FROM

ISPOSAL

ESOURCESTO

A NEW VISION

INTERIM

FINANCIAL REPORT

AS OF JUNE 30, 2019

Created by/Document template: Thomas Herbin © 2019

1

2

CON-

TENTS

SELECTED FINANCIAL INFORMATION

5

  • MESSAGE FROM THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER

INTERIM ACTIVITY REPORT

9

2.1 Highlights of the period

10

2.2

Comments on consolidated activity at June 30, 2019

15

2.3

Comments on the consolidated financial position at June 30, 2019

24

2.4

Comments on consolidated cash flows at June 30, 2019

27

2.5

Main transactions with related parties

29

2.6 Outlook

30

2.7

Ownership structure

32

3

4

5

FINANCIAL STATEMENTS FOR THE FIRST

33

HALF OF 2019

3.1 Consolidated balance sheet at June 30, 2019

34

3.2

Consolidated income statement at June 30, 2019

35

3.3

Statement of net income and gains and losses recognized

36

directly in other comprehensive income

37

3.4

Statement of changes in consolidated equity

3.5

Consolidated cash flow statement

38

3.6 Notes to the consolidated financial statements at June 30, 2019

39

STATUTORY AUDITORS' REPORT ON THE

61

FINANCIAL INFORMATION FOR THE FIRST

HALF OF 2019

CERTIFICATION OF THE PERSON RESPONSIBLE

63

FOR THE INTERIM FINANCIAL REPORT

2019 Interim Report

1

Selected

financial information

5

Key financial data at June 30, 2019

In €m

06/30/2018

06/30/2019

Gross change

12/31/2018

Contributed revenue1

277.6

329.8

+18.8%

560.5

EBITDA

51.8

63.6

+22.8%

108.7

Current operating income

20.7

22.1

+6.8%

44.2

Net income (Group share)

9.2

7.6

-17.4%

15.6

Net industrial CapEx paid (excl. IFRIC)

22.3

30.2

+35.4%

46.9

Free cash flow2

11.6

35.0

+202%

38.4

Net bank debt3

318.9

390.4

+22.7%

317.4

Financial leverage ratio

3.0x

3.2x

-

2.9x

1 - Consolidated revenue net of:

a. IFRIC 12 revenue, representing investments made for assets under concession arrangements booked as revenue in accordance with IFRIC 12.

and,

b. damages and compensation paid to Sénerval, net of variable cost savings to cover costs incurred to maintain continuity of services to local authorities during asbestos removal at the Euro Métropole Strasbourg incinerator.

2 - Available cash before development investments, financial investments, dividends, and financing.

3 - According to the definition provided in the banking contract.

4 - At constant scope and exchange rates and after restatements for the impact of the first-time application of IFRS 16.

6 SÉCHÉ ENVIRONNEMENT - INTERIM FINANCIAL REPORT AT JUNE 30, 2019

2019 Interim Report

Introduction

Chairman's message

Dear Shareholders,

The first half of 2019 featured a steady pace of acquisitions internationally, and good business volumes and solid operating income across the historical scope, all of which confirm the relevance of Séché Environnement's sustainable-growth strategy.

Across its historical scope, Séché Environnement pursued quality growth in France and internationally, driven by dynamic circular economy and sustainable development markets,

specifically with Industrials, which are its core clientele.

Internationally, Séché Environnement took a leading position in South Africa, gained strength in Peru, and began operating in Italy. These actions align, geographically and industrially, with our existing facilities in those areas of Latin America and Europe. In South Africa, Interwaste and the Séché South Africa holding company, recently created to accelerate the Group's development in southern Africa, are aspiring to build growth platforms in those regions.

The trend in our operating income over the period demonstrates that our profitability is on target for the medium term, supported by our innovation capacity and our positioning on value-added business lines in waste recovery and treatment.

As such, the second half of 2019 should confirm the economic performance of the first half - internationally, with the ramping up of the subsidiaries recently acquired in Peru and South Africa, and in France, with the return to high business volumes in services.

At the same time, in line with our financial targets, our development investments are preparing for the future, for example with the transformation of the Salaise 2 incinerator, which, from 2020 will make this facility a model in energy recovery from hazardous waste, in a circular economy approach, and the launch of the Eden project, the first PPP in South Africa for the construction of benchmark facilities for waste recovery and treatment in the Mossel Bay region.

This favorable outlook boosts our confidence in Séché Environnement's ability to improve its results across the board in 2019 compared to 2018 and, starting in 2019, to meet or even exceed some of the economic and financial targets set for 2020.

For this reason, I wanted the new strategic targets for 2022 to be presented in December 2019 in terms of operations, earning power, which will reaffirm our sustainable and value-creating growth.

Joël Séché

Chairman and Chief Executive Officer

CHAPTER 1 - Selected financial information - Message from the Chairman and Chief Executive Officer 7

2019 Interim Report

2

Activity report

  1. Highlights of the period
  2. Comments on consolidated activity and results at June 30, 2019
  3. Comments on the consolidated financial position at June 30, 2019
  4. Comments on consolidated cash flows at June 30, 2019
  5. Main transactions with related parties
  6. Outlook
  7. Ownership structure

9

2.1

HIGHLIGHTS OF THE PERIOD

During the first half of 2019, Séché Environnement deployed an active external growth strategy internationally, taking control of Peruvian company Kanay and acquiring Interwaste in South Africa and Mecomer in Italy.

Across its historical scope, the Group has maintained quality organic growth on its main markets in France and internationally. Against this backdrop, the improvement in operating income reflects positive trading effects (volume effect and favorable prices) as well as temporary delays in activity and the increase in local taxes and in one-time expenses related to the Group's international growth.

The second half of 2019 is expected to bring continued high volumes of business and set the stage for further improvement in income in 2019 compared to 2018.

In addition, Séché Environnement, in favorable market conditions, carried out an €80 million bond issue with French and European investors, with the aim of refinancing acquisitions made in the first half of 2019.

2.1.1. Acquisition of a majority stake in Kanay (Peru)

On January 31, 2019, in accordance with its purchase option on Kanay's shares, Séché Environnement acquired an additional 7% stake in Kanay's capital, increasing its holding from 49% to 56%. It subsequently purchased the remaining shares and at June 30, 2019, it held 100% of Kanay's capital.

Kanay is active in medical waste treatment and decontamination in Peru and is actively expanding into the hazardous waste markets, in particular incineration activities.

At December 31, 2018, Kanay Group posted revenue of €14.1 million for EBITDA of €1.8 million and current operating income of €1.3 million. The company had €9.3 million in net financial debt. It employed 246 people.

Kanay has been fully consolidated since January 1, 2019 (previously accounted for under the equity method).

2.1.2. Acquisition of Interwaste Holdings Limited (South Africa)

On January 9, 2019, Interwaste's Annual General Meeting approved Séché Environnement's acquisition plan in a special resolution, with 99.99% of shareholders in favor. The proposed acquisition put forward by Séché Environnement on November 2, 2018 involves a Scheme of Arrangement put to shareholders by the Interwaste Board of Directors at a price of ZAR 1.20 per share, putting the total value of Interwaste shares at around €35.2 million1 (including 41 million shares held as treasury stock). Following the removal of the outstanding conditions precedent, the Scheme of Arrangement and the delisting of Interwaste from the Johannesburg Stock Exchange were finalized on March 5, 2019.

