 million (2.1% of sales) in H1 2016. S+B Distribution contributed €10.2 million (3.8% of sales) to EBITDA, compared to €1 million in H1 2016.

€m	Q2 2017	Q2 2016	H1 2017	H1 2016
Sales	232.1	224.8	472.7	453.8
Change vs 2016	3.2%		4.2%
Price effect	8.8%		6.4%
Volume effect	-5.6%		-2.3%
Gross margin	56.7	52.2	116.7	99.3
% of sales	24.4%	23.2%	24.7%	21.9%
EBITDA	12.6	6.6	26.5	9.4
% of sales	5.4%	2.9%	5.6%	2.1%
Operating income before non-recurring items	10.1	4.4	22.6	5.4
% of sales	4.4%	2.0%	4.8%	1.2%

3 Consolidated financial position

Summary balance sheet

The summary balance sheet below sets out Jacquet Metal Service's consolidated financial position at June 30, 2017 and December 31, 2016.

Working capital	30.06.2017	31.12.2016
Goodwill	68,390	68,489
Net non-current assets	144,813	147,598
Net inventory	387,223	376,243
Net trade receivables	230,592	171,315
Other assets	92,440	91,707
Cash	66,427	72,951
Total assets	989,885	928,303
Shareholders' equity	312,702	296,522
Provisions (including provisions for employee benefit obligations)	105,609	112,274
Trade payables	229,072	176,429
Borrowings	242,204	281,231
Other liabilities	100,298	61,847
Total equity and liabilities	989,885	928,303

Working capital

As of June 30, 2017, operating working capital amounted to €389 million, including inventories of €387 million, and represented 23.4% of sales, stable compared to year end 2016.

€000	30.06.2017	31.12.2016	Variations
Net inventory	387,223	376,243
Days sales inventory 1	136	142
Net trade receivables	230,592	171,315
Days sales outstanding	47	47
Trade payables	(229,072)	(176,429)
Days payable outstanding	49	51
Net operating working capital	388,743	371,129	17,614
% of sales 1	23.4%	23.4%
Other receivables or payables excluding taxes and financial items	(52,945)	(24,059)
Working capital excluding taxes and financial items	335,798	347,070
Changes in consolidation and other	—	(12,726)
Working capital before taxes and financial items and adjusted for other changes	335,798	334,344	1,454
% of sales 1	20.2%	21.1%

¹ Rolling 12 months

Group inventories amounted to €387.2 million at June 30, 2017, compared to €376.2 million at December 31, 2016.

Inventory in tonnage represented 136 days of sales at June 30, 2017, compared to 142 days at December 31, 2016.

Trade receivables amounted to €230.6 million at June 30, 2017 with an average customer payment term that was broadly unchanged compared to December 31, 2016 (around 47 days' sales, excluding the impact of receivables assigned without recourse). The Group had assigned trade receivables amounting to €47.4 million at June 30, 2017 without recourse, compared to €31.8 million at December 31, 2016. This change is due to the €76 million increase in sales versus Q4 2016.

Trade payables amounted to €229.1 million at June 30, 2017, with an average supplier payment term of 49 days' purchases, compared to 51 days at December 31, 2016.

Net debt

As of June 30, 2017, Group net debt stood at €172 million, compared with shareholders' equity of €313 million, resulting in a net debt to equity ratio of 55.2% (69.2% as of December 31, 2016).

€000	30.06.2017	31.12.2016
Borrowings	242,204	281,231
Cash, cash equivalents and other	69,725	75,969
Net debt	172,479	205,262
Debt to equity ratio	55.2%	69.2%

Financing

The Group had €565 million in lines of credit at June 30, 2017, 43% of which had been used:

€m	Authorized at June 30, 2017	Used at June 30, 2017	% used
Jacquet Metal Service SA	340.9	136.8	40%
Syndicated revolving loan	125.0	0.0	0%
Schuldscheindarlehen (private placement of debt instruments under German law)	88.0	88.0	100%
Lines of credit and asset financing	127.9	48.8	38%
Subsidiaries	224.4	105.4	47%
Lines of credit	149.0	58.2	39%
Factoring	27.9	1.9	7%
Asset financing (term/revolving loans and leasing)	47.5	45.2	95%
Total	565.3	242.2	43%

In addition to the financing shown in the above table, the Group also had €65 million in without-recourse receivable assignment facilities, €47 million of which had been used at June 30, 2017.

