Half-year report 2008

HALF-YEAR REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2008

I. HALF-YEAR ACTIVITY REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS AT 30 JUNE 2008.............................................................................................................. 2

II. CONDENSED HALF-YEARLY CONSOLIDATED FINANCIAL STATEMENTS ............................. 14

III. STATUTORY AUDITORS’ REPORT....................................................................................26

IV. STATEMENT BY THE PERSON RESPONSIBLE.................................................................... 27

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I. HALF-YEAR ACTIVITY REPORT ON THE CONSOLIDATED FINANCIAL

STATEMENTS AT 30 JUNE 2008

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IMS saw contrasting performance in its various product lines in terms of both volumes distributed and profitability:

- Volume growth in engineering and wear resistant steels was close to the target of 6% per year. Volumes rose by 6.6% in engineering steels and 5.3% in wear resistant steels against a background of rising prices, mainly at the end of the second quarter.

- Stainless steels suffered from relatively weak demand, major competitive pressure from producers and falling prices, resulting from movements in the price of alloy elements used to make these steels.

Although transportation costs surged (by 18.2% on a like-for-like basis), IMS managed to limit the impact on operating expenses per tonne, which rose by only 0.9%. Operating margin in the first half of 2008, adjusted for windfall profit and loss and other non-recurring items, was 7.0%, compared to 8.6% in the year-earlier period.

Free cash flow was €6.8 million over the first half of 2008, versus -13.7 million one year earlier. Debt fell from €222.8 million at 30 June 2007 to €216.1 million at 30 June 2008. With gearing down to 62.5% at 30 June 2008, IMS has the capacity to raise more than €90 million of additional resources to finance its growth.

In an uncertain environment, with forecasts of European manufacturing activity having been cut for 2008 and 2009, IMS has revised its volume target, expecting volumes to rise from 651,000 tonnes in 2007 to 710,000 in 2008, an increase of +9%. Regarding acquisitions, the multiples demanded by sellers are currently high as selling prices are rising and the distributors are having strong business levels. As a result, and in order to benefit from more favourable acquisition terms expected at a later date, IMS has decided to postpone part of its acquisition programme scheduled on the second half of 2008 until the first half of 2009. 2008 acquisitions are likely to boost business volumes by 10,000 tonnes in 2008, as opposed to the initial forecast of 40,000, excluding deals done in 2007.

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1. HALF-YEARLY FINANCIAL STATEMENTS - GENERAL PRINCIPLES

Accounting standards In accordance with European regulation 1606/2002 of 19 July 2002 on international financial reporting standards, the IMS Group's condensed consolidated financial statements comply with IAS/IFRS standards as approved by the European Union and available at http://ec.europa.eu/internal_market/accounting/ias_fr.htm#adopted-commission. The accounting policies applied for the six months ended 30 June 2008 are identical to those applied for the 2007 full-year IFRS financial statements.

The condensed half-yearly financial statements have been drawn up in accordance with IAS 34.

New texts or amendments adopted by the European Union since 1 January 2008 (IFRIC 11 – Group and Treasury Share Transactions) do not have any material effect on the consolidated financial statements at 30 June 2008.

The Group did not carry out early application of non-mandatory standards or interpretations from 1 January 2008, such as IAS 1 (Presentation of Financial Statements - capital management), IAS 23 (Borrowing Costs), IFRS 8 (Operating Segments), IFRIC 13 (Customer Loyalty Programmes), IFRS 3 as amended (Business Combinations), IAS 27 as amended (Consolidated and Separate Financial Statements), IFRS 2 as amended (Share-based Payment, purchase and cancellation terms) and IAS 32 (Financial Instruments: Presentation - puttable instruments).

There was no change in estimates during the period liable to affect the 2007 financial statements. Contingent assets and liabilities have not changed since end-2007.

Timetable for financial statement approval and reporting The Group's condensed consolidated financial statements at 30 June 2008 were approved by the Executive Committee on 28 August 2008. On 29 July 2008 after the market close, the Group published a press release commenting on its activity. On 28 August 2008, it published a press release relating to its half-yearly results.

Change in the scope of consolidation between 1 January and 30 June 2008 During the first quarter of 2008, IMS strengthened its Italian tool steels market position with the acquisition of Comacciai (4,800 tonnes distributed) and its position in the Italian wear resistant steels market with the acquisition of Venturi (5,000 tonnes sold per year). In Spain, it strengthened also its presence in engineering steels with the acquisition of Diclacero (1,500 tonnes distributed per year).

During the second quarter of 2008, IMS acquired stainless steel distributor Antera located in Lithuania and Latvia (sales by €10 million, 2,500 tonnes distributed) and French mechanical tube distributor ATR (sales by €3.5 million, 1,900 tonnes sold). The acquisition of the French company Euralliage, which distributes non-ferrous metals (mainly aluminium and copper) to engineering companies, was completed on 1 July 2008. The Euralliage company generates annual sales of €9 million and has a distribution volume of 1,500 tonnes.

On 27 June 2008, IMS sold 100% of Astralloy Steel Products Inc. to ArcelorMittal Steel Solutions & Services US. The proceeds from this divestment were affected by the dollar's sharp slide against the euro, and almost no gain was realised. Astralloy Steel Products Inc. generated sales of $21.6 million in the first half of 2008 (5,147 tonnes distributed) and operating profit of $2.2 million, consolidated in the Group's financial statements. This divestment completes IMS' move to focus on distributing special steels in Europe, which began in 2005.

Acquisitions made during the first half of 2008 did not result in change of more than 25% in sales or total assets, and so do not require IMS to publish pro forma consolidated financial statements for 2007 reflecting the impact of first-half 2008 acquisitions as if they had taken place at the start of 2007.

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However, to facilitate the comparability of data, comments in this document will relate to pro forma figures when necessary.