Interwaste is one of the rare integrated operators managing hazardous and non-hazardous waste in South Africa and is one of the main players serving waste markets across South Africa and neighboring countries.

The Group has a solid base of local and multinational industrial clients, most of which operate in the mining and raw materials sector, as well as a sizeable portfolio of large local authority clients.

Interwaste was founded in 1989 and has a workforce of around 2,000 employees. In 2018 it generated consolidated sales of ZAR 1,164 million

  1. Based on a ZAR/EUR exchange rate of 0.0625.

10 SÉCHÉ ENVIRONNEMENT - INTERIM FINANCIAL REPORT AT JUNE 30, 2019

2019 Interim Report

(around €68.8 million) and EBITDA of ZAR 219 million (around €13.6 million), with current operating income totaling ZAR 109 million (around €7.3 million) and net income of ZAR 10 million (around €0.6 million). Its growth has been led by an experienced, professional, autonomous management team. Boasting ISO 14001 and OHSAS 18001 certification, Interwaste has recent, high quality infrastructure meeting international standards to provide its industrial clients with an integrated offer of waste management solutions.

Interwaste has been fully consolidated since January 1, 2019.

With this acquisition, Séché Environnement aims to build a strong position in South Africa, thus taking advantage of the growth and transformation of waste markets as part of a circular economy approach.

A holding company, Séché South Africa, was created to accelerate the Group's development in the promising regions of southern Africa.

2.1.3. Acquisition of Mecomer

(Italy)

Created in 1987, Mecomer is a recognized specialist in the management of solid and liquid industrial waste, in particular waste with high value added, generated by the chemical, pharmaceutical and energy sectors.

With its analysis laboratory and two transfer facilities located in the Milan region, certified to ISO 14001, OHSAS 18001 and ISO 9001, the Company provides its industrial clients with innovative, technology-intensive local solutions for the characterization, grouping, trading and transfer of the most technical waste. Thanks to a high-performing logistics solution in terms of safety and environmental friendliness, Mecomer delivers relevant solutions to the core issues facing its clients in developing a circular economy.

In 2018, Mecomer posted revenue of €32.2 million for adjusted EBITDA (IFRS) of €6.2 million and current operating income of €4.9 million. At year- end 2018, its adjusted net debt (IFRS) totaled €4.5 million and it employed 150 people.

This acquisition brings substantial commercial synergies with facilities that complement each other perfectly from both an industrial and geographical standpoint, allowing the Group to roll out new, local industrial waste management solutions focused on the circular economy to its shared core customers in these regions.

The acquisition of Mecomer also strengthens Séché Environnement's position as an integrated regional player on the European hazardous waste recovery and treatment markets.

The Group acquired 90% of Mecomer's capital. Stefano Ferrante, the son of the Mecomer's founder, kept a minority stake and will continue to support the company's growth alongside Séché Environnement as Chief Executive Officer.

Mecomer has been fully consolidated since April 1, 2019.

2.1.4. New bond issue

On May 20, 2019, Séché Environnement issued a new €80 million bond in two tranches:

■ ■ €60 million maturing in 7 years (2026) with a coupon of 2.90%;

■ ■ €20 million maturing in 8 years (2027) with a coupon of 3.05%.

The proceeds from this issue refinanced the recent international acquisitions which had been financed by drawing on the syndicated credit facility.

  1. Based on a ZAR/EUR exchange rate of 0.0666 (average exchange rate of 2018).
    (3)See the press release of July 11, 2018.

CHAPTER 2 - Activity report 11

The issue was completed with considerably better terms and conditions than the previous bond issue in July 20183 and was subscribed for by French and European investors, illustrating the solidity of Séché Environnement's financial position. It also reflects the financial markets' confidence in Séché Environnement's long-term growth strategy.

2.1.5. ESG impact loan: improvement in all criteria and reduction in interest rate

At the end of the first year of the ESG impact loan set up in July 20184, Séché Environnement had improved its performance in all the areas required to obtain a lower cost of borrowing, i.e.:

  1. Energy independence: increased from 220% in 2017 to 246% in 2018;
  2. Concrete action in support of biodiversity under the Act4Nature scheme: drafting of an action plan with commitments for the future;
  3. Ethifinance ESG rating: upgraded in 2018 in relation to 2017.

As a result of these improvements, it benefited from a 0.05% reduction in the interest rate on its bank loan for 12 months from July 1, 2019.

In addition, in June 2019, Séché Environnement made further commitments in favor of sustainable development and biodiversity by signing two new patronage agreements. The first was signed with the National Natural History Museum's Marinarium in Concarneau to reduce pollution, and marine pollution in particular, and the second agreement was signed in support of the "De la terre et des ailes" program run by the bird protection association Ligue de Protection pour les Oiseaux, in support of daily life, food choices, cultural techniques, and land occupation.

These patronage initiatives also fulfil the criteria set in the ESG impact loan agreement to obtain lower interest rates.

2.1.6. Summary of the main changes in business activity, results and the consolidated financial position in the first half of 2019

2.1.6.1. Solid organic growth - International scope effect

With consolidated growth up by +18.8% to €329.8 million, the first half of 2019 confirmed the momentum of Séché Environnement's organic growth on its main markets in France and internationally, strengthened by the contribution of acquisitions during the period.

At constant scope and exchange rates, contributed revenue was €286.6 million, an increase of +3.2%, in line with expectations.

In France, the Group benefited from a positive trend in its industrial markets and from the strength of its markets with local authorities, supported by the implementation of regulations relating to the circular economy. Across this scope, contributed revenue was €249.5 million, an increase of +1.3% over the same period the previous year, with the strong growth seen in recovery and treatment being countered by the shortfall in service operations (Decontamination).

Internationally, revenue was up significantly: +156% to €80.3 million, partly reflecting the contribution of the entities acquired over the period, representing +€43.2 million (see above). At constant scope and exchange rates, revenues outside France rose by +18.1%, illustrating the momentum of the international markets. Overall, the subsidiaries turned in a solid performance compared to the first half of 2018, with the exception of Kanay (Peru), which reported significant project delays, which should positively impact the second half of 2019.

2.6.1.2. Operating income

At June 30, 2019, EBITDA reached €63.6 million, or 19.3% of contributed revenue, an increase of +22.8% over the previous year.

(4)See Ibid.

12 SÉCHÉ ENVIRONNEMENT - INTERIM FINANCIAL REPORT AT JUNE 30, 2019

2019 Interim Report

At constant scope, EBITDA came to €57.0 million, up +10.0%, bringing gross operating profitability up to 19.9% of contributed revenue at constant scope (vs. 18.7% at June 30, 2018). This increase reflects the strong levels of activity in the core businesses in France (with positive price effects in particular) and internationally (new business), which were offset by 1/ a reduced contribution from the Services business lines, 2/ changes in the property ownership tax base, which led to the recognition of non-recurring income of +€1.4 million in the first half of 2018 following the government's decision not to raise this tax for 2017 and 2018, and led to an additional expense of -€1.5 million for the first half of 2019, and 3/ onetime expenses linked to the Group's international expansion, for -€1.2 million.

Current operating income stood at €22.1 million, an increase of +6.8% compared to June 30, 2018. At constant scope, current operating income came to €19.4 million, with current operating profitability at 6.8% of contributed revenue at constant scope at June 30, 2019 (vs. 7.4% a year earlier). The rise in EBITDA in France and internationally was offset by higher amortization expenses and provisions, in particular in France with the creation of new storage cells and the amortization of operating leases (application of IFRS 16).

