Kloeckner & Co SE

Quarterly Report • May 8, 2015

Klöckner & Co SE

A Leading Multi Metal Distributor

$\epsilon$

Interim Report

as of March 31, 2015

KLÖCKNER & CO GROUP FIGURES	2
INTERIM GROUP MANAGEMENT REPORT	3
KLÖCKNER & CO SHARE	19
CONSOLIDATED STATEMENT OF INCOME FOR THE THREE-MONTH PERIOD ENDING
MARCH 31, 2015	21
STATEMENT OF COMPREHENSIVE INCOME FOR THE THREE-MONTH PERIOD ENDING
MARCH 31, 2015	22
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS OF MARCH 31, 2015	23
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE THREE-MONTH PERIOD ENDING
MARCH 31, 2015	25
SUMMARY OF CHANGES IN EQUITY	26
SELECTED EXPLANATORY NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS OF
KLÖCKNER & CO SE FOR THE THREE-MONTH PERIOD ENDING MARCH 31, 2015	28

KLÖCKNER&CO SE

Klöckner & Co Group Figures

Shipments and income statement		Q1 2015	Q1 2014 *	Variance
Shipments	Tto	1,661	1,633	$+28$
Sales	$\epsilon$ million	1,697	1,572	$+125$
Gross profit	$\epsilon$ million	310	302	$+8$
Gross profit margin	%	18.2	19.2	$-1.0\%p$
Earnings before interest, taxes, depreciation and amortization (EBITDA)	$\epsilon$ million	10	39	$-29$
EBITDA before initial application of IFRIC 21	$\epsilon$ million	17	45	$-28$
EBITDA margin	$\%$	0.6	2.5	$-1.9%p$
EBITDA margin before initial application of IFRIC 21	%	1.0	2.9	$-1.9%p$
Earnings before interest and taxes (EBIT)	$\epsilon$ million	$-15$	17	$-32$
Earnings before taxes (EBT)	$\epsilon$ million	$-27$	$\mathbf{0}$	$-27$
Net income	$\epsilon$ million	$-22$	$-2$	$-20$
Net income attributable to shareholders of Klöckner & Co SE	$\epsilon$ million	$-21$	$-2$	$-19$
Earnings per share (basic)	€	$-0.22$	$-0.02$	$-0.20$
Earnings per share (diluted)	€	$-0.22$	$-0.02$	$-0.20$
Cash flow statement/Cash flow		Q1 2015	Q1 2014 *	Variance
Cash flow from operating activities	$\epsilon$ million	$-143$	$-65$	-78
Cash flow from investing activities	$\epsilon$ million	$-1$	$-6$	$+5$
Free cash flow**)	$\epsilon$ million	–144	$-71$	-73
Balance sheet		March 31, 2015	March 31, 2014	Variance
Net working capital***)	$\epsilon$ million	1,559	1,330	$+229$
Net financial debt	$\epsilon$ million	650	407	$+243$
Equity	$\epsilon$ million	1,455	1,437	$+18$
Equity ratio	%	37.3	38.8	$-1.5%p$
Balance sheet total	$\epsilon$ million	3,904	3,707	+197
Employees		March 31, 2015	March 31, 2014	Variance

$9,737$

9,517

$+220$

Employees at end of period

*) Comparative amounts adjusted due to initial application of IFRIC 21 (Levies).
**) Free cash flow = Cash flow from operating activities plus cash flow from investing activities.
***) Net working capital = Inventories plu

Highlights in the first three months of 2015 and outlook

• •
• •
• •
• •

Corporate strategy

Accelerating the shift to higher value-added products and services

Our second strategic lever alongside digitalization is to increase the proportion of higher value-added products and processing services. We are going to step up capital expenditure to that end by some 50% this year. There is huge market potential here as many of our customers are strongly vertically integrated and still carry out tasks that we could perform more efficiently by consolidating orders. A good example is our investment in 3D lasers, which we can use to combine several conventional customer tasks such as drilling, sawing and slotting at an attractive price and with significant gains in precision. We also aim to substantially boost more profitable business in higher value-added products like aluminum, which is in increasing demand from the automotive industry.

In total, we plan to further increase the percentage of sales accounted for by higher value-added products and processing services from 34% in 2014 to 45% by 2017. We want to generate the lion's share of sales with highermargin products and services by 2020.