The impact of these acquisitions on the consolidated income statement in the first half of 2008 was as follows:

- Comacciai: this company was consolidated from 1 February 2008, and contributed sales of €2.7 million. Goodwill relating to this acquisition totalled €2.7 million.

- Venturi: this company was consolidated from 1 February 2008, and generated sales of €4.6 million. Goodwill relating to this acquisition totalled €1.8 million.

- Diclacero: the size of this company is not significant relative to the Group, and so no specific reporting is carried out.

- Antera: this company and its subsidiary were consolidated from 15 April 2008, and generated sales of €1.3 million. Provisional goodwill relating to this acquisition totalled €3.3 million.

- ATR: this company generated sales of €0.3 million in June 2008. Provisional goodwill relating to this acquisition totalled €0.9 million.

Changes in consolidated shareholders' equity

Apart from purchases and sales under the liquidity agreement, IMS bought 114,497 of its own shares in the first half of 2008 for €2.4 million, giving an average cost of €21.32 per share. €0.1 million of own shares were sold when stock options, granted under plans initiated before 2004, were exercised.

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2. HALF-YEARLY MANAGEMENT REPORT

2.1 Activity Sales totalled €790.9 million in the first half of 2008, an increase of 5.7% year-on-year, but down 3.6% at constant scope.

The breakdown of sales by product line was as follows:

(in thousands of euros) Second quarter

2007 Second quarter

2008 30 June

2007 30 June

2008

Stainless 200,352 173,476 382,358 349,950

Wear resistant 45,621 58,462 93,504 117,143

Engineering 123,163 144,492 238,824 283,940

Others * 16,082 20,601 33,379 39,915 Total 385,218 397,031 748,065 790,948 Volumes (tonnes) 173,140 188,666 347,012 376,826

Volume, price and scope effects in each product line were as follows:

Second quarter 2008 Volume

effect Price effect

Constant scope

Change in scope

Actual scope

Stainless -2.8% -19.5% -22.3% +8.9% -13.4%

Wear resistant +4.8% +9.8% +14.6% +13.5% +28.1%

Engineering +5.8% +5.2% +11.0% +6.3% +17.3%

Others * ns ns ns ns ns

Total +0.8% -6.0% -5.2% +8.3% +3.1%

First half 2008 Volume

effect Price effect

Constant scope

Change in scope

Actual scope

Stainless -2.5% -17.6% -20.1% +11.6% -8.5%

Wear resistant +5.3% +7.5% +12.8% +12.5% +25.3%

Engineering +6.6% +6.5% +13.1% +5.8% +18.9%

Others * ns ns ns ns ns

Total +0.9% -4.5% -3.6% +9.3% +5.7%

* Direct mill business sales in all product lines are now reported under "Others". 2007 figures have been adjusted accordingly.

o Stainless: - A -2.8% volume effect in the second quarter of 2008 followed a -2.3% volume effect in the

first quarter. Volumes distributed in the second quarter of 2008 (35,458 tonnes) were similar to the first-quarter 2008 figure (36,011 tonnes) and sharply higher than in the fourth quarter of 2007 (31,380 tonnes for the storage and distribution business).

- The -17.6% price effect in the first half arose mainly from movements in alloy prices. In

particular, the decline in nickel prices, expressed in dollars per tonne, was amplified by the fall in the dollar against the euro. Expressed in euros per tonne, average nickel prices were down 54% relative to the second quarter of 2007 and down 15% relative to the first quarter of 2008.

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Quarterly average nickel price (€/t)

Q1-07 31,523 Q2-07 35,626 Q3-07 21,961 Q4-07 20,158 Q1-08 19,282 Q2-08 16,424

The average stainless steel selling price was €4,892 per tonne in the second quarter of 2008, versus €4,901 in the first quarter of 2008 and €6,036 in the second quarter of 2007 (storage and distribution business only). The windfall loss in the first quarter of 2008 was estimated at €6.1 million, and remained unchanged in the second quarter. Although methods for setting stainless steel prices vary between countries and products, they mainly involve a basic steel price and an alloy surcharge calculated on the delivery date. For IMS, this alloy surcharge is usually calculated by averaging observed prices in months m-2 and m-3. The alloying elements concerned are chromium, molybdenum and above all nickel. The average nickel price in the fourth quarter of 2007, which mainly determined the value of inventories at 31 March 2008, was very close to that in the first quarter of 2008 used to determine the alloy surcharges billed in the second quarter. As a result, no windfall profit or loss was seen in the second quarter.

- The effect of changes in scope on stainless steel sales (+11.6% at 30 June 2008) should decrease sharply in the third quarter of 2008. Cotubel group companies, consolidated on 1 June 2007, have been contributing to Group organic sales since 1 June 2008. Any residual effect from changes in scope in the stainless steel business relate to Antera in Lithuania and Latvia (301 tonnes and €1.3 million in the first half of 2008).

o Wear resistant :

- As for engineering steels, wear resistant products saw average selling prices rise to €1,881 per tonne in the second quarter of 2008, from €1,812 per tonne in the first quarter of 2008 and €1,686 per tonne in the second quarter of 2007. These price increases resulted in a windfall profit estimated at €0.3 million in the second quarter of 2008.

- Organic sales growth in the second quarter of 2008 was 4.8%, slightly lower than the first-

quarter 2008 figure of 5.8%. The 12.5% scope effect was due to the impact of acquisitions in 2007 (Produr in France) and 2008 (Venturi in Italy).

o Engineering:

- Engineering steel volumes rose by 5.8% in the second quarter of 2008, compared to a growth

by 7.4% in the first quarter of 2008, resulting in a first-half 2008 increase by 6.6%. The weaker volume growth in the second quarter relative to the first one was partly due to increases in prices invoiced to customers. This resulted in an estimated windfall profit of €1.3 million in the second quarter of 2008. For engineering steels solely (excluding tool steels), the average selling price was €1,281 per tonne in the second quarter of 2008, versus €1,263 in the first quarter of 2008 and €1,216 in the second quarter of 2007 (storage and distribution business only).