Operating income totaled €21.6 million, or 6.6% of contributed revenue, marking a +15.5% increase compared to June 30, 2018 (€18.7 million, and 6.7%). Note that at June 30, 2018 operating income incurred -€1.7 million in performance plan-related expenses, among other items.

2.6.1.3. Change in Group net income

Taking into account financial income of -€8.4 million (vs. -€6.5 million at June 30, 2018, and recognizing the share of income of associates and minority interests, Group net income stood at €7.6 million at June 30, 2019, or 2.3% of contributed revenue.

Excluding the -€0.2 million impact of the first- time adoption of IFRS 16, Group net income came to €7.8 million (vs. €9.2 million at June 30, 2018).

In addition to the increase in tax expenses (€5.0 million vs. €3.1 million a year earlier), this decline was mainly due to operating income, which had benefited from +€1.4 million in non- recurring income in the first half of 2018 after the government decided not to raise the property ownership tax base for 2017 and 2018, but which incurred an additional expense of +€1.5 million at June 30, 2019 (see above).

2.6.1.4. Solid financial position showing preserved flexibility and a strong liquidity position

Industrial investments totaled €27.3 million at June 30, 2019 (vs. €24.3 million one year earlier). As well as the change in scope, this change reflects the increase in development investments over the period to €9.6 million (vs. €1.7 million at June 30, 2018). Recurring industrial investments were kept under control with regard to changes in scope, at 6.1% of contributed revenue (vs. 7.1% one year ago).

Free cash flow increased very sharply compared to June 30, 2018, to €35.0 million (vs. €11.6 million), reflecting the effects of the good operating performance, the favorable trend in WCR in connection with the improvement in the clients line item and the scope effect, and the containment of recurring industrial investments. The rate of conversion of EBITDA into cash flow, at around 55%, came out ahead of the target of 35% set for 2020.

Available cash amounted to €94.3 million at June 30, 2019 (vs. €46.1 million one year earlier) and contributed to the clear improvement in the Group's liquidity position compared to June 30, 2018, at €289.1 million (vs. €105.9 million at June 30, 2018).

CHAPTER 2 - Activity report 13

Net bank debt stood at €390.4m as of June 30, 2019 (vs. €318.9 million one year earlier). This increase reflects +€68.7 million in net financial investments made in the first half in connection with the acquisition policy, as well as non-cash scope effects, for +€25.8 million.

The financial leverage ratio (net financial debt/ EBITDA) was 3.2x, slightly higher than at June 30, 2018 (3.0x), in light of the substantial acquisitions made during the first half of 2019 and their partial contribution to EBITDA for the period.

Following the various refinancing operations carried out over the past 12 months, the Group's debt maturity increased from 3.8 years at June 30, 2018 to 6.0 years at June 30, 2019.

14 SÉCHÉ ENVIRONNEMENT - INTERIM FINANCIAL REPORT AT JUNE 30, 2019

2019 Interim Report

2.2

COMMENTS ON CONSOLIDATED ACTIVITY

AND RESULTS AT JUNE 30, 2019

2.2.1. Summary financial statement

Note: Unless expressly stated, the percentages shown in the tables and mentioned in the comments below are calculated using contributed revenue6.

In millions of euros

Consolidated

o/w France

o/w International

At June 30

2018

2019

2018

2019

2018

2019

Revenue (reported)

287.8

342.3

256.4

262.0

31.4

80.3

Contributed revenue

277.6

329.8

246.2

249.5

31.4

80.3

EBITDA

51.8

63.6

46.5

49.4

5.3

14.2

As a %

18.7%

19.3%

18.9%

19.8%

17.0%

17.7%

Current operating income

20.7

22.1

17.4

15.0

3.3

7.1

As a %

7.4%

6.7%

7.0%

6.0%

10.6%

8.8%

Operating income

18.7

21.6

As a %

6.7%

6.6%

Financial income

(6.5)

(8.4)

As a %

2.3%

2.6%

Income of consolidated companies

9.2

8.2

As a %

3.3%

2.5%

Share of income of associates

0.3

(0.1)

Minority interests

(0.3)

(0.5)

Group net income

9.2

7.6

As a %

3.3%

2.3%

Consolidated data

  1. Contributed revenue: consolidated revenue net of: 1/ IFRIC 12 revenue (investments made for assets under concession arrangements and booked as revenue pursuant to IFRIC 12) and 2/ damages and compensation paid to Sénerval, net of variable cost savings to cover costs incurred to maintain continuity of services to local authorities during asbestos removal at the Euro Métropole Strasbourg incinerator.

CHAPTER 2 - Activity report 15

2.2.2. Comments on first-half

2019 activity

2.2.2.1. Reported consolidated

revenue - Consolidated contributed revenue - Scope effect

At June 30, 2019, Séché Environnement reported consolidated revenue of €342.3 million. This includes diversion compensation and other compensation, amounting to €12.5 million (vs. €7.4 million one year earlier).

Contributed revenue totaled €329.8 million at June 30, 2019 (vs. €277.6 million a year earlier, reflecting a gross increase of +18.8% for the period.

Contributed revenue at June 30, 2019 included a €43.2 million scope effect resulting from the consolidation of subsidiaries acquired during the period: Kanay (Peru) and Interwaste (South Africa) as from January 1, 2019, as well as Mecomer (Italy) as from April 1, 2019.

At constant scope and exchange rates, the increase in contributed revenue at June 30, 2019 stood at +3.2% compared to contributed revenue at June 30, 2018, at €286.6 million.

At June 30

2018

2019

Gross change

Contributed revenue (historical scope)

277.6

286.6

3.2%

Revenue - new scope

-

43.2

-

Consolidated contributed revenue

277.6

329.8

18.8%

IFRIC 12 revenue

2.8

0.0

-

Diversion compensation

7.4

12.5

-

Total reported consolidated revenue

287.8

342.3

+18.9%

Reported consolidated data

At constant exchange rates, contributed revenue at June 30, 2018 would have been €277.7 million, illustrating a negligible foreign exchange effect of +€0.1 million.

2.2.2.2. Breakdown of revenue by geo- graphic region

At June 30

2018

2019

Gross change

Change (organic)

In €m

As a %

In €m

As a %

Subsidiaries in France (contributed revenue)

246.2

88.7%

249.5

75.7%

1.3%

1.3%

o/w scope effect

-

-

-

-

International subsidiaries

31.4

11.3%

80.3

24.3%

155.9%

18.1%

o/w scope effect

-

-

43.2

13.1%

Total contributed revenue

277.6

100.0%

329.8

100.0%

18.8%

3.2%

IFRIC 12 revenue

2.8

-

0.0

Diversion compensation

7.4

-

12.5

Total reported consolidated revenue

287.8

-

342.3

+18.9%

3.9%

Reported consolidated data

16 SÉCHÉ ENVIRONNEMENT - INTERIM FINANCIAL REPORT AT JUNE 30, 2019

2019 Interim Report

During the first half of 2019, activity was supported by the positive trend in most businesses in France and the strong internal and external growth internationally:

  • In France, contributed revenue totaled €249.5 million at June 30, 2019 vs. €246.2 million a year earlier, reflecting an increase of +1.3% for the period.