KCO WIN and further enhancement of pricing

We combined the measures designed to improve workflows and processes in our business operations in the KCO WIN program. The focus is on improving sales and distribution. Our prime objective in this area is to fine-tune pricing in order to raise the gross profit margin. The first step is price optimization through systematic daily analysis of productspecific selling prices at country level. In addition, we are already working on the deployment of special software that implements dynamic pricing algorithms referencing a wide range of market data.

Also as part of KCO WIN, we are implementing numerous measures to effect improvements to workflows and structures in internal logistics, processing, and transportation logistics.

KCO WIN already accounted for €16 million of the increase in operating income in 2014. The program is budgeted to deliver an incremental contribution of €20 million this year. This means the full expected annual EBITDA effect from the program will be up to €40 million from 2015.

Economic environment

Macroeconomic situation

Global economic growth stood at 2.0% in the first quarter of 2015, mainly driven by an increase in GDP in the US and emerging markets. However, geopolitical crises had a negative impact on the markets.

The eurozone economy expanded by 1.0% in the first quarter. Growth was buoyed by low energy prices and the weak euro, which made the European economy more competitive.

In the US, the upturn under way since 2009 continued through the reporting period. While consumer spending was below expectations and a sharp downturn in the oil and gas sector subdued growth compared with the preceding quarter, the economy nonetheless grew by 3.0% compared with the prior-year quarter.

At 7.0%, China's first-quarter economic growth was once again weaker than in the preceding quarters. The sustained cooldown in the property market contributed to the downturn in the growth rate. Government investment still dominates Chinese economic activity even though the country is pursuing a more consumer-based economy.

In Brazil, the economic outlook continues to darken. Economic output declined by 1.5% year-on-year in the first quarter as companies' ongoing low propensity to invest coupled with the rise in commodity prices due to the strong US dollar weighed on economic performance.

Development of GDP in our core countries (in percent)	Q1 2015 vs. Q1 2014
Europe *)	1.0
Germany	1.2
United Kingdom	2.4
France	0.6
Spain	2.4
Switzerland	1.5
China	7.0
Americas
United States	3.0
Brazil	$-1.5$

Source: Bloomberg; experts' estimates (in some cases provisional). *) Eurozone.

Industry-specific situation

According to the World Steel Association, global production of raw steel declined by 1.8% year-on-year to 400 million tons in the first three months of 2015. Production volumes dropped by 0.6% overall in the EU and by as much as 7.6% in the US. Production was also down in China, where it fell by 1.7%. Brazil, on the other hand, saw a slight increase of 0.7%.

In Europe, Eurometal reports that shipments in steel distribution fell by 5% in the first three months of this year. Shipments in the US were down by 1.6% according to the Metals Service Center Institute (MSCI).

Results of operations, financial position and net assets

Key figures results of operations
(€ million)	Q1 2015	Q1 2014*)
	1,661
	1,697
	310
	18.2 %
	10
	0.6 %

Key figures net assets

(€ million)	March 31, 2015	March 31, 2014	December 31, 2014
	1,559
	650

Other key figures

$($ $\in$ million)	March 31, 2015	March 31, 2014*)	December 31, 2014
Gearing (Net financial debt/shareholders' equity**))	46%	29%	34%
Leverage (Net financial debt/EBITDA***))	4.0x	2.5x	2.5x

Comparative amounts adjusted due to initial application of IFRIC 21 (Levies).

Consolidated shareholders' equity less non-controlling interests and less goodwill from business combinations subsequent to May 23, 2013.

***) EBITDA is calculated on a last twelve months basis before reporting date.

Discussion of the key figures in detail:

Shipments and sales

Group shipments in the first three months of 2015, at 1.7 million tons, were slightly (1.7%) up on the prior-year period.

Compared with the first three months of 2014, the Europe segment increased shipments by a moderate 2.4%. This was mainly driven by the ongoing strong positive performance at Becker Stahl-Service (BSS), which serves the automotive business, and the acquisition of Riedo by the Swiss country organization early in the second quarter of 2014. The remaining European country organizations recorded a drop in shipments due to the ongoing difficult market environment.

In the Americas segment, shipments increased by only a slight 0.6% on the prior-year period. The main factor here continues to be the weak performance of our activities in Brazil. In the US, by contrast, we boosted shipments by 1.7% compared with the weak first quarter of 2014.