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- The +5.8% scope effect in the first half of 2008 was mainly due to the acquisition of Brescia Acciai on 1 July 2007. Acquisitions in 2008 (Comacciai in February and ATR in June) contributed to volumes by around 2,000 tonnes and to sales by €3 million.

Due to the combined effect of growth in Italy (sharp increase in volumes distributed and acquisitions) and the decline in stainless steel selling prices, Italy was IMS' main market in terms of sales in the first half of 2008. The sharp increase in sales in Benelux was the result of the Cotubel acquisition on 1 June 2007.

30 June 2008 (€ '000)

30 June 2007 (€ '000)

Change

Italy 168,455 136,233 23.7% Germany 162,769 180,304 -9.7% France 134,070 117,797 13.8% Central Europe 108,365 106,978 1.3% Spain 79,300 83,742 -5.3% Benelux 54,626 20,246 169.8% Other Europe 42,578 63,873 -33.3% Other 40,785 38,892 4.9% Total 790,948 748,065 5.7%

2.2 Profitability Gross profit came to €167.7 million in the first half of 2008, compared to €188.3 million in the year-earlier period.

It was affected by a number of non-recurrent factors:

- windfall loss in stainless steels: this loss, which had been entirely recognised in the first quarter of 2008, amounted to -€6.1 million, and contrasted with a windfall profit of +€22.3 million in the first half of 2007;

- loss of gross margins in stainless steel welded tubes activity: the lower gross margins recognised in the first half of 2008 resulted from major competitive pressure from producers, particularly in decorative tubes, and generated an insufficient operating profitability of around -€2.6 million compared to normalised sector levels;

- windfall profit in engineering and wear resistant steels: this windfall profit took place entirely in the second quarter and totalled +€1.6 million;

- scrap operations: due to the very high scrap metal prices in April and May 2008, IMS decided to sell low-turnover products as scrap. This had a negative effect of -€1.5 million on gross profit, net of provision releases.

Restated for these non-recurrent items, and for the €2.1 million profit on the divestment of a warehouse in France reported in 2007, first-half 2008 performance indicators are as follows:

First half, in millions of euros 2008 actual 2007 actual Sales Gross profit Operating profit <Non-recurrent items> Operating profit excluding non-recurrent items Operating margin excluding non-recurrent items (% of normalised sales)

790.9 167.7 46.7 8.6

55.3

7.0%

748.1 188.3 86.7 -24.4

62.3

8.6%

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Reasons for increases in gross profit relative to the first quarter of 2008 differ by product lines:

- Stainless: no windfall loss in the second quarter, as opposed to a -€6.1 million loss in the first quarter; gross profit per tonne was €852 versus €790 in the first quarter of 2008 (after reallocation of provision changes) and €1,504 in the second quarter of 2007 (storage and distribution sales only); this remains lower than normalised gross profit of €950 per tonne, due to the conditions in the stainless steel welded tubes market (impact of €2.6 million in the first half of 2008);

- Engineering and wear resistant: windfall profits of €1.3 million (engineering) and €0.3 million (wear resistant) were recognised in May (Spain) and June (Spain, Italy and France). Gross profit per tonne in wear resistant was €574 versus €511 in the first quarter of 2008 and €458 in the second quarter of 2007. Gross profit per tonne in engineering (including tool steels) was €341 in the second quarter of 2008, €332 in the first quarter of 2008 and €339 in the second quarter of 2007.

Gross profit by product line (euros per tonne)

0,000

0,200

0,400

0,600

0,800

1,000

1,200

1,400

1,600

1Q02

2Q023Q02

4Q021Q

032Q03

3Q034Q03

1Q04

2Q043Q04

4Q041Q

052Q05

3Q054Q05

1Q06

T2 06

T3 06

T4 06

T1 07

T2 07

T3 07

4Q071Q

082Q08

StainlessWear resistantEngineering

Given the changes in scope of consolidation, and although their impact on sales and assets is lower than the 25% threshold, IMS presents below pro forma figures reflecting the following adjustments:

2008 income statement figures are translated using 2007 exchange rates for non-euro subsidiaries;

the pro forma income statement data for the first half of 2007 include, in addition to the figures published at 30 June 2007, 5 months of activity at Cotubel (consolidated from 1 June 2007), 6 months of activity at Brescia Acciai (consolidated from 1 July 2007) and Produr (consolidated from 1 October 2007), 5 months of activity at Venturi, 4.5 months of activity at Comacciai, 2.5 months of activity at Antera and one month of activity at ATR.

Hoselmann's direct factory sales are excluded from volumes distributed.

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First half, in millions of euros

2008 pro forma

2008 actual

2007 pro forma

2007 actual

Sales Gross profit Operating profit Net profit

789.4 168.1 46.7 30.4

790.9 167.7

46.7 30.4

825.2 210.0 94.8 57.1

748.1 188.3

86.7 51.8

On a pro forma basis, operating costs per tonne rose by 0.9%:

(in thousands of euros) 30 June 2007 30 June 2008

Change

Total pro forma net operating expenses 115,153 121,376 5.4% Pro forma tonnage sold 345,520 361,028 4.5%

Pro forma net operating expenses (€ per tonne) 333.3 336.2 0.9%

Personnel costs 58,768 57,741 -1.7% Leasing, depreciation, amortisation and

maintenance 18,041 20,281 12.4% Transport 15,909 18,807 18.2%

Consumables and energy 6,332 7,599 20.0% Fees 3,829 2,584 -32.5%

Disposal gains/losses -2,111 2 -100.1% Other 14,385 14,362 -0.2%

This 0.9% increase can be attributed to tight control over operating expenses, which almost fully offset the rise in transport costs.