Within the recovery and treatment sectors, most businesses did well in terms of activity, driven by the solid showing of industrial markets and the stability of contracts with local authorities (see below, Breakdown of revenue by division and Breakdown of revenue by activity). Services, particularly decontamination, showed substantial postponements of project starts to the second half, which undermined consolidated performance.

Revenue earned in France accounted for 75.7% of contributed revenue (vs. 88.7% at June 30, 2018).

  • Internationally, revenue totaled €80.3 million at June 30, 2019 vs. €31.4 million one year earlier).

This increase included a scope effect of €43.2 million from the inclusion in the consolidation scope of subsidiaries acquired during the period:

■ ■ Mecomer: with €10.0 million in revenue in the second quarter of 2019, up +26.2% compared to the same period the previous year, the subsidiary confirmed its strong commercial momentum;

■ ■ As expected, Interwaste had a weaker first quarter (-12.2% to €32.3 million) compared to the equivalent period in 2018, which featured especially high business volumes. This base effect will be smoothed across the current financial year thanks to the brisk business anticipated in the second half;

■ ■ With €0.9 million in revenue, Kanay recorded a substantial delay in operations resulting from the "spot" nature of a portion of its operations (decontamination sites). This delay will be made up in the second half by the startup of large-volume decontamination contracts.

At constant scope and exchange rates, growth in revenue outside France stood at +18.1% compared to the previous year.

Across the historical scope, international subsidiaries recorded high business volumes, particularly SAN (hazardous waste storage in Chile) and SEM (treatment of PCBs in Mexico), which posted solid business momentum, while Solarca's activity for the period was compared to a strong 2018 baseline.

Revenue earned by international subsidiaries accounted for 24.3% of contributed revenue (vs. 11.3% at June 30, 2018).

2.2.2.3. Breakdown of revenue by division

At June 30

2018

2019

Gross change

Change (organic)

In €m

As a %

In €m

As a %

Subsidiaries in France (contributed revenue)

173.5

62.5%

213.8

64.8%

23.2%

4.4%

o/w scope effect

-

-

32.5

9.8%

International subsidiaries

104.1

37.5%

116.0

35.2%

11.4%

1.2%

o/w scope effect

--

-

10.7

3.2%

Total contributed revenue

277.6

100.0%

329.8

100.0%

18.8%

3.2%

IFRIC 12 revenue

2.8

-

0.0

Diversion compensation

7.4

-

12.5

Total reported consolidated revenue

287.8

-

342.3

+18.9%

3.9%

Reported consolidated data

CHAPTER 2 - Activity report 17

During the first half of 2019, the waste recovery and treatment business lines benefited from a continued strong macroeconomic environment in France and solid market gains internationally, particularly across the historical scope.

For instance, the Hazardous Waste (HW) division was supported by a solid showing from industrial markets, which drove treatment in France and internationally. The Non-Hazardous Waste (NHW) division continues to be supported in France by the implementation of regulations relating to the circular economy, and internationally by the contribution from the new scope.

The HW division (64.8% of consolidated contributed revenue) recorded revenue of €213.8 million at June 30, 2019, up +23.2% on the first half of 2018.

This sharp increase reflects a scope effect (€32.5 million) and strong industrial markets in France and internationally:

■ ■ In France, the division brought in €146.4 million in revenue, representing growth of +2.3% compared to the same period last year. Over the period, the division's growth was driven by industrial markets, which are still showing robust volumes and pricing, which benefited waste treatment activities, while there were some temporary project delays (decontamination) in services;

■ ■ Internationally, the division's revenue totaled €67.5 million at June 30, 2019 vs. €30.4 million one year earlier.

This revenue included a scope effect of €32.5 million.

At constant scope and exchange rates, international revenue came to €35.0 million, up +14.7% on the first half of 2018. This increase reflects a dynamic market penetration strategy that supports strong growth in treatment volumes, in particular in Latin America (Chile, Mexico, etc.), while Solarca's volumes (services) are weighed against the brisk business it did in the first half of 2018.

The NHW division represented 35.2% of consolidated contributed revenue and recorded contributed revenue of €116.0 million, up +11.4% compared to June 30, 2018 (€104.1 million).

The division's revenue growth included a €10.7 million contribution from subsidiaries acquired internationally during the period.

At constant scope and exchange rates, with contributed revenue of €105.3 million, the division's growth amounted to +1.2% compared to the first half of 2018.

■ ■ In France, the NHW division posted €103.1 million in revenue, stable compared to the first half of 2018. While the division benefited fully from the implementation of regulations related to the circular economy, which support its recovery and treatment operations, this stability was due to the delay in service operations, specifically decontamination;

■ ■ Internationally, revenue totaled €12.9 million (vs. €1.0 million at June 30, 2018). At constant scope and exchange rates, the division's growth (+19.7%) reflects, in particular, the major increase in the contribution from SAN in Chile and SEM in Mexico.

18 SÉCHÉ ENVIRONNEMENT - INTERIM FINANCIAL REPORT AT JUNE 30, 2019

2019 Interim Report

2.2.2.4. Breakdown of revenue by

activity

At June 30

2018

2019

Gross change

Change (organic)

In €m

As a %

Treatment

137.3

49.5%

o/w scope effect

-

-

Recovery

49.1

17.6%

o/w scope effect

-

-

Services

91.3

32.9%

o/w scope effect

-

-

Total contributed revenue

277.6

100.0%

IFRIC 12 revenue

2.8

-

Diversion compensation

7.4

-

Total reported consolidated revenue

287.8

-

In €m

As a %

158.0

47.9%

15.1%

4.1%

15.1 4.6%

60.6

18.3%

23.4%

14.4%

4.5

1.4%

111.2

33.7%

21.9%

-4.1%

23.6

7.2%

329.8

100.0%

18.8%

3.2%

0.0

12.5

342.3

+18.9%

3.9%

Reported consolidated data

During the first half of 2019, recovery and treatment operations were supported by the continued upbeat environment on industrial markets and by the implementation of regulations pertaining to the circular economy, while in services, decontamination recorded significant project delays:

■ ■ Treatment: revenue from treatment activities totaled €158.0 million at June 30, 2019 (vs. €137.3 million one year earlier).

This increase includes a scope effect of €15.1 million.

At constant scope and exchange rates, the increase in treatment volumes over the period amounted to +4.1%;

■ ■ In France, these volumes were up by +1.2% to €134.3 million. They benefited from favorable market conditions in terms of price and volume, consistent with the good health of the industrial markets;

■ ■ Internationally, revenue totaled €23.7 million (vs. €4.7 million one year earlier). This strong growth reflects the scope effect (€15.1 million) as well as the continued momentum in market gains, particularly in Latin America.

Treatment activities accounted for 47.9% of contributed revenue at June 30, 2019 (vs. 49.5% one year earlier).

■ ■ Recovery: with €60.6 million in revenue as at June 30, 2019, recovery activities were up 23.4% from the first half of 2018 (€49.1 million).

This sharp increase includes a scope effect of €4.5 million.

At constant scope and exchange rates, recovery activities were up +14.4% over the period, boosted by the sharp increase in energy recovery within the NHW division (incineration business lines).

Recovery activities accounted for 18.3% of contributed revenue at June 30, 2019 (vs. 17.6% one year ago).