Financing covenants mainly apply to the syndicated revolving loan and the German private placement (Schuldscheindarlehen). These covenants mainly correspond to commitments that must be complied with at Group level.

The syndicated revolving loan was renegotiated during second quarter 2017.

The main terms of the syndicated revolving loan are as follows:

• Date of signature: June 2017

• Maturity: July 16, 2020

• Amount €125 million (unused)

• Security: none

• Change of control clause: JSA must hold at least 40% of Jacquet Metal Service SA's share capital and voting rights.

> Main covenant:

• Compliance with one of the following ratios:

• Debt to equity ratio less than 1

• or

• Leverage less than 2

The main terms of the Schuldscheindarlehen are as follows:

• Date of signature: October 2015

• Maturity: October 30, 2020

• Amount €88 million (fully used)

• Security: none

• Change of control clause: JSA must hold at least 40% of Jacquet Metal Service SA's share capital and voting rights. > Main covenant:

• Debt to equity ratio less than 1.

All of these financing covenants were in compliance at June 30, 2017.

Cash flow

€000	30.06.2017	31.12.2016
Operating cash flow before change in working capital	49,186	45,353
Change in working capital	(1,454)	(2,234)
Cash flow from operating activities	47,732	43,119
Capital expenditure	(7,961)	(18,262)
Asset disposals	621	1,166
Dividends paid to shareholders of Jacquet Metal Service SA	—	(9,460)
Interest paid	(5,415)	(9,616)
Other movements	(2,194)	1,321
Change in net debt	32,783	8,268
Net debt brought forward	205,262	213,530
Net debt carried forward	172,479	205,262

The Group generated operating cash flow of €48 million during H1 2017. As of June 30, 2017, operating working capital amounted to €389 million, including inventories of €387 million, and represented 23.4% of sales, equivalent to the 2016 year-end ratio.

First half capital expenditure amounted to €8 million, mainly relating to new finishing capacity.

Risk factor

The general risk factors did not change during the first half. They are set out in the 2016 Annual report on pages 30-34.

Post balance sheet events

None.

> Summary interim consolidated financial statements

Consolidated statement of comprehensive income

€000	Notes	30.06.2017	30.06.2016
Sales	2.1	910,685	839,527
Cost of goods sold	—	(674,690)	(643,887)
Gross margin	2.1	235,995	195,640
Operating expenses	—	(83,312)	(85,860)
Personnel expenses	—	(93,367)	(90,347)
Miscellaneous taxes	—	(2,110)	(2,230)
Other net income	—	1,824	3,097
Net depreciation and amortization	—	(10,970)	(10,369)
Net provisions	—	995	4,435
Non-recurring income and expenses	—	162	143
Operating income	2.1	49,217	14,509
% of sales	—	5.4%	1.7%
Cost of debt	—	(3,652)	(3,415)
Income from investments	—	—	—
Net cost of debt	—	(3 652)	(3 415)
Other financial income	—	29	197
Other financial expenses	—	(2,589)	(1,705)
Net financial expense	—	(6,212)	(4,923)
Income before tax	—	43,005	9,586
Corporate income tax	1.2	(13,585)	(6,349)
Total consolidated net income	—	29,420	3,237
% of sales	—	3.2%	0.4%
Minority interests	—	(1,704)	(890)
Net income (Group share)	—	27,716	2,347
% of sales	—	3.0%	0.3%
Items that may be reclassified to profit or loss
Exchange differences	—	(414)	(1,306)
Other	—	(355)	(22)
Items not reclassified to profit or loss
Actuarial gains /(losses)	—	1,463	(3,091)
Total comprehensive income/(loss) (Group share)	—	28,410	(2,072)
Minority interests	—	1,695	799
Total comprehensive income/(loss)	—	30,105	(1,273)
Earnings per share in circulation (€)	—	1.15	0.10
Diluted earnings per share (€)	2.3	1.17	0.10

The Notes are an integral part of the summary interim consolidated financial statements.