- transport costs per tonne rose by 13%, from €46 to €52, due to higher fuel prices; - personnel costs were down relative to 2007 due to the lower cost of the bonus share programme

(€1.2 million in 2008, €2.2 million in 2007) and lower performance-related pay (€4.2 million in 2008, €5.8 million in 2007), due to weaker performance in 2008;

- fees were down sharply, after a number of special projects in 2007, particularly IT-related.

Net financial expenses rose from -€4.2 million in the first half of 2007 to -€4.8 million in the first half of 2008. This was due to higher average debt levels, including factoring, which rose from €167.7 million to €217.2 million. However, this effect was sharply limited by the increase in value of interest-rate hedging products.

The Group's average tax rate fell substantially from 37.2% in 2007 to 27.3% in 2008. This decrease was due to:

- expected full-year 2008 tax being equal to 33% of pre-tax profit, as opposed to more than 35% in 2007;

- a €1.9 million tax credit, equal to around 4.5% of pre-tax profit.

The Group's net profit was €30.4 million, versus €51.8 million in the first half of 2007.

2.2.1 Consolidated financial position

IMS measures its financial performance through ROCE (return on capital employed) and free cash flow from operating activities. At 30 June 2008, ROCE came to 8.3% on a 12-month rolling basis, compared with 14.6% at 31 December 2007.

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in millions of euros 30 June 2008

31 December 2007

Operating profit after normative tax Average capital employed (1) ROCE Normalised ROCE

47.5 572.0 8.3% 10.9%

71.5 490.4 14.6% 13.9%

(1) after adding back factoring

The above normalised ROCE figure is adjusted for the net windfall loss of -€21.8 million before tax incurred between 1 July 2007 and 30 June 2008.

The working capital requirement came to €384.7 million, up by 7.5% compared to 31 December 2007 (€357.9 million) but down by 1% after including factoring of trade receivables.

(in millions of euros) 31

December 2007

30 June 2008

Change

Operating WCR 418.2 444.7 +6.3% Other WCR (including tax) -60.3 -60.0 ns

Consolidated WCR 357.9 384.7 +7.5% Add back factoring 50.2 19.4 -61.3%

Adjusted WCR 408.1 404.1 -1%

On a like-for-like basis, i.e. adjusted for acquisitions, the changes in each component of the operating working capital requirement were as follows:

(in millions of euros) 31

December 2007

30 June 2008 l-f-l

Change

Inventories (net) 381.4 379.1 -0.6% Trade receivables excluding factoring (net) 248.0 318.3 +28.3%

Trade payables -211.2 -258.0 +22.1% Consolidated operating WCR 418.2 439.4 +3.6%

Sales (last 12 months) 1,425.8 1,459.7 +2.4% Consolidated operating WCR (%) 29.3% 30.1%

Factoring of trade receivables 50.2 19.4 -61.4%

Consolidated operating WCR + factoring (%) 32.9% 31.4%

On a like-for-like basis, the net value of inventories fell by -0.6% from €381.4 million to €379.1 million, reflecting:

- Stability of inventory volumes (220,506 tonnes versus 219,890 on a like-for-like basis at 31 December 2007), while sales volumes rose by 3.9% on a like-for-like basis during the period;

- a 2.3% decrease in the gross weighted average price which came from €1,803 per tonne at 31 December 2007 to €1,762 at 30 June 2008, resulting from falling stainless steel prices and rising engineering steel prices.

At end of June 2008, on a rolling 12-month basis, inventories represented 120 days of sales versus 122 days at 31 December 2007. Trade receivables (after adding back factoring) represented 69.6 days of sales at 30 June 2008 versus 67 days at 31 March 2008 and 64 days in 2007. The growth of sales in Italy, where payment times are substantially longer than in other European countries, have impaired the Group's trade receivables/sales ratio (Italian sales as a proportion of the Group total rose from 18%

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in 2007 to 21% in the first half of 2008). Trade payables represented 66 days of purchases at 30 June 2008 versus 58 days at 31 March 2008. Overall, and at constant scope, operating WCR (after adding back factoring) represented 113 days of sales at 30 June 2008, compared to 117 days at 31 March 2008 and 118 days at 31 December 2007.

Total shareholders' equity amounted to €344.3 million, up €11.4 million relative to 31 December 2007.

Financial net debt (after adding back factoring) amounted to €216.1 million at 30 June 2008. Cash flow in the first half of 2008 broke down as follows:

First half (in millions of euros)

2007 2008

Consolidated financial net debt (opening balance) 94.7 168.2 Factoring (opening balance) 17.9 50.2

Net cash flow from operations -59.5 -39.3 Change in WCR and tax 69.7 23.1

Change in factoring 15.9 -30.8 Gross capital expenditure 8.4 8.9

Gross financial investments 64.6 21.9 Dividends 14.4 19.3

Other movements -3.3 -5.3 Consolidated financial net debt (closing balance) 189.0 196.7

Factoring (closing balance) 33.8 19.4

Financial net debt + factoring 222.8 216.1 Shareholders' equity 319.4 344.3

Gearing for bank covenant purposes 69.8% 62.5%

2.2.2 Cash flow

The IMS Group generated free cash flow of €6.8 million in the first half of 2008, while €13.7 million was used in financing operations during the first half of 2007. The sale proceeds from Astralloy Steel Products Inc. are included in the "Financial divestments" item of the table below.