■ ■ Services: revenue totaled €111.2 million at June 30, 2019 (vs. €91.3 million one year earlier).

This strong increase includes a scope effect of €23.6 million, tied to the consolidation of Interwaste's (South Africa) logistics operations.

CHAPTER 2 - Activity report 19

At constant scope and exchange rates, service revenue stood at €87.6 million (-4.1%), a trend which was attributable mainly to one-time lags in project startups (decontamination) in France and internationally.

Services activities accounted for 33.7% of contributed revenue at June 30, 2019 (vs. 32.9% one year ago).

2.2.3. Comments on the consolidated results at June 30, 2019

2.2.3.1. Preamble: Effects of the first- time adoption of IFRS 16(7)

The first-time adoption of IFRS 16 had the following effects on the opening balance sheet:

In millions of euros

12/31/2018

Impact of IFRS 16

01/01/2019 restated

Property, plant and equipment and other non-current assets

12.0

27.3

39.3

Lease liabilities

12.0

27.3

39.3

This had the following effects on the main income statement balances at June 30, 2019:

In millions of euros

06/30/2018

06/30/2019

Impact of

06/30/2019

before IFRS 16

IFRS 16

published

EBITDA

51.8

59.3

4.3

63.6

Current operating income

20.7

21.8

0.3

22.1

Operating income

18.7

21.4

0.0

21.4

Financial income

(6.5)

(7.9)

(0.5)

(8.4)

Net income

9.2

7.8

(0.2)

7.6

2.2.3.2. EBITDA

At June 30, 2019, consolidated Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) was up +22.8% from the first half of 2018, at €63.6 million, representing 19.3% of contributed revenue.

This increase in EBITDA at June 30, 2019 reflects:

■ ■ A scope effect of +€6.6 million related to the consolidation of subsidiaries acquired during the period;

■ ■ In the historical scope:

■ ■ The impact of the first-time adoption of IFRS 16 in the amount of +€4.3 million;

■ ■ Positive trading effects (volume and price effects), net of the change in variable

expenses, at +€8.4 million. The operating margin benefited from healthy business volumes, especially from treatment facilities, but it was compromised by the lesser contribution from service operations in France and internationally alike;

■ ■ The impact of the change to the property ownership tax base, for -€3.9 million: in 2018, the government decided not to raise this tax for the 2017 and 2018 financial years, which resulted in non-recurring income of +€1.4 million in the first half of 2018, compared to an additional expense of -€1.5 million in the first half of 2019;

■ ■ The change in fixed expenses (+€4.4 million), which supported the onetime impact of expenses in connection with acquisitions made in the first half, including -€1.2 million in non-recurring expenses.

(7) The effects of the first-time adoption of IFRS 16 are described in Note 6.2.2. to the consolidated financial statements.

20 SÉCHÉ ENVIRONNEMENT - INTERIM FINANCIAL REPORT AT JUNE 30, 2019

2019 Interim Report

Breakdown of EBITDA by geographic scope

In millions of euros

June 30, 2018

June 30, 2019

Consolidated

France

International

Consolidated

France

International

Contributed revenue

277.6

246.2

31.4

329.8

249.5

80.3

EBITDA

51.8

46.5

5.3

63.6

49.4

14.2

% of contributed revenue

18.7%

18.9%

17.0%

19.3%

19.8%

17.7%

Reported consolidated data

For each geographic scope, the main changes were:

■ ■ In France, EBITDA totaled €49.4 million, or 19.8% of contributed revenue (vs. €46.5 million, or 18.9% of contributed revenue, a year earlier).

This change is mainly attributable to:

  • The impact of the first-time adoption of IFRS 16 in the amount of +€3.3 million;
  • Positive trading effects (see above);
  • The application of the new property ownership tax base, representing an additional expense of +€1.5 million in the first half of 2019 compared with non-recurring income of +€1.4 million in the first half of 2018;
  • The increase in holding company expenses, some of which were one-time charges, for -€1.2 million, in connection with the Group's international expansion.

■ ■ Internationally, EBITDA totaled €14.2 million, or 17.7% of contributed revenue (vs. €5.3 million at June 30, 2018, i.e. 17.0% of contributed revenue).

This change is attributable to:

  • A scope effect of +€6.6 million, reflecting consolidation of the subsidiaries acquired in the first half, with gross profitability representing 15.6% of revenue for this scope at June 30, 2019. Mecomer's strong contribution was partially offset by the weaker performance by Kanay and, to a lesser extent, Interwaste, both of which were hampered by activity postponed to the second half;
  • In the historical scope:
    • The impact of the first-time application of IFRS 16 in the amount of +€1.0 million;
    • The distinct improvement in the contribution by SAN (Chile) and SEM (Mexico).

2.2.3.3. Current operating income

At June 30, 2019, current operating income stood at €22.1 million, or 6.7% of contributed revenue.

This increase reflects:

■ ■ A scope effect of +€2.7 million reflecting the contributions of Kanay, Interwaste and Mecomer;

■ ■ In the historical scope:

  • The impact of the first-time application of IFRS 16 in the amount of +€0.3 million;
  • The rise in net depreciation, amortization and provisions in the amount of +€2.6 million, in connection with the creation of new storage cells in France and operating lease amortization for +€4.0 million (application of IFRS 16).

CHAPTER 2 - Activity report 21

Breakdown of current operating income by geographic scope

In millions of euros

June 30, 2018

June 30, 2019

Consolidated

France

International

Consolidated

France

International

Contributed revenue

277.6

246.2

31.4

329.8

249.5

80.3

Current operating income

20.7

17.3

3.3

22.1

15.0

7.1

% of contributed revenue

7.4%

7.0%

10.6%

6.7%

6.0%

8.8%

Reported consolidated data

For each geographic scope, the main changes

2.2.3.4. Operating income

were:

■ ■ In France, current operating income totaled €15.0 million, or 6.0% of contributed revenue (vs. €17.3 million, or 7.0% of contributed revenue, a year earlier).

This amount includes the impact of the first- time adoption of IFRS 16 in the amount of +€0.2 million.

Excluding that impact, the change in current operating income reflects the increase in EBITDA in France (+€2.7 million) offset by the increase in depreciation, amortization and provisions across this scope in connection with the creation of new storage cells in the first half (+€1.9 million) and the amortization of operating leases under IFRS 16.

At June 30, 2019, operating income came to €21.6 million, 6.6% of contributed revenue (vs. €18.7 million, or 6.7% of contributed revenue, a year earlier).

This change mainly reflects:

■ ■ The increase in current operating income (+€1.4 million);

■ ■ Asset impairment on property, plant and equipment equal to -€0.7 million;

■ ■ The effects of business combinations in the amount of -€0.7 million;

■ ■ The lack of significant expenses related to the performance plan, which had been assessed at -€1.7 million at June 30, 2018.

■ ■ Internationally, current operating income totaled €7.1 million, or 8.8% of revenue (vs. €3.3 million at June 30, 2018, i.e. 10.6% of contributed revenue).

This sharp increase (+€3.8 million) mainly reflects the following:

  • The scope effect (+€2.7 million), i.e. a current operating performance of 6.4% of revenue, which reflects the differentiated contribution of the newly acquired subsidiaries over the period;
  • In the historical scope:
    • The impact of the first-time application of IFRS 16 in the amount of +€0.1 million;
    • The distinct improvement in the contribution by most subsidiaries, in particular SAN (Chile) and SEM (Mexico).