Consolidated statement of financial position

		30.06.2017		31.12.2016
€000 Notes	Gross	Dep. amort. prov.	Net	Net
Assets
Goodwill 2.4	68,390	—	68,390	68,489
Intangible assets 2.5	26,688	22,046	4,642	4,794
Property, plant and equipment 2.5	425,029	284,858	140,171	142,804
Other financial assets —	11,949	1,509	10,440	9,875
Deferred tax 2.12	53,153	—	53,153	56,641
Non-current assets —	585,209	308,413	276,796	282,603
Inventory and work-in-progress 2.1, 2.6	459,478	72,255	387,223	376,243
Trade receivables 2.1, 2.7	239,777	9,185	230,592	171,315
Tax assets receivable —	3,153	—	3,153	2,707
Other assets —	25,720	30	25,690	22,065
Derivatives —	4	—	4	419
Cash and cash equivalents 2.8	66,427	—	66,427	72,951
Current assets	794,559	81,470	713,089	645,700
Assets held for sale —	—	—	—	—
Total Assets —	1,379,768	389,883	989,885	928,303
Equity & liabilities
Share capital —	—	—	36,631	36,631
Consolidated reserves —	—	—	263,749	249,615
Shareholders' equity (Group share) —	—	—	300,380	286,246
Minority interests —	—	—	12,322	10,276
Shareholders' equity 2.9	—	—	312,702	296,522
Deferred tax 2.12	—	—	5,672	6,583
Non-current provisions 2.10	—	—	6,150	6,085
Provisions for employee benefit obligations 2.11	—	—	65,356	68,121
Other non-current liabilities —	—	—	4,477	4,356
Long-term borrowings 2.8	—	—	136,939	144,365
Non-current liabilities —	—	—	218,594	229,510
Short-term borrowings 2.8	—	—	105,265	136,866
Trade payables 2.1	—	—	229,072	176,429
Current tax liabilities —	—	—	10,726	4,417
Current provisions 2.10	—	—	34,103	38,068
Derivatives —	—	—	788	367
Other liabilities —	—	—	78,635	46,124
Total current liabilities —	—	—	458,589	402,271
Liabilities held for sale —	—	—	—	—
Total equity and liabilities —	—	—	989,885	928,303

The Notes are an integral part of the summary interim consolidated financial statements.

Cash flow statement

€000	Notes	30.06.2017	31.12.2016	30.06.2016
Cash and cash equivalents at beginning of period	2.8	72,951	90,588	90,588
Operating activities
Net income	—	29,420	17,778	3,237
Depreciation, amortization and provisions	2.5, 2.10	6,792	21,964	8,510
Capital gains on asset disposals and other	—	(162)	(115)	(143)
Change in deferred taxes	—	2,071	2,592	1,144
Other non-cash income and expenses	—	—	(6,417)	—
Free cash flow after tax and cost of borrowings	—	38,121	35,802	12,748
Cost of borrowings	—	5,196	9,724	4,947
Current income tax	—	10,799	10,995	5,00,
Taxes paid	—	(4,930)	(11,168)	(5,437)
Operating cash flow before change in working capital	—	49,186	45,353	17,262
Change in inventory and work-in-progress	—	(11,441)	13,485	28,730
Change in trade receivables	—	(59,806)	3,034	(47,076)
Change in trade payables	—	52,539	(15,913)	20,562
Other changes	—	17,254	(2,840)	8,480
Total change in working capital	—	(1,454)	(2,234)	10,696
Cash flow from operating activities	—	47,732	43,119	27,958
Investing activities
Acquisitions of fixed assets	2.5	(7,961)	(18,262)	(9,471)
Acquisitions of subsidiaries	—	(233)	(75)	(2)
Disposal of assets	—	621	1,166	760
Other changes	—	(257)	(365)	(181)
Cash flow from investing activities	—	(7,830)	(17,536)	(8,894)
Financing activities
Dividends paid to parent company shareholders	2.9	—	(9,460)	—
Dividends paid to minority shareholders of consolidated companies	2.9	(1,533)	(1,315)	(597)
New borrowings	2.8	—	11,075	10,389
Change in borrowings	2.8	(39,101)	(34,748)	(20,071)
Interest paid	—	(5,415)	(9,616)	(4,978)
Other changes	—	(230)	1,230	2
Cash flow from financing activities	—	(46,279)	(42,834)	(15,255)
Change in cash and cash equivalents	—	(6,377)	(17,251)	3,809
Exchange differences	—	(147)	(386)	(361)
Net cash at end of period	2.8	66,427	72,951	94,036