Sales grew significantly more strongly than shipments, from €1.6 billion to €1.7 billion (an increase of 8.0%), though this is due to rising exchange rates - primarily for the US dollar and the Swiss franc against the euro - as well as to the inclusion of Riedo. Sales in the Europe segment went up by 1.0% due to the acquisition and the stronger Swiss franc and pound sterling exchange rates; at constant exchange rates, however, weaker price levels made for a 3.0% fall in sales.

While prices likewise fell in the Americas segment, especially in the flat steel business that is important to Klöckner & Co, this was more than offset by the sharp rise in the US dollar exchange rate. In total, the segment saw sales rise by 20.8%; at constant exchange rates, sales were 0.5% down on the first quarter of 2014.

	Q1 2014*)
	1,572
310	302
$-299$	$-263$
10	39
$-15$	17
$-27$	$\overline{0}$
$-22$	$-2$
	Q1 2015 1,697

*) Comparative amounts adjusted due to initial application of IFRIC 21 (Levies).

**) Personnel expenses plus other operating expenses less other operating income plus income from investments.

The fall in prices, above all in the US, coupled with strong price pressure in Switzerland due to the appreciation of the Swiss franc also impacted the gross profit margin, which dropped from 19.2% in the prior-year period to 18.2%. Gross profit, at €310 million, was slightly up on a year earlier (2.5%). This was, however, entirely due to the exchange rate changes already mentioned.

Other operating income and expenses (OPEX) changed as follows:

$(\epsilon$ million)	Q1 2015	$Q1 2014$ *)
Other operating income	12	10
Personnel expenses	$-161$	$-141$
Other operating expenses	$-150$	$-132$
Income from investments		$\Omega$
OPEX	$-299$	$-263$

*) Comparative amounts adjusted due to initial application of IFRIC 21 (Levies).

Other operating income, at €12 million, was slightly higher than the prior-year period's €10 million.

Personnel expenses showed a substantial €20 million increase, about €15 million of which was due to the change in the US dollar and Swiss franc exchange rate relative to the euro. The inclusion of Riedo also added to the increase.

Likewise, the €18 million rise in other operating expenses is mainly due to exchange rate changes (€12 million). Other operating expenses include $\epsilon$ 7 million (O1 2014: $\epsilon$ 6 million) relating to the first-time application of new rules on accounting for levies (IFRIC 21). Exchange rate losses connected with the sudden rise in the Swiss franc relative to the euro and the inclusion of Riedo also contributed to the increase in other operating expenses.

In total, and primarily as a result of the weak gross margins as explained above, EBITDA was significantly down at €10 million compared with €39 million in the prior-year period. The EBITDA margin decreased accordingly by 1.9 percentage points to 0.6%.

EBITDA by segments
$(\epsilon$ million)	Q1 2015	$Q1 2014$ *)
Europe		23
Americas		21
Headquarters	$-5$	$-5$
Klöckner & Co Group	10	39

*) Comparative amounts adjusted due to initial application of IFRIC 21 (Levies).

EBITDA in the Europe segment decreased significantly to €8 million in the first three months of 2015 compared with €23 million a year earlier. Earnings performance was unsatisfactory in all country organizations except BSS. The most severe impact on earnings came from the price pressure in Switzerland (euro discount) induced by the removal of the cap on the Swiss franc exchange rate as well as from the still very weak business situation in France.

The price-related fall in gross profit meant that EBITDA in the Americas segment, at $\epsilon$ 7 million, was likewise well under the €21 million prior-year comparative figure. In particular the significantly lower market prices for hot rolled plate and heavy plate resulted in strong pressure on margins, whereas the first quarter of the prior year saw prices rising. Compared with the 2014 year-end, market prices for these products went down by over 20%, which had significant inventory effects. Additionally, there were approximately €4 million in inventory write-downs due to lower net realizable value.

Headquarters EBITDA was on a par with the prior-year period, at a negative €5 million (Q1 2014: negative €5 million).

$(\epsilon$ million)	Q1 2015	Q1 2014*)
EBITDA	10	39
Depreciation, amortization and impairments	$-25$	$-22$
EBIT	$-15$	17
Financial result	$-12$	$-17$
EBT	$-27$	0
Income taxes	6	$-2$
Net income	$-22$	$-2$

*) Comparative amounts adjusted due to initial application of IFRIC 21 (Levies).