2.2.3.5. Financial income

At June 30, 2019, financial income came to -€8.4 million compared to -€6.5 million one year earlier.

The change in financial income reflects, in part, the impact of the first-time adoption of IFRS 16 in the amount of -€0.5 million and, for the balance, the increase in average net financial debt for the period, along with the 0.21% increase in the average cost of gross debt compared to June 30, 2018, to 3.07%.

Note that the rise in the cost of debt comes with a significant extension of its maturity, stemming from the refinancing conducted over the past 12 months, from 3.8 years one year ago to 6.0 years at June 30, 2019.

22 SÉCHÉ ENVIRONNEMENT - INTERIM FINANCIAL REPORT AT JUNE 30, 2019

2019 Interim Report

2.2.3.6. Income tax

At June 30, 2019, the income tax expense was €5.0 million (vs. €3.1 million one year earlier). The change in the tax expense partly reflects the consolidationoftherecentlyacquiredsubsidiaries that are not part of the tax consolidation scope.

2.2.3.7. Share of income of associates

The share of net income of associates was primarily composed of the Group's share in the income of GEREP and SOGAD.

At June 30, 2019, this totaled -€0.1 million (vs. +€0.3 million a year earlier). Note that at June 30, 2018, this balance included a contribution of +€0.5 million from Kanay, which has been fully consolidated since January 1, 2019.

2.2.3.8. Consolidated net income

At June 30, 2019, consolidated net income was €8.1 million (vs. €9.2 million at June 30, 2018).

After recognizing minority interests in net income, in the amount of -€0.5 million vs. +€0.3 million in 2017, Group net income stood at €7.6 million (vs. €9.2 million in the first half of 2018).

Excluding the negative impact of the first-time adoption of IFRS 16 in the amount of -€0.2 million, Group net income amounted to €7.8 million.

CHAPTER 2 - Activity report 23

2.3

COMMENTS ON THE CONSOLIDATED

FINANCIAL POSITION

2.3.1. Simplified consolidated balance sheet

In millions of euros

12/31/2018

06/30/2019

Non-current assets

648.3

752.0

Current assets (excluding cash and cash equivalents)

202.4

234.4

Cash and cash equivalents

67.4

94.3

Assets intended for sale

-

-

Total assets

918.1

1,080.7

Shareholders' equity (including minority interests)

254.8

254.4

Non-current liabilities

402.1

514.5

Current liabilities

261.2

311.8

Liabilities held for sale

-

-

Total liabilities

918.1

1,080.7

Reported consolidated data

2.3.2. Non-current assets

Non-current assets are primarily fixed assets (property, plant and equipment and intangible assets - including goodwill - and long-term investments) and deferred tax assets.

Total non-current assets increased by +€103.7 million, mainly due to:

■ ■ Property, plant and equipment and intangible assets: +€103.8 million, primarily reflecting:

  • The impact of the first-time adoption of IFRS 16 for +€27.3 million;
  • Net investments during the period totaling +€100.6 million, including €31.9 million in net industrial investments and €68.8 million in net financial investments;
  • Net depreciation, amortization and provisions for -€26.8 million

■ ■ Non-recurring tax receivables: -€1.3 million due to the use of deferred tax assets;

■ ■ Non-current financial assets and investments in associates: -€3.0 million.

2.3.3. Current assets (excl. cash and cash equivalents)

Current assets excluding cash amounted to €234.4 million, up by €32.0 million on December 31, 2018. This increase incorporates a sale of receivables for €21.7 million.

24 SÉCHÉ ENVIRONNEMENT - INTERIM FINANCIAL REPORT AT JUNE 30, 2019

2019 Interim Report

2.3.4. Shareholders' equity

The change in shareholders' equity (Group share) over the period breaks down as follows:

In millions of euros

Group

Minority interests

Shareholders' equity at January 1, 2019

251.3

3.5

Dividends paid

(7.5)

(0.6)

Net income (Group share)

7.6

0.5

Translation difference

0.9

Hedging instruments

(1.1)

Actuarial gain (loss)

(0.1)

Fair value of assets available for sale

Treasury stock

(0.2)

Disposal of securities without loss of control

(1.2)

Change in consolidation scope

1.4

Other changes

Shareholders' equity at June 30, 2019

249.6

4.8

Reported consolidated data

2.3.5. Current and non-current liabilities

Current liabilities cover all liabilities with a maturity of less than one year. Non-current liabilities therefore represent all liabilities with a maturity of more than one year. Current and non-current liabilities break down as follows:

12/31/2018

06/30/2019

In millions of euros

Non-current

Current

TOTAL

Non-current

Current

TOTAL

Hedging instruments

0.6

-

0.6

0.3

0.1

0.4

Provisions

20.5

2.0

22.5

22.7

4.8

27.6

Other liabilities

0.4

221.2

221.6

5.8

247.7

253.5

Income tax payable

-

1.6

1.6

-

4.5

4.5

TOTAL (excl. financial debt)

21.5

197.5

246.3

28.9

257.1

286.0

Financial debt

380.6

36.4

417.0

485.6

54.7

540.2

TOTAL

402.1

261.2

663.3

514.4

311.8

826.2

CHAPTER 2 - Activity report 25

Current and non-current liabilities excluding financial debt amounted to €286.0 million, up +€39.6 million, reflecting mainly:

■ ■ A change in provisions, for +€3.6 million;

■ ■ Other liabilities, for +€41.6 million, mostly reflecting "Trade payables".

Consolidated net financial debt evolved as follows over the period:

In millions of euros, at June 30

2018

2019

Bank debt (excl. non-recourse bank loans)

307.0

206.6

Non-bank debt

30.1

28.3

Bonds

49.5

255.0

Lease finance liabilities

8.5

9.5

Miscellaneous financial debt

1.5

3.6

Short-term bank borrowings

1.5

8.4

Equity investments

-

-

Total financial debt (current and non-current)

398.2

511.4

Cash balance

(47.6)

(94.3)

Net financial debt

350.6

417.1

o/w due in less than one year

28.1

54.7

o/w due in more than one year

322.5

391.3

Net financial debt (bank definition)

318.9

390.4

Reported consolidated data

26 SÉCHÉ ENVIRONNEMENT - INTERIM FINANCIAL REPORT AT JUNE 30, 2019

2019 Interim Report

2.4

COMMENTS ON CONSOLIDATED CASH FLOWS

2.4.1 Consolidated cash flow statement

In millions of euros

12/31/2018

06/30/2018

06/30/2019

Cash flows from operating activities

86.2

39.5

64.8

Cash flows from investment activities

(52.0)

(24.6)

(100.6)

Cash flows from financing activities

(19.4)

(20.9)

55.7

Change in cash flow from ongoing operations

14.8

(6.0)

20.0

Change in cash flow for discontinued operations

-

-

-

Change in cash and cash equivalents

14.8

(6.0)

20.0

Reported consolidated data

2.4.2. Cash flows from operating activities

Over the period, the Group generated €64.8 million in cash flows from operating activities (vs. €39.5 million in the first half of 2018).

This change primarily reflects the combined effect of:

■ ■ The change in cash flow from operating activities (+€12.3 million) due to the change in

EBITDA;

■ ■ The +€8.2 million change in the WCR over the half-year, reflecting the improvement in the clients line item and the scope effect;

■ ■ -€0.8 million in taxes paid compared to -€1.7  million one year ago (a cash flow gain of +€0.9 million).