Free cash flow 30 June

2007 30 June

2008

Operating profit 86,670 46,670 Tax on operating profit -30,335 -15,401 Depreciation and amortisation 5,659 7,548 Change in WCR -87,700 -21,408 Change in tax liabilities 17,963 -1,710 Net capital expenditure -5,950 -8,895

Free cash flow -13,693 6,804 Financial investments -64,635 -21,920 Financial divestments 1,664 12,028

Excess cash flow -76,664 -3,088

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2.2.3 Outlook

In order to benefit from more favourable acquisition terms, the IMS Group may postpone part of its acquisition programme scheduled on the second half of 2008 until the first half of 2009.

As a consequence, volumes distributed in 2008 could total 710,000 tonnes versus 651,000 in 2007 (+9.1%). The Group confirms its target of distributing 1 million tonnes of special steels in 2010 and increasing its European market share from 10% in 2008 to 14% in 2010.

Waiting for the full effects of the measures aimed at restoring margins in the Stainless Steel Welded Tubes activity in early 2009, the Group is looking for operating profit of €33 million for the 2nd half of 2008 (a normalised operating margin of 6.5% of turnover), versus €24 million for the 2nd half of 2007. For FY 2008, IMS intends to continue reducing its debt and is targeting operating profit of €80 million, after a net windfall loss estimated at €14 million. The Group is finalising the acquisition of French company EMS (annual turnover of €12 million, 9,500 tonnes distributed). EMS distributes Engineering and Stainless Steels, as well as aluminium products, essentially to a clientele of mechanical engineers. Once the remaining conditions precedent have been lifted, EMS’ activity should be consolidated within the Group’s accounts from 1st September 2008.

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II. CONDENSED CONSOLIDATED HALF-YEARLY

FINANCIAL STATEMENTS

Consolidated income statement (in thousands of euros) First half 2007 First half 2008 change Q2 2007 Q2 2008 change

Sales 748,065 790,948 5.7% 385,218 397,031 3.1%

Income from ordinary activities 748,065 790,948 5.7% 385,218 397,031 3.1%

Purchases (639,836) (618,570) 3.3% (324,970) (314,867) 3.1%Net change in inventories 80,095 (4,691) NS 35,277 3,618 -89.7%

Gross profit 188,324 167,687 -11.0% 95,525 85,782 -10.2%

Other operating income and releases from provisions 5,319 3,208 -39.7% 3,503 1,836 -47.6%

Personnel costs (50,331) (54,119) -7.5% (25,241) (26,718) -5.9%Additions to depreciation and amortisation (5,659) (7,548) -33.4% (2,989) (4,022) -34.6%Additions to provisions (2,806) (2,154) 23.2% (330) (1,138) -244.8%Other expenses (48,177) (60,404) -25.4% (25,285) (31,366) -24.0%

Total expenses (106,973) (124,225) -16.1% (53,845) (63,244) -17.5%

Operating profit 86,670 46,670 -46.2% 45,183 24,374 -46.1%

Net financial expenses (4,226) (4,839) -14.5% (1,968) (741) 62.3%Share in the net profit of equity-accounted companies 7 7

Profit before tax 82,451 41,831 -49.3% 43,222 23,633 -45.3%

Tax (30,627) (11,424) 62.7% (16,669) (6,288) 62.3%

Net profit from continuing ordinary operations 51,824 30,407 -41.3% 26,553 17,345 -34.7%

Profit from discontinued operations

Net profit of the consolidated whole 51,824 30,407 -41.3% 26,553 17,345 -34.7%

attributable to equity holders of the parent 51,824 30,407 -41.3% 26,553 17,345 -34.7%attributable to minority interests

Net attributable profit per share issued (in euros) 2.87 1.68 -41.3% 1.47 0.96 -34.7%Net attributable profit per share excluding treasury shares (in euros) 2.95 1.76 -40.5% 1.51 1.00 -33.8%

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Consolidated balance sheet (in thousands of euros) 30/06/2008 31/12/2007

gross Dep./prov. Net NetASSETS

Goodwill 93,639 93,639 83,932Intangible fixed assets 15,236 10,232 5,004 5,670Tangible fixed assets 178,705 93,956 84,749 75,915Equity investments 45 45 45Shares in equity-accounted companiesAssets available for sale 50 50 50Other long-term assets 5,181 176 5,005 5,008Deferred tax assets 6,152 6,152 7,836

Total non-current assets 299,008 104,364 194,644 178,456

Inventories 396,822 9,730 387,092 381,453Trade receivables 328,325 7,885 320,440 248,037Other receivables 12,658 12,658 12,277Corporate income tax due from tax authorities 1,802 1,802 1,846Derivative instruments 1,865 1,865 536Embedded interest-rate derivativesCash and cash equivalents 14,413 14,413 23,377

Total current assets 755,885 17,615 738,270 667,526

Assets held for sale

Total assets 1,054,893 121,979 932,914 845,982

LIABILITIES AND SHAREHOLDERS' EQUITY

SHAREHOLDERS' EQUITYShare capital 27,528 27,528Consolidated reserves 282,158 240,815Foreign-exchange translation differences 4,222 833Net profit 30,407 63,694Minority interests

Total shareholders’ equity 344,315 332,870

Interest-bearing non-current liabilities 77,500 81,287Deferred tax liabilities 9,916 7,647Provisions for contingencies 1,306 1,289Pension provisions 26,113 23,840Other non-current liabilities 210 216

Total non-current liabilities 115,045 114,279

Trade payables 262,865 211,249Other payables 48,562 46,284Corporate income tax due 25,903 28,159Interest-bearing current liabilities 132,597 110,021Derivative instruments 256Embedded interest-rate derivatives 1,960 766Current provisions for contingencies 1,667 2,098

Total current liabilities 473,554 398,833

LIABILITIES HELD FOR SALE

Total liabilities 932,914 845,982

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Consolidated cash flow statement

(in thousands of euros)First half 2007 First half 2008

Net cash at start of period

Cash and cash equivalents 24,235 23,377Accrued interest (34)Cash and cash equivalents adjusted for accrued interest 24,201 23,377