The Notes are an integral part of the summary interim consolidated financial statements.

Changes are shown at the net book value.

Bank overdrafts are used to finance both short and medium-term loans.

Accordingly, they are analyzed as financing and classified as such in the cash flow statement.

Change in consolidated shareholders' equity

€000	Number of shares	Share capital	Reserves	Exchange differences (Group share)	Share holders' equity (Group share)	Minority interests	Sharehol ders' equity
At 31.12.2015	24,028,438	36,631	246,236	2,797	285,664	9,763	295,427
Net income	—	—	2,347	—	2,347	890	3,237
Exchange differences	—	—	—	(1,306)	(1,306)	(91)	(1,397)
Actuarial gains/(losses)	—	—	(3,091)	—	(3,091)	—	(3,091)
Other	—	—	(22)	—	(22)	—	(22)
Total comprehensive income/(loss)	—	—	(766)	(1,306)	(2,072)	799	(1,273)
Changes in consolidation scope	—	—	259	—	259	(79)	180
Dividend payments	—	—	(9,459)	—	(9,459)	(1,299)	(10,758)
Other	—	—	37	—	37	(4)	33
At 30.06.2016	24,028,438	36,631	236,307	1,491	274,429	9,180	283,609
At 31.12.2016	24,028,438	36,631	248,234	1,381	286,246	10,276	296,522
Net income	—	—	27,716	—	27,716	1,704	29,420
Exchange differences	—	—	—	(414)	(414)	(9)	(423)
Actuarial gains/(losses)	—	—	1,463	—	1,463	—	1,463
Other	—	—	(355)	—	(355)	—	(355)
Total comprehensive income/(loss)	—	—	28,824	(414)	28,410	1,695	30,105
Changes in consolidation scope	—	—	(2,062)	—	(2,062)	1,882	(180)
Dividend payments	—	—	(11,847)	—	(11,847)	(1,533)	(13,380)
Other	—	—	(367)	—	(367)	2	(365)
At 30.06.2017	24,028,438	36,631	262,782	967	300,380	12,322	312,702

The Notes are an integral part of the summary interim consolidated financial statements.

Notes to the summary interim consolidated financial statements

The summary interim consolidated financial statements of Jacquet Metal Service Group for the 6 months ended June 30, 2017 were reviewed by the Board of Directors on September 6, 2017.

All figures are reported in thousands or millions. Some totals may display differences in rounding.

1 Consolidation principles and methods

In accordance with European regulation 1606/2002 dated July 19, 2002 on international financial reporting standards, the summary interim consolidated financial statements of Jacquet Metal Service Group for the 6 months ended June 30, 2017 and the 2016 comparative financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) in force as of June 30, 2017, as approved by the European Union.

The standards and interpretations applied are those published in the Official Journal of the European Union (OJEU) before June 30, 2017 for compulsory application as from this date.

These accounting principles cover all standards approved by the International Accounting Standards Board (IASB), i.e. IFRS, International Accounting Standards (IAS) and interpretations issued by the IFRS Interpretations Committee (IFRIC) or the former Standing Interpretations Committee (SIC). These accounting standards can be consulted on the European Commission website at: http://ec.europa.eu/finance/ company-reporting/index_en.htm.