Deducting depreciation and amortization, which were slightly higher due to exchange rate changes, EBIT came out at a negative €15 million, compared with a positive €17 million in the prior-year period. On the other hand, the financial result improved significantly, from a negative €17 million to a negative €12 million. The main alleviating factor here lay in interest expense following the redemption of promissory notes and convertible bonds in the prior year. EBT was a negative €27 million as against close to zero a year earlier.

Notwithstanding the inability to offset tax losses between countries combined with restrictions on the recognition of deferred tax assets for current losses, the first quarter once again brought an income tax income item of €6 million (Q1 2014: income tax expense of €2 million).

All in all, net income thus amounted to a negative €22 million (Q1 2014: negative €2 million).

Basic earnings per share came to a negative €0.22, compared with a negative €0.02 in the prior-year period.

(€ million)	March 31, 2015	December 31, 2014
	1,208
	1,336
	960
	119
	281
Total assets	3,904	3,629
	1,455
	604
	569
	321
	737
	218
Total equity and liabilities	3,904	3,629

Financial position and balance sheet structure

(€ million)	March 31, 2015	March 31, 2014	December 31, 2014
	1,336
	960
	– 737
Net working capital	1,559	1,330	1,321

(€ million)	March 31, 2015	March 31, 2014*)	December 31, 2014
	650
	46%

Consolidated statement of cash flows

(€ million)	Q1 2015	Q1 2014
	– 143
	– 1
Free cash flow	– 144	– 71
	100

Subsequent events

Macroeconomic outlook including key opportunities and risks

Expected development of GDP in our core countries (in percent)	2015
Europe *)	1.5
Germany	1.6
United Kingdom	2.7
France	1.2
Spain	2.5
Switzerland	0.8
China	6.8
Americas
United States	3.1
Brazil	$-1.0$

Source: International Monetary Fund, Bloomberg *) Eurozone.

Expected sector trend

The World Steel Association currently predicts that global steel consumption will grow by 0.5% in 2015. For the European Union, the Association anticipates an increase of 2.1%, while the North American Free Trade Agreement (NAFTA) region is expected to contract by 0.9% and South and Central America by 3.4%. A slight decline (0.5%) is also forecast for China.

Expected trend in our core customer sectors

Construction industry

According to Euroconstruct estimates, the European construction industry will grow by some 2% in 2015 thanks to stimulus from civil engineering and residential construction. In the US, the sector is expected to expand by 5% in 2015, with stimulus to growth coming mainly from commercial construction. Individual government infrastructure projects are also expected to be conducive to growth. China is forecast to record an increase of around 7%. Infrastructure spending will help here, too, while demand in residential construction is expected to lose momentum. In Brazil, industry investment in construction projects is very subdued due to the weak state of the economy, as a result of which the sector is expected to barely grow at all.

Machinery and mechanical engineering

Global machinery and mechanical engineering is projected to see a further increase in shipments in 2015. The favorable exchange rate environment in Europe is likely to help this export-oriented industry achieve moderate growth. Industry association Eurofer expects the sector in this region to expand by 2.1%. A sharp increase of 3.6% is forecast for the US due to substantial replacement demand. Strong growth is also expected for China, the world's largest machinery producer by far.

Automotive industry

The German Association of the Automotive Industry (VDA) currently estimates that the global automotive market will grow by 2% year-on-year. For Europe, the VDA forecasts an increase of 2%. In the US, the industry is also expected to grow by 2%, thereby regaining its pre-crisis level. According to VDA estimates, the Chinese market will continue to grow strongly, albeit at a slower pace than in previous years, expanding by 6%. In Brazil, on the other hand, automotive production is expected to decline.

Current assessment of opportunities and risks

Outlook

®

Share price performance

		Q1 2015	Q1 2014	Jan. 1 – Dec. 31, 2014
		99,750,000
		8.93
		891
		100.0
		10.12
		8.34
		795,340

Key data – Klöckner & Co share

Ownership structure

Capital market communications

(€ thousand)	Q1 2015	Q1 2014*)
	1,697,465
	12,105
	– 5,356
	5
	– 1,382,586
	– 161,337
	– 25,558
	– 150,085
Operating result	– 15,347	16,660
	878
	– 13,028
Financial result	– 12,150	– 16,773
Income before taxes	– 27,497	– 113
	5,935
Net income	– 21,562	– 1,977
	– 21,482
	– 80
Earnings per share (€/share)
– basic	– 0.22	– 0.02
– diluted	– 0.22	– 0.02