Operating activities

Net profit 51,824 30,407Depreciation and amortisation expense 5,659 7,548Change in provisions 1,902 864Other items 2,236 1,231Gains (losses) on asset disposals (2,103) (717)

Cash flow from operations after tax and cost of debt 59,518 39,333

Cost of debt 4,912 7,756Taxes 28,177 9,924

Cash flow from operations before tax and cost of debt 92,607 57,013

Total change in WCR (87,700) (21,408)

Cash flow from operating activities before tax and financial expense 4,907 35,605

Income tax paid (10,214) (11,634)

Cash flow from operating activities after tax and before financial expense (5,307) 23,971

Investing activities

Investments in intangible and tangible assets (excluding finance leases) (8,389) (8,922)Divestments of intangible assets and tangible assets 2,439 27Financial investments (41,336) (21,793)Net cash of companies acquired or reclassified under IFRS 5 312 1,499Net gain on divestment of shares in consolidated companies, net of cash 10,982Other financial divestments 1,664 1,046

Cash flow from investing activities (45,310) (17,161)

Financing activities

Capital increaseTreasury stock 352 (4,319)Dividends paid (14,398) (19,263)New medium- and long-term borrowings (excluding finance leases) 82,752 6,245Repayment of medium- and long-term borrowings (excluding finance leases) (39,197) (8,359)Repayment of finance leases (1,231) (993)Change in other financial debt (506) (6)Change in short-term debt 29,468 18,227Assets available for saleNet interest expense paid (4,878) (7,333)Other

Cash flow from financing activities 52,362 (15,801)

Change in cash position 1,745 (8,991)

Foreign exchange translation differences (319) 27

Net cash at end of period 25,627 14,413

Cash and cash equivalents 25,627 14,413Accrued interestCash and cash equivalents adjusted for accrued interest 25,627 14,413

17

Consolidated net debt statement

(in thousands of euros)

First half 2007 First half 2008

Net debt at start of period

Cash and cash equivalents (24 235) (23 377)Assets available for sale (51) (50)Derivative instruments (268) 766Interest-bearing current liabilities 69 129 110 021Interest-bearing non-current liabilities 50 115 81 287

Adjusted for accrued interest (assets and liabilities) 34 (484)

Total 94 724 168 163

Operating activities

Net profit 51 824 30 407Depreciation and amortisation 5 659 7 548Change in provisions 1 902 864Other items 2 236 1 231Gains (losses) on asset disposals (2 103) (717)

Funds from operations after tax and cost of debt 59 518 39 333

Cost of debt 4 912 7 756Tax 28 177 9 924

Funds from operations before tax and cost of debt 92 607 57 013

Change in operating WCR (101 730) (19 015)Change in other WCR items 14 030 (2 393)Total change in WCR (87 700) (21 408)

Cash flow from operating activities before tax and financial expenses 4 907 35 605

Income tax paid (10 214) (11 634)

Cash flow from operating activities after tax and before financial expenses (5 307) 23 971

Investing activities

Investments in intangible and tangible assets (excluding finance leases) (8 389) (8 922)Divestments of intangible and tangible assets 2 439 27Financial investment (41 336) (21 793)Debt of companies acquired or reclassified under IFRS 5 (23 299) (127)Net gain on divestment of shares in consolidated companies, net of cash 10 982Other financial divestments 1 664 1 046

Cash flow from investing activities (68 921) (18 787)

Financing activities

Capital increaseTreasury stock 352 (4 319)Dividends paid (14 398) (19 263)New finance leases (346) (396)Net interest paid (4 878) (7 333)Other (506) (6)

Cash flow from financing activities (19 776) (31 317)

Change in debt 94 004 26 133

Foreign exchange translation differences 299 2 391

Net debt at end of period 189 027 196 687

Cash and cash equivalents (25 627) (14 413)Assets available for sale (1 551) (50)Embedded interest-rate derivatives (856) 1 960Interest-bearing current liabilities 133 712 132 597Interest-bearing non-current liabilities 83 349 77 500

Adjusted for accrued interest (assets and liabilities) (907)Total 189 027 196 687

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Consolidated statement of changes in shareholders' equity

(in thousands of euros)

Shareholders' equity Share capital Issue premiumTreasury

stock

Attributable foreign

exchange translation differences

Attributable cumulative

results

Attributable total

Minority interests

At 1 January 2007 279,884 27,528 28,287 (6,141) 1,563 228,647 279,884

Dividends paid (14,398) (14,398) (14,398)First-half net profit 51,824 51,824 51,824Foreign exchange translation differences (539) (539) (539)Treasury stock 352 352 352Bonus share issue 2,242 2,242 2,242OtherNet change over the period 39,481 352 (539) 39,668 39,481

At 30 June 2007 319,365 27,528 28,287 (5,789) 1,024 268,315 319,365

At 1 January 2008 332,870 27,528 28,287 (7,111) 833 283,333 332,870

Dividends paid (19,263) (19,263) (19,263)First-half net profit 30,407 30,407 30,407Foreign exchange translation differences 3,389 3,389 3,389Treasury stock (4,319) (4,319) (4,319)Bonus share issue 1,231 1,231 1,231Net change over the period 11,445 (4,319) 3,389 12,375 11,445

At 30 June 2008 344,315 27,528 28,287 (11,430) 4,222 295,708 344,315

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. ACCOUNTING POLICIES In accordance with European regulation 1606/2002 of 19 July 2002 on international financial reporting standards, the IMS Group's condensed consolidated financial statements comply with IAS/IFRS standards as approved by the European Union and available at http://ec.europa.eu/internal_market/accounting/ias_fr.htm#adopted-commission.

The accounting policies applied for the six months ended 30 June 2008 are identical to those applied to the 2007 full-year IFRS financial statements.