The summary interim consolidated financial statements have been prepared in accordance with IAS 34 - Interim Financial Reporting, which allows a condensed presentation of the Notes to the financial statements. The financial statements should therefore be read with reference to the consolidated financial statements for the year ended December 31, 2016 and, in particular, Note 1 "Consolidation principles and methods" and Note 2 "Valuation methods" as contained in the Registration Document filed with the Autorité des Marchés Financiers (AMF) on April 4, 2017 under number D.17- 0319 and available for consultation on the company website at www.jacquetmetalservice.com.

With the exception of the points described in the paragraph below, the accounting principles applied are identical to those used in the audited consolidated financial statements for the year ended December 31, 2016.

New standards or amendments for compulsory application as from January 1, 2017 are as follows:

• Amendment to IAS 12: Recognition of deferred tax assets arising from unrealized losses,

• Amendment to IAS 7: Statement of cash flows,

• Annual improvements to IFRS (2014-2016 cycle).

These new standards and amendments for compulsory application as from January 1, 2017 have not yet been adopted by the European Union and have therefore not been applied by the Group to the period ended June 30, 2017.

The Group has chosen not to apply in advance standards and interpretations adopted by the European Union before the balance sheet date but applicable after said date.

• IFRS 15 Revenue from Contracts with Customers (applicable as of January 1, 2018);

• IFRS 9 Financial Instruments (applicable as of January 1, 2018),

• IFRS 16 Leases (applicable as of January 1, 2019).

The Group is currently assessing the impact of IFRS 15 and IFRS 9. The Group does not expect IFRS 15 to have a material impact on the financial statements.

The Group has not applied any accounting principles for compulsory or optional application in 2017 that have not yet been adopted by the European Union. Group management does not expect the standards and interpretations issued by the IASB but not yet adopted by the European Union to have a material impact on the Group financial statements.

Use of estimates

The consolidated half-year financial statements have been established on the basis of rules applied for the 2016 annual financial statements. In this regard, it is appropriate to clarify the treatment of income taxes: for interim financial statements, the current and deferred tax charge is calculated by applying the estimated annual average tax rate for the current financial year to the six-month taxable income for each legal entity or tax group, as adjusted for non-recurring items allocated to the period.

In accordance with IAS 10, management's estimates are based on the information available at the balance sheet date, taking post balance sheet events into account.

The main estimates at June 30, 2017 involved:

Estimating the realizable value of deferred tax assets: the method is based on 5-year business plans and takes local legislation into account;

1.1 Change in consolidation

The value of goodwill is tested for impairment at least once a year for the annual financial statements, and whenever an indication of loss of value arises;

• Inventory valuation: the method followed to determine the net realizable value of inventory is based on the best estimate, as of the date of the preparation of the financial statements, of the future sale price in the normal course of business less any estimated selling costs;

• Impairment of receivables is reviewed on a case-bycase basis to take account of the specific situation of particular customers;

• Employee benefit liabilities are measured based on actuarial assumptions;

• Current and non-current provisions are estimated to reflect the best estimate of the risks as of the balance sheet date.

During first half 2017 the business of Schmolz+Bickenbach Distributions GmbH was transferred to the following companies:

• IMS Deutschland GmbH;

• IMS TecPro GmbH;

• IMS Trade GmbH;

• SBES Werkstofftechnik GmbH.

2 Notes on the financial position at June 30, 2017 and the first half 2017 consolidated statement of comprehensive income

2.1 Operating segments

The key indicators for each operating segment at June 30, 2017 were as follows:

30.06.2017
€m	Sales	Gross margin	Operating income before non recurring items	Operating working capital	Operating wor king capital as a % of sales 2
JACQUET / Abraservice	195.9	60.5	8.9	103.6	29.6%
STAPPERT	240.6	56.1	15.8	91.7	20.9%
IMS Group	472.7	116.7	22.6	183.0	21.1 %
Other 1	10.8	2.7	2.8	10.3	n.a
Inter-brand eliminations	(9.3)	—	—	—	n.a
Total	910.7	236.0	50.1	388.7	23.4%

30.06.2016

			Operating income before non	Operating	Operating wor king capital as a
€m	Sales	Gross margin	recurring items	working capital	% of sales 2
JACQUET / Abraservice	169.1	49.9	0.8	87.2	26.9%
STAPPERT	216.7	44.1	5.7	81.6	19.4%
IMS Group	453.8	99.3	5.4	190.4	22.4%
Other 1	8.5	2.3	2.2	10.1	n.a
Inter-brand eliminations	(8.6)	—	—	—	n.a
Total	839.5	195.6	14.1	369.3	23.2%

Non-brand activities (including Jacquet Metal Service SA)

Rolling 12 months sales

n.a: Not applicable.