(€ thousand)	Q1 2015	Q1 2014*)
Net income	– 21,562	– 1,977
	– 44,453
	8,047
Total	– 36,406	– 11,067
	85,812
	– 1,632
	-
	– 325
Total	83,855	4,315
Other comprehensive income	47,449	– 6,752
Total comprehensive income	25,887	– 8,729
	26,248
	– 361

(€ thousand)	March 31, 2015	December 31, 2014
Non-current assets
	484,693
	684,577
	10,486
	1,405
	15,400
	4,049
	7,558
Total non-current assets	1,208,168	1,103,143
Current assets
	1,336,432
	959,690
	21,466
	82,340
	281,244
	15,151
Total current assets	2,696,323	2,525,534

Total assets	3,904,491	3,628,677

(€ thousand)	March 31, 2015	December 31, 2014
Equity
	249,375
	900,759
	267,775
	23,040
Equity attributable to shareholders of Klöckner & Co SE	1,440,949	1,414,701
	13,623
Total equity	1,454,572	1,428,685
Non-current liabilities
	381,020
	18,072
	603,918
	68,271
	102,110
Total non-current liabilities	1,173,391	1,000,985
Current liabilities
	100,360
	7,612
	320,772
	737,495
	110,289
Total current liabilities	1,276,528	1,199,007
Total liabilities	2,449,919	2,199,992
Total equity and liabilities	3,904,491	3,628,677

(€ thousand)	Q1 2015	Q1 2014*)
	– 21,562
	– 5,935
	12,150
	25,558
	325
	– 3,414
	86,211
	– 158,730
	– 58,324
	– 9,410
	– 4,848
	352
	– 4,971
Cash flow from operating activities	– 142,598	– 65,331
	3,135
	12,168
	– 16,180
Cash flow from investing activities	– 877	– 6,039
	101,673
	– 1,763
Cash flow from financing activities	99,910	2,430
Changes in cash and cash equivalents	– 43,565	– 68,940
	8,445
	316,364
Cash and cash equivalents at the end of the reporting period as per statement of financial position	281,244	527,288

(€ thousand)	Subscribed capital of Klöckner & Co SE	Capital reserves of Klöckner & Co SE	Retained earnings
Balance as of January 1, 2014	249,375	900,759	266,925
Other comprehensive income
Total comprehensive income
Balance as of March 31, 2014*)	249,375	900,759	264,791
Balance as of January 1, 2015	249,375	900,759	289,257
Other comprehensive income
Total comprehensive income
Balance as of March 31, 2015	249,375	900,759	267,775

Currency translation adjust ment	Actuarial gains and losses (IAS 19)	Fair value adjust ments of financial instruments	Equity attributable to shareholders of Klöckner & Co SE	Non–controlling interests	Total
72,912	– 56,648	– 3,764	1,429,559	15,913	1,445,472
					2,945
					218
					1,685
					– 12,199
					599
			– 6,928	176	– 6,752
					– 1,977
			– 9,062	333	– 8,729
75,681	– 67,715	– 2,394	1,420,497	16,246	1,436,743
114,797	– 138,862	– 625	1,414,701	13,984	1,428,685
					85,812
					– 1,632
					– 44,453
					7,722
			47,730	– 281	47,449
					– 21,562
			26,248	– 361	25,887
200,890	– 175,268	– 2,582	1,440,949	13,623	1,454,572

Selected explanatory notes to the interim consolidated financial statements of Klöckner & Co SE for the three-month period ending March 31, 2015

(1) Basis of presentation

The condensed interim consolidated financial statements of Klöckner& Co SE for the three-month period ending March 31, 2015 were prepared for the interim presentation in accordance with Sec. 37 x para. 3 WpHG in connection with Sec. 37 w, para. 2 no. 1 and 2, para. 3 and para. 4 WpHG, as well as International Financial Reporting Standards (IFRS) and the respective interpretations issued by the International Accounting Standards Board (IASB), as adopted for use within the EU.

The interim consolidated financial statements were not reviewed by an independent auditor.

Except for the changes discussed in note 2 below, the accounting policies applied to the interim financial statements as of March 31, 2015 are generally consistent with those used for the consolidated financial statements of Klöckner& Co SE as of December 31, 2014 under consideration of the IAS 34 regulations (Interim Financial Reporting). A detailed description of those policies is provided in the notes to the consolidated financial statements on pages 92 to 106 of the 2014 Annual Report.