CHAPTER 2 - Activity report 27

2.4.3. Cash from investments

Investment expenses (net of sales proceeds collected) amounted to €100.6 million for the period and included the financial disbursements for external growth and industrial investments:

In millions of euros

12/31/2018

06/30/2018

06/30/2019

Industrial investments

65.2

24.3

27.3

Financial investments

1.0

0.4

92.8

INVESTMENTS RECORDED

66.1

24.7

120.1

Industrial investments

53.1

24.2

31.9

Financial investments

Subsidiary acquisition - Net cash flow (**)

(1.1)

0.4

ns

Subsidiary acquisition - Net cash flow

-

-

68.8

INVESTMENTS PAID OUT

52.0

24.6

100.6

Reported consolidated data

2.4.5. Net cash from financing activities

The Group's financing requirement derives from its debt (new borrowings, loan repayments, interest paid) and the remuneration of its shareholders via dividends. Over the period, the Group took out €65.7 million in new borrowings (net of repayments), essentially to refinance acquisitions made in the first half of 2019 (see above, "Highlights of the period").

28 SÉCHÉ ENVIRONNEMENT - INTERIM FINANCIAL REPORT AT JUNE 30, 2019

2019 Interim Report

2.5

MAIN TRANSACTIONS WITH RELATED PARTIES

Séché Environnement Group's main transactions with related parties are presented in Note 2.4 to the interim financial statements.

CHAPTER 2 - Activity report 29

2.6

OUTLOOK

2.6.1 Risks and uncertainties

Séché Environnement Group's assessment of the main risks and uncertainties to which its businesses are exposed has not changed from that detailed on pages 25-38 of the 2018 Registration Document filed with the French Financial Markets Authority on March 22, 2019.

2.6.2. Outlook for the second half of 2019

Séché Environnement is positioned in France and internationally on the bullish circular economy and sustainable development markets, where increasing regulatory requirements and the growing needs of industrial and government clients are development opportunities for the Group, which specializes in material and energy recovery from waste and hazard containment.

In these markets, which are positively oriented over the medium term, the 2019 financial year will nonetheless be compared to an especially strong 2018 financial year, specifically in France, and is part of a more uncertain macroeconomic environment in France and internationally.

However, the Group remains confident about the solidity of its markets, especially industrial markets, and, in the coming months, the continuation of positive trends from the first half of 2019, in France and internationally.

In France, Séché Environnement should continue to benefit from solid and buoyant industrial markets in the second half of the year, with business volumes in line with the first half.

In hazardous waste management, the renovation work on the Salaise 2 incinerator, which started in August 2019 for a three-month period, will reduce its contribution to the Group's results in

2019. Fully operational in 2020, this treatment and energy recovery facility will be more available and its energy production capacity will be tripled to enable deployment of the Osiris project, an industrial ecology project aimed at recovering energy from waste generated by businesses in the Osiris Roussillon GIE, the largest chemicals platform in France, in a circular economy approach.

In non-hazardous waste, the second half will be marked by the gradual ramp-up of the Sénerval incinerator following its restart after a four-year shutdown for asbestos abatement and its return to normal operating conditions and profitability.

Internationally, the second half is expected to feature higher volumes within some subsidiaries that were hampered early in the year by operating delays, specifically:

■ ■ Kanay (Peru): the startup of significant decontamination sites and renewed sales initiatives after the management transition mean that economic and financial performance for the 2019 financial year should be comparable to that of 2018;

■ ■ Interwaste (South Africa): the 2019 financial year is a year of consolidation and strategic positioning. In the second half, Interwaste should benefit from the implementation of new waste management contracts with large industrial clients. For Interwaste, these positive factors confirm the outlook for a 2019 financial year that is comparable to the previous financial year, in terms of both operations and income. Because of the startup, in the second half of 2019, of the Eden Project, a public- private partnership for creating waste recovery and treatment infrastructure in the Mossel Bay region, as well as the strategic repositioning of this subsidiary, we anticipate that growth will resume in 2020;

30 SÉCHÉ ENVIRONNEMENT - INTERIM FINANCIAL REPORT AT JUNE 30, 2019

2019 Interim Report

■ ■ Mecomer (Italy): the second half of 2019 will be marked by continued sales momentum on still- promising industrial markets.

2.6.3. Business targets confirmed

With these excellent prospects, Séché Environnement can confirm its targets for 20198:

■ ■ Revenue at constant scope:

  • France: quality growth following a particularly strong performance in 2018;
  • International: steady organic growth, even though operations in certain subsidiaries (Solarca) have a high basis for comparison in

2018;

■ ■ Financial leverage ratio (Net financial debt/ EBITDA) of about 3x in mid-cycle;

■ ■ Capacity to achieve, or even exceed in 2019, the main financial targets set for 2020 at the Investor Day held on June 26, 20189.

Séché Environnement is confident in its ability to improve all of its results in 2019 compared to 2018.

At its Investor Day on December 17, 2019, Séché Environnement will present its new strategic outlook through to 2022 in terms of business, earning power.

(8)See the press release of March 12, 2019.

(9)See the press release of June 26, 2018.

CHAPTER 2 - Activity report 31

2.7

OWNERSHIP STRUCTURE

At June 30, 2019

Shares

As a %

Voting rights

As a %

Joël Séché

1

0.00%

2

0.00%

Séché Group SAS (1)

4,639,483

59.04%

6,748,216

66.51%

Sub-total, Séché family

4,639,484

59.04%

6,748,218

66.51%

ICM

787,593

10.02%

787,593

7.76%

Treasury stock (2)

57,784

0.74%

57,784

0.57%

Employee share ownership

34,819

0.44%

67,638

0.67%

Free float

2,338,052

29.75%

2,484,902

24.49%

Total

7,857,732

100.00%

10,146,135

100.00%

  1. Mr. Guillaume Séché and Mr. Maxime Séché control the majority stake in Séché Group SAS.
  2. Treasury stock is stripped of voting rights. However, the table here presents the calculation of voting rights as recommended by the AMF for shareholding notification requirements.

In a letter to the AMF dated May 6, 2019, ICM reported a previous increase in its holding:

  • Above the notification threshold of 5% of voting rights in Séché Environnement, on May 6, 2015. As of this date, it held 528,093 shares representing the same number of voting rights, equal to 6.12% of the share capital and 5.02% of the voting rights in the Company;
  • Above the notification threshold of 10% of the share capital in Séché Environnement, on March 31, 2019. As of this date, it held 787,593 Séché Environnement shares representing the same number of voting rights, equal to 10.02% of the share capital and 7.90% of the voting rights in the Company.

On June 28, 2019, Caisse des Dépôts sold to Séché Group SAS its entire holding in Séché Environnement, equal to 710,617 shares representing 9.04% of the share capital and 7.00% of voting rights at this date and taking Séché Group SAS' holding in Séché Environnement from 50.00% to 59.04% of the share capital and from 57.80% to 66.51% of voting rights at this date.