2.2 Corporate income tax

Net income includes a €13.6 million tax charge representing 32% of income before tax, given that tax loss carryforwards are generally not recognized for reasons of prudence.

2.3 Earnings per share

	30.06.2017	30.06.2016
Net income, Group share (€000)	27,716	2,347
Total number of shares from January 1 to period end	24,028,438	24,028,438
Treasury shares	334,941	379,866
Total number of shares excluding treasury shares	23,693,497	23,648,572
Basic earnings per share (€)	1.17	0.10
Bonus shares 1	—	—
Total diluted number of shares, excluding treasury shares	23,693,497	23,648,572
Diluted earnings per share (€)	1.17	0.10

Average number of shares during the period

2.4 Goodwill

Goodwill amounted to €68.4 million as of June 30, 2017 and did not change during the first half of 2017.

The Group analyzed the results of the various cash-generating units (CGU), which did not reveal any indication of impairment.

2.5 Change in PP&E and intangible assets

€m
Net book value at December 31, 2016	147.6
Acquisitions	8.9
Net disposals and scrap	(0.4)
Net depreciation/impairment	(11.0)
Exchange differences	(0.3)
Net book value at June 30, 2016	144.8

2.6 Inventories and WIP

€m	30.06.2017	31.12.2016
Gross value	459.5	443.9
Impairment	(72.3)	(67.7)
Net book value	387.2	376.2

Net inventories have been restated at net realizable value after a provision representing 15.7% of the gross value at June 30, 2017, compared to 15.2% at December 31, 2016.

2.7 Trade receivables

€m	30.06.2017	31.12.2016
Gross value	239.8	180.6
Impairment of receivables	(9.2)	(9.3)
Net book value	230.6	171.3

The value of receivables does not include receivables assigned without recourse under factoring agreements and canceled in the accounts, mainly in France, Germany and Belgium, amounting to €47.4 million at June 30, 2017 as against €31.8 million at December 31, 2016.

2.8 Net cash and borrowings

€m	30.06.2017	31.12.2016
Cash	59.1	58.8
Cash equivalents	7.3	14.2
Cash and cash equivalents	66.4	73.0

"Cash equivalents" largely comprise interest-bearing term deposits.

Borrowings break down as follows:

€m	30.06.2017	31.12.2016
Borrowings at fixed rates	45.1	49.6
Borrowings at floating rates	119.7	131.7
Bank overdrafts, factoring, discounting	76.7	99.0
Accrued interest	0.7	1.0
Borrowings	242.2	281.2
Long-term loans	(3.3)	(3.0)
Cash and cash equivalents	(66.4)	(73.0)
Net borrowings	172.5	205.3

2.9 Shareholders' equity

In accordance with a resolution of the June 30, 2017 General Meeting, on July 7, 2017 the Group paid out a dividend of €0.5 per share amounting to €11.8 million in total. This amount is recognized under "Other liabilities" on the balance sheet.

2.10 Provisions

€m	31.12.16	Charges	Reversals (unused)	Reversals	(used)1 June 30, 2017
Non-current provisions	6.1	1.6	—	(1.6)	6.1
Current provisions	38.1	1.7	—	(5.7)	34.1
Total	44.2	3.3	—	(7.3)	40.2

¹ including €3.6 million reversals of provisions used, classified under personnel expenses in the consolidated statement of comprehensive income

2.11 Provisions for employee benefit obligations

In accordance with IAS 34 - Interim Financial Reporting, the change in employee benefit obligations is based on the annual actuarial projection for December 31, 2017 as estimated at December 31, 2016. The impact on income is accrued straight line over time.