As part of the preparation of an interim consolidated financial statement in accordance with the IAS 34 for the period ending March 31, 2015, Klöckner & Co SEs management is required to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The actual amounts can differ from these estimates.

In the opinion of the Management Board, the interim consolidated financial statements reflect all adjustments deemed necessary to provide a true and fair view of the results. The results for the period ending March 31, 2015 are not necessarily indicative of future results.

The present interim consolidated financial statements for the three-month period ending March 31, 2015 were authorized for issuance by the Management Board after discussion with the Audit Committee of the Supervisory Board on May 7, 2015. Unless otherwise indicated, all amounts are stated in million euros (€ million). Discrepancies to the unrounded figures may arise.

Standard/Interpretation

		Q1 2015	Q1 2014*)
		– 21,482
		99,750
Basic earnings per share	(€/share)	– 0.22	– 0.02
Diluted earnings per share	(€/share)	– 0.22	– 0.02

(€ million)	March 31, 2015	December 31, 2014
	1,381
	– 45
Inventories	1,336	1,318

(€ million)	March 31, 2015	December 31, 2014
Non-current financial liabilities
	177
	133
	291
	3
	604	522
Current financial liabilities
	181
	83
	55
	1
	1
	321	259
Financial liabilities as per consolidated balance sheet	925	781

(€ million)	March 31, 2015	December 31, 2014
Financial liabilities as per consolidated balance sheet	925	781
	6
Gross financial liabilities	931	788
	– 281
Net financial debt Klöckner & Co Group	650	472

Financial assets as of
March 31, 2015				Measurement in accordance with
				IAS 39	IAS 17
(€ million)	Carrying amount	Amortized costs	Fair value recognized in profit and loss	Fair value recognized in equity	Amortized costs	Not covered by the scope of IFRS 7	Fair value
Non-current financial assets
Current financial assets
Total	1,340	1,314	4	-	-	22	1,318

Financial liabilities as of March 31, 2015 Measurement in accordance with

				IAS 39	IAS 17
(€ million)	Carrying amount	Amortized costs	Fair value recognized in profit and loss	Fair value recognized in equity	Amortized costs	Not covered by the scope of IFRS 7	Fair value
Non-current financial liabilities
Current financial liabilities
Total	1,839	1,677	3	96	4	59	1,789

Financial assets

as of December 31, 2014 Measurement in accordance with IAS 39 IAS 17

			Fair value recognized	Fair value		Not covered by the
(€ million)	Carrying amount	Amortized costs	in profit and loss	recognized in equity	Amortized costs	scope of IFRS 7	Fair value
Non-current financial assets
Current financial assets
Total	1,185	1,167	-	-	-	18	1,167

Financial liabilities as of December 31, 2014 Measurement in accordance with

				IAS 39	IAS 17
(€ million)	Carrying amount	Amortized costs	Fair value recognized in profit and loss	Fair value recognized in equity	Amortized costs	Not covered by the scope of IFRS 7	Fair value
Non-current financial liabilities
Current financial liabilities
Total	1,635	1,540	5	38	4	48	1,596

The fair values of current financial assets are largely identical to their carrying amounts. The fair values of financial liabilities reflect the current market environment as of the reporting date for the respective financial instruments. The fair value is not reduced by transaction costs. For current financial liabilities for which no transaction costs are to be considered, the carrying amount approximates the fair value.

Derivative financial instruments not designated in hedge accounting include a put liability incurred in the acquisition of the Brazilian Kloeckner Metals Brasil Group (former Frefer Group) for a possible transfer of the remaining noncontrolling interests. The value is based on the discounted future profits. The projected results are derived from the business plan. As of March 31, 2015 the fair value remains unchanged compared to year-end at €0 million.

Any assets and liabilities recognized are accounted for at fair value and are regularly remeasured.

The valuation of all financial instruments follows the hierarchy concept of IFRS 13. Financial instruments for which the fair value is obtained from quoted prices for similar instruments are classified as Level 1. If fair values are derived from directly observable market inputs, those instruments are included in Level 2. Financial instruments for which the fair values are not based on observable market data are assigned to Level 3. With the exception of the put liability agreed on in connection with the Kloeckner Metals Brasil Group acquisition financial instruments are allocated to Level 2 of the measurement hierarchy.