The condensed half-yearly financial statements have been drawn up in accordance with IAS 34.

New texts or amendments adopted by the European Union since 1 January 2008 (IFRIC 11 – Group and Treasury Share Transactions) do not have any material effect on the consolidated financial statements at 30 June 2008.

The Group did not carry out early application of non-mandatory standards or interpretations from 1 January 2008, such as IAS 1 (Presentation of Financial Statements - capital management), IAS 23 (Borrowing Costs), IFRS 8 (Operating Segments), IFRIC 13 (Customer Loyalty Programmes), IFRS 3 as amended (Business Combinations), IAS 27 as amended (Consolidated and Separate Financial Statements), IFRS 2 as amended (Share-based Payment, purchase and cancellation terms) and IAS 32 (Financial Instruments: Presentation - puttable instruments).

The Group is in the process of determining any potential impact on the Group's consolidated financial statements, but does not expect any material impact on its consolidated financial statements at this stage of the analysis.

The Group’s consolidated financial statements were prepared using the historical cost principle, except for financial derivative instruments and available-for-sale assets, 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 account of changes in fair value attributable to the hedged risks.

The preparation of the financial statements implies that the management of the Group and 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 of the period.

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 assets and liabilities. Actual results may differ substantially from these estimates based on different assumptions or conditions.

2. PARTICULARITIES OF PREPARING HALF-YEARLY FINANCIAL STATEMENTS The condensed consolidated financial statements for the first six months of 2008 were prepared on the basis of rules used for full-year 2007, with the following exception concerning income tax: in the half-yearly 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.

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3. SCOPE OF CONSOLIDATION

IMS' ongoing growth policy led to the following changes in the scope of consolidation:

- In January 2008, IMS, through its Italian company IMS SpA and in accordance with the purchase undertaking recognised in the financial statements at 31 December 2007, acquired 50% of the shares of Brescia Acciai, which it now wholly owns.

- In February 2008, again through IMS SpA, IMS acquired tool steels distributor Comacciai, along with Venturi, which specialises in wear resistant products. The goodwill arising on these two acquisitions totalled €2.7 million and €1.8 million respectively.

- IMS SpA set up a company in Turkey, which is not yet operational.

- In April 2008, through its German subsidiary Stappert, IMS acquired Lithuanian company Antera UAB, which leads the Lithuanian stainless steel distribution market, along with its Latvian subsidiary Antera LAT. The transaction resulted in a provisional goodwill of €3.3 million.

- In late May 2008, IMS' French subsidiary IMS France acquired ATR, which specialises in boiler tubes. Provisional goodwill relating to this acquisition totalled €0.9 million.

IMS sold its US subsidiary Astralloy in late June 2008. Given the disposal date, IMS' half-yearly financial statements include six months of activity at Astralloy. The disposal gain, after selling expenses and translation differences, amounted to €0.2 million.

IMS also carried out internal restructuring in the first half of 2008:

- Noxon sold Asadin to Stappert, after which Stappert and Asadin merged,

- IMS SpA and Comacciai merged,

- IMS SpA and Brescia Acciai merged.

These operations had no impact on the financial statements at 30 June 2008.

A simplified income statement is presented below.

The 2008 pro forma income statement is calculated using June 2007 exchange rates and excludes the effect of the Astralloy divestment.

Pro forma figures for the first half of 2007, compared to figures published in 2007, also include:

- 6 months of activity at Brescia Acciai (fully consolidated from July 2007),

- 5 months of activity at Cotubel (consolidated from 1 June 2007),

- 5 months of activity at Venturi (acquired in February 2008),

- 4.5 months of activity at Comacciai (acquired in mid-February 2008),

- 6 months of activity at Produr (consolidated from 1 September 2007),

- 1 month of activity at ATR (consolidated from 1 June 2008),

- 2.5 months of activity at the Antera companies (acquired in mid-April 2008).

in millions of euros (first half)

2008 pro forma

2008 actual

2007 pro forma

2007 actual

Sales Gross profit Operating profit Net profit from continuing ordinary operations

789.4 168.1 46.7

30.4

790.9 167.7 46.7

30.4

825.2 210.0 94.8

57.1

748.1 188.3 86.7

51.8

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• The main indicators of new companies, had they been acquired on 1 January 2008, would have been as follows (in millions of euros):

Sales Gross profit Comacciai 3.8 1.3 Venturi 5.5 2.5 ATR 3.2 0.9 Antera UAB 3.4 0.3

The balance sheet impact of changes in the scope of consolidation relative to 31 December 2007 results from the integration of Venturi, Comacciai, Antera and ATR and the disposal of Astralloy:

in millions of euros

30 June 2008

Actual Acquisitions

Disposals

30 June 2008

Restated Goodwill 93.6 -8.7 0.2 85.1 Intangible and tangible fixed assets 89.8 -6.2 1.1 84.7 Other non-current assets 11.2 -0.1 0.2 11.3 Non-current assets 194.6 -15.0 1.5 181.1 Inventories 387.1 -13.1 5.1 379.1 Trade receivables 320.4 -5.9 3.8 318.3 Other current debtors 14.5 -0.8 0.3 14.0 Derivative instruments 1.9 1.9 Cash and cash equivalents 14.4 -3.0 0.8 12.2 Current assets 738.3 -22.8 10.0 725.5

TOTAL ASSETS 932.9 -37.8 11.5 906.6 Shareholders' equity 344.3 +0.4 -2.8 341.9 Non current interest bearing liabilities 77.5 -0.1 77.4 Other non-current liabilities 37.5 -2.1 0.1 35.5 Non-current liabilities 115.0 -2.2 0.1 112.9 Trade payables 262.9 -6.5 1.6 258.0 Other current liabilities 74.5 -10.9 0.8 64.4 Current interest bearing liabilities 132.6 -18.6 11.8 125.8 Current derivative instruments and provisions 3.6 3.6 Current liabilities 473.6 -36.0 14.2 451.8 TOTAL LIABILITIES AND EQUITY 932.9 -37.8 11.5 906.6

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4. GOODWILL

Changes in goodwill since 31 December 2007 are as follows (in millions of euros):

Net value at 1 January 2008 83.9 Goodwill adjustment on Cotubel 0.6 Goodwill on Comacciai (*) 2.7 Goodwil on Venturi (*) 1.8 Goodwill on Antera (*) 3.3 Goodwill on ATR (*) 0.9 Disposal of Astralloy -0.2 Foreign exchange translation differences 0.6 Net value at 30 June 2008 93.6

(*) The goodwill on these new companies is based on an initial assessment of the required IFRS adjustments, identified on a preliminary basis.