The discount rate applied was increased by 0.25 percentage points, leading to a €2.1 million decrease in the provision and a €1.5 million increase in shareholders' equity after tax.

2.12 Deferred tax

The origin of deferred tax is as follows:

€m	30.06.17	31.12.16
Tax losses carried forward	10.4	14.9
Temporary differences	21.5	21.7
Other IFRS restatements	15.5	13.4
Net deferred tax	47.5	50.0

3 Undertakings related to financing

Financing covenants mainly apply to the syndicated revolving loan and the German private placement (Schuldscheindarlehen). These covenants mainly correspond to commitments that must be complied with at Group level.

The syndicated revolving loan was renegotiated during second quarter 2017.

The main terms of the syndicated revolving loan are as follows:

• Date of signature: June 2017

• Maturity: July 16, 2020

• Amount €125 million (unused)

• Security: none

• Change of control clause: JSA must hold at least 40% of Jacquet Metal Service SA's share capital and voting rights.

• Main covenant:

• Compliance with one of the following ratios:

• Debt to equity ratio less than 1

• or

• Leverage less than 2

The main terms of the Schuldscheindarlehen are as follows:

• Date of signature: October 2015

• Maturity: October 30, 2020

• Amount €88 million (fully used)

• Security: none

• Change of control clause: JSA must hold at least 40% of Jacquet Metal Service SA's share capital and voting rights.

• Main covenant: > Debt to equity ratio less than 1.

All of these financing covenants were in compliance at June 30, 2017.

4 Post balance sheet events

None.

Statutory auditors' report on the half-year financial reporting

GRANT THORNTON

Membre français de Grant Thornton International Cité internationale 44, quai Charles de Gaulle CS 60095 69463 Lyon Cedex 06 S.A. au capital de € 2.297.184

Commissaire aux Comptes Membre de la compagnie régionale de Versailles

ERNST & YOUNG et Autres

Tour Oxygène 10-12, boulevard Marius Vivier Merle 69393 Lyon Cedex 03 S.A.S. à capital variable

Commissaire aux Comptes Membre de la compagnie régionale de Versailles

Jacquet Metal Service For the period from January 1 to June, 30, 2017

Statutory Auditors' Review Report on the Half-yearly Financial Information

To the Shareholders,

In compliance with the assignment entrusted to us by your Annual General Meeting and in accordance with the requirements of article L.451-1-2 III of the French monetary and financial code ("code monétaire et financier"), we hereby report to you on:

• the review of the accompanying condensed half-yearly consolidated financial statements of Jacquet Metal Service, for the period from January 1, 2017 to June 30, 2017,
• the verification of the information presented in the half-yearly management report.

These condensed half-yearly 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.

1. Conclusion on the financial statements

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 halfyearly consolidated financial statements are not prepared, in all material respects, in accordance with IAS 34 – standard of the IFRSs as adopted by the European Union applicable to interim financial information.

2. Specific verification

We have also verified the information presented in the half-yearly management report on the condensed half-yearly consolidated financial statements subject to our review.

We have no matters to report as to its fair presentation and consistency with the condensed half-yearly consolidated financial statements.

Lyon, September 6, 2017

The Statutory Auditors

GRANT THORNTON

French Member of Grant Thornton International

ERNST & YOUNG et Autres

Françoise Mechin

Nicolas Perlier

Statement by the person responsible for The half-year financial report

I hereby certify that, to my knowledge, Jacquet Metal Service's summary interim consolidated financial statements for the first half of 2017 have been prepared in accordance with applicable accounting standards and give a true and fair view of the assets, liabilities, financial position and earnings of the company and all companies included in the consolidation scope, and that the activity report for the first half of 2017 gives a true and fair account of the important events that took place in the first six months of the year, their impact on the financial statements and the main transactions between related parties and includes a description of the main risks and uncertainties for the remaining six months of the year.

Saint-Priest, September 6, 2017

Éric Jacquet Chairman and CEO, Jacquet Metal Service