(7) Subsequent events

Our Syndicated Loan was prolonged ahead of term in an amend and extend process in April by one year to May 2018 while retaining the €360 million loan amount. The terms were additionally amended in Klöckner & Co's favor with effect from May 2015. In the transaction, Klöckner & Co succeeded in negotiating more favorable financing terms while improving the maturity profile.

Key substantive changes also include the accession of Kloeckner Metals Corporation as borrower and the ability to draw up to 50% of the facility amount in US dollar. This enhances Klöckner & Co's financial flexibility. The new loan documentation once again includes the option, subject to the banks' approval, to extend the loan term in two stages up to May 2020. The banking syndicate was reduced from eleven to ten banks with a strengthening of the business relationship with Klöckner & Co's core banks.

(8) Related party transactions

Within the framework of its ordinary business activities, the Klöckner&Co Group has business relationships with numerous companies. These also include related parties. Business relations with these companies do not fundamentally differ from trade relationships with third parties. No material transactions were conducted with any of these related parties in the reporting period.

(9) Segment reporting

		Europe		Americas		Headquarters/ Consolidation		Total
$(\epsilon$ million)	Q 1 2015	Q 1 $2014^{*}$	Q 1 2015	Q 1 $2014^{*}$	Q 1 2015	Q 1 $2014^{*}$	Q 1 2015	Q 1 $2014$ * )
Segment sales	1,025	1,015	672	557		$\overline{a}$	1,697	1,572
EBITDA (segment result)	8	23		21	$-5$	$-5$	10	39
EBIT	$-5$	12	$-5$	10	$-5$	$-5$	$-15$	17
Net working capital as of March 31, 2015 (December 31, 2014)	891	762	664	555	$\overline{4}$	$\overline{4}$	1,559	1,321
Employees as of March 31, 2015 (December 31, 2014)	7,089	7,083	2,550	2,559	98	98	9,737	9,740

*) Comparative amount adjusted due to initial application of IFRIC 21 (Levies).

Reconciliation of EBIT to income before taxes:

$(\epsilon$ million)	O1 2015	$Q1 2014$ *)
Earnings before interest and taxes (EBIT)	$-15$	17
Financial result	$-12$	$-17$
Income before taxes	$-27$

*) Comparative amounts adjusted due to initial application of IFRIC 21 (Levies).

Duisburg, May 7, 2015

Klöckner & Co SE

Management Board

May 12, 2015	Annual General Meeting 2015, Düsseldorf
August 7, 2015	Q2 interim report 2015 Conference call with journalists Conference call with analysts
November 5, 2015	Q3 interim report 2015 Conference call with journalists Conference call with analysts

Klöckner&Co SE

Christian Pokropp

Disclaimer

This Report (particularly the "Forecast" section) contains forward-looking statements that are based on the current estimates of the Klöckner & Co SE management with respect to future developments. They are generally identified by the words "expect", "anticipate", "assume", "intend", "estimate", "target", "aim", "plan", "will", "endeavor", "outlook" and comparable expressions, and include generally any information that relates to expectations or targets for economic conditions, sales or other performance measures.

Forward-looking statements are based on current plans, estimates and projections. You should consider them with caution. Such statements are subject to risks and uncertainties, most of which are difficult to predict and are generally beyond Klöckner & Co's control. Among the relevant factors are the impacts of important strategic and operating initiatives, including the acquisition or disposal of companies. If these or other risks or uncertainties materialize, or if the assumptions underlying any of the statements prove incorrect, Klöckner & Co's actual expectations of uncertainty different from those stated or implied by such statements. Klöckner & Co SE can offer no assurance that its expectations or targets will be achieved.

Without prejudice to existing legal obligations, Klöckner & Co SE does not assume any obligation to update forward-looking statements to take information or future events into account or otherwise. In addition to the figures prepared in line with IFRS or HGB (Handelsgesetzbuch - German Commercial Code), Klöckner & Co SE presents non-GAAP financial performance measures, e.g., EBITDA, EBIT, net working capital and net financial debt.

These non-GAAP measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with IFRS or HGB. Non-GAAP measures are not subject to IFRS or HGB, or to other generally accepted accounting principles. Other companies may define these terms in different ways.

There may be rounding differences in the percentages and figures in this report.

This English version of the interim report is a courtesy translation of the original German version; in the event of variances, the German version shall prevail over the English translation.