5. OFF-BALANCE SHEET COMMITMENTS

• Factoring

IMS has set up factoring programmes. At 30 June 2008, €19.4 million of trade receivables in Germany and France had been factored, and had therefore moved off-balance sheet, since the programmes comply with IFRS rules for derecognition.

• IMS SA's bank covenants

Bank covenants, which require IMS to comply with two ratios based on consolidated financial statement data, apply to all of IMS' credit facilities.

The first is the ratio of net debt (net debt plus receivables ceded without recourse) to EBITDA (operating profit plus depreciation, amortisation and changes in provisions for liabilities and charges) over a rolling 12-month period. This ratio must remain below 3.

The second (gearing) is the ratio of net debt (defined as above) to shareholders' equity, and must remain below 90%.

IMS SA complied with the bank covenants on its credit facilities at 30 June 2008.

6. 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 (734,487), as the denominator.

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7. SEGMENT REPORTING

The breakdown of revenue and operating profit by geographical segment is as follows:

First half 2008 Revenue from ordinary activities

(thousands of euros) Total sales by region

Inter-regional

sales

Sales to external

customers

Segment operating

profit

Germany 211,114 -22,771 188,343 12,452 France 150,750 -2,715 148,035 7,314 Italy 182,598 -3,433 179,165 12,117 Spain 83,018 -2,917 80,101 8,807 Rest of the world 211,132 -15,828 195,304 5,027 IMS SA - 1,959 Intra-group sales -47,664 47,664 2,912

Total 790,948 790,948 46,670

First half 2007 Revenue from ordinary activities

(thousands of euros) Total sales by region

Inter-regional

sales

Sales to external

customers

Segment operating

profit

Germany 247,462 -31,107 216,355 36,473 France 133,117 -1,814 131,303 10,216 Italy 150,438 -4,111 146,327 14,586 Spain 86,756 -2,611 84,145 13,123 Rest of the world 180,575 -10,640 169,935 16,439 IMS SA - 455 Intra-group sales -50,283 50,283 -3,712

Total 748,065 748,065 86,670

8. INFORMATION ON RELATED PARTIES

The only relevant related parties are members of the Executive Committee and Supervisory Board.

As in 2007, relations between the Group and these parties were limited to remuneration paid to and regulated agreements with Jean-Yves Bouffault, Pierre-Yves Le Daëron and Philippe Brun governing the terms applicable in the event of their dismissal.

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9. CASH FLOW STATEMENT

The change in the working capital requirement broke down as follows in the first half of 2008 (in millions of euros):

Inventories 4,7 Trade receivables - 71.8 Other receivables -0.4 Trade payables 48.1 Other payables -2.0 Total change -21.4

€19.3 million of dividends were distributed.

10. POST-BALANCE SHEET EVENTS

No material event took place after the balance sheet date.

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III. STATUTORY AUDITORS' REPORT

Statutory auditors' review report on the first half-year financial information for 2008

To the Shareholders, In our capacity as statutory auditors and in accordance with articles L. 232-7 of the French Company Law (Code de commerce) and L. 451-1-2 III of the French Monetary and Financial Code (Code monétaire et financier), we hereby report to you on:

our review of the accompanying condensed half-yearly consolidated financial statements of the company IMS International Metal Service, for the period from 1 January 2008 to 30 June 2008, and

the verification of the information contained in the half-yearly management report. These condensed half-yearly consolidated financial statements are the responsibility of the executive board. 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 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 can only provide moderate assurance that the financial statements, taken as a whole, do not contain any material misstatements. This level of assurance is less than can be obtained from an audit. Based on our review, nothing has come to our attention that causes us to believe that these condensed half-yearly consolidated financial statements are not prepared in all material respects in accordance with IAS 34 – IFRS as adopted by the European Union applicable to interim financial information.

2. Specific verification

We have also verified the information provided in the interim management report in respect of the half-yearly financial statements that were the object of our review. We have nothing to report on the fairness and consistency of this information with the condensed half-yearly financial statements.

Paris and Paris-La Défense, 28 August 2008

The Statutory Auditors

Bellot Mullenbach et Associés Ernst & Young Audit

Jean-Louis Mullenbach François Carrega

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27

IV. STATEMENT BY THE PERSON RESPONSIBLE

I hereby certify that, to my knowledge, the condensed half-yearly consolidated financial statements for 2008 have been prepared in accordance with applicable accounting standards and give a true and fair view of the assets, financial position and earnings of the company and all companies included in the scope of consolidation, and that the half-yearly activity report for period from 1 January to 30 June 2008 states in a true and fair manner the important events that took place in the first six months of the year, their impact on the financial statements, the main transactions between related parties and a description of the main risks and the uncertainties for the remaining six months of the year.

Nanterre, 28 August 2008

Jean-Yves Bouffault

Chairman of IMS' Executive Committee

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

Société anonyme (public limited company) governed by an Executive Committee

and a Supervisory Board with capital of €27,527,740.73 RCS Nanterre B 311 361 489

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