32 SÉCHÉ ENVIRONNEMENT - INTERIM FINANCIAL REPORT AT JUNE 30, 2019

2019 Interim Report

3

Consolidated financial

statements at June 30, 2019

  1. Consolidated balance sheet
  2. Consolidated income statement
  3. Consolidated statement of other comprehensive income
  4. Statement of changes in consolidated equity
  5. Consolidated statement of cash flows
  6. Notes to the consolidated financial statements at June 30, 2019

33

3.1

CONSOLIDATED BALANCE SHEET

(In thousands of euros)

06/30/2018

12/31/2018

06/30/2019

Notes

Goodwill

265,485

265,220

300,608

1

Intangible fixed assets under concession arrangements

50,525

53,588

51,719

1

Other intangible fixed assets

16,413

16,879

25,973

1

Property, plant and equipment

228,805

235,907

297,138

1

Investments in associates

3,238

3,276

387

2

Non-current financial assets

9,292

8,886

8,799

3

Non-current derivatives - assets

0

210

0

3

Non-current financial operating assets

41,362

40,551

45,073

3

Deferred tax assets

27,820

23,729

22,275

NON-CURRENT ASSETS

642,941

648,245

751,971

Inventories

12,556

12,920

14,316

3

Trade and other receivables

153,429

157,184

187,541

3

Current financial assets

2,148

3,597

2,113

3

Current derivatives - assets

0

32

0

3

Current financial operating assets

28,962

28,680

30,377

3

Cash and cash equivalents

47,594

67,425

94,326

3.1.4

CURRENT ASSETS

244,689

269,839

328,673

Assets held for sale

-

-

-

TOTAL ASSETS

887,630

918,083

1,080,643

Share capital

1,572

1,572

1,572

6.1

Additional paid-in capital

74,061

74,061

74,061

6.2

Reserves

160,531

160,042

166,376

6.3

Net income

9,249

15,580

7,574

Shareholders' equity (Group share)

245,413

251,255

249,583

Minority interests

3,199

3,515

4,831

TOTAL SHAREHOLDERS' EQUITY

248,612

254,769

254,414

Non-current financial debt

322,510

380,599

485,560

3.2.1

Non-current derivatives - assets

466

630

331

3.2.2

Employee benefits

6,210

6,217

7,760

4

Non-current provisions

14,040

14,203

14,982

4

Non-current financial liabilities

566

430

2,139

3

Deferred tax liabilities

50

60

3,660

NON-CURRENT LIABILITIES

343,843

402,138

514,431

Current financial debt

75,671

36,377

54,673

3.2.1

Current derivatives - liabilities

53

74

100

3.2.2

Current provisions

3,685

1,973

4,815

4

Tax liabilities

1,349

1,562

4,549

Current financial operating liabilities

214,418

221,189

247,662

3

CURRENT LIABILITIES

295,176

261,176

311,798

Liabilities held for sale

-

-

-

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

887,630

918,083

1,080,643

34 SÉCHÉ ENVIRONNEMENT - INTERIM FINANCIAL REPORT AT JUNE 30, 2019

2019 Interim Report

3.2

CONSOLIDATED INCOME STATEMENT

In thousands of euros

Notes

06/30/2018

06/30/2019

Notes

Revenue

7

287,726

342,286

1

Other operating income

2,706

3,429

1

Transfers of expenses

510

298

1

Purchases used for operational purposes

(35,813)

(44,249)

1

External expenses

(113,176)

(130,262)

2

Taxes other than on income

(23,378)

(24,249)

3

Employee expenses

(66,828)

(83,659)

3

EBITDA

8

51,801

63,595

3

Expenses for rehabilitation and/or maintenance of sites

(5,513)

(5,804)

under concession arrangements

Operating income

888

226

Operating expenses

(343)

(2,051)

3

Net allocations to provisions and impairment

(1,982)

116

3

Depreciation

(24,182)

(33,977)

3

CURRENT OPERATING INCOME

8

20,669

22,105

3

Income on sales of fixed assets

59

(681)

3

Impairment of assets

(6)

(38)

3.1.4

Impact of changes in consolidation scope

(328)

(663)

Other operating income and expenses

(1,656)

915

OPERATING INCOME

9

18,738

21,639

Income from cash and cash equivalents

32

349

6.1

Cost of gross financial debt

(5,866)

(8,150)

6.2

COST OF NET FINANCIAL DEBT

(5,835)

(7,801)

6.3

Other financial income

871

1,680

Other financial expenses

(1,487)

(2,310)

FINANCIAL INCOME

10

(6,450)

(8,432)

Income tax

11

(3,094)

(4,994)

NET INCOME OF CONSOLIDATED COMPANIES

9,194

8,214

3.2.1

Share of income of associates

322

(118)

3.2.2

NET INCOME FROM CONTINUING OPERATIONS

9,516

8,095

4

Income from discontinued operations

-

-

4

NET INCOME

9,516

8,095

3

o/w minority interests

266

521

o/w Group share

9,249

7,574

3.2.1

Group share

3.2.2

Non-diluted earnings per share

€1.19

€0.96

4

Diluted earnings per share

€1.19

€0.96

CHAPTER 3 - Consolidated financial statements at June 30, 2019 35

3.3

CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME

In thousands of euros

06/30/2018

12/31/2018

06/30/2019

Other comprehensive income not reclassified to profit

or loss in a subsequent period:

Actuarial gains/losses on employee benefit liabilities

(266)

102

(200)

Income tax effects

78

(50)

56

Change in fair value of equity instruments

(234)

-

-

Amount before income tax (A)

(422)

52

(144)

o/w share of income of associates

-

(30)

-

Other comprehensive income reclassified to profit or loss in a subsequent period:

Change in net investments (1)

(159)

(409)

(1,105)

Change in fair value of derivatives

(221)

(212)

(30)

Tax effect on the items listed above

76

73

30

Foreign exchange rate adjustments

(156)

(666)

911

Amount before income tax (B)

(460)

(1,214)

(194)

o/w share of income of associates

-

-

-

TOTAL OTHER COMPREHENSIVE INCOME

(883)

(1,162)

(338)

Net income

9,516

16,230

8,095

TOTAL COMPREHENSIVE INCOME

8,633

15,068

7,757

o/w Group share

8,340

14,384

7,217

o/w minority interests

292

684

540

  1. o/w -€0.9 million linked to the net investment for the acquisition of Interwaste group at June 30, 2019.

36 SÉCHÉ ENVIRONNEMENT - INTERIM FINANCIAL REPORT AT JUNE 30, 2019

2019 Interim Report

3.4

STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

In thousands of euros

Share

Additional

Treasury

Consolidated

Foreign

Fair value

Group share

Share of

TOTAL

capital

paid-in

stock

reserves

exchange

reserves

non-

shareholders'

capital

rate

controlling

equity

adjustments

interests

Shareholders' equity at 12/31/2017

1,572

74,061

(3,355)

183,607

(6,093)

(5,422)

244,370

2,832

247,203

Other comprehensive income

-

-

-

(422)

(183)

(304)

(909)

26

(883)

Net income

9,249

9,249

266

9,516

Total comprehensive income

8,827

(183)

(304)

8,340

292

8,633

Dividends paid

(7,465)

(7,465)

(22)

(7,486)

Treasury stock

12

12

12

Other changes

156

156

95

251

Shareholders' equity at 06/30/2018

1,572

74,061

(3,343)

185,126

(6,276)

(5,726)

245,414

3,199

248,613

Shareholders' equity at 12/31/2018

1,572

74,061

(3,260)

185,861

(6,516)

(462)

251,255

3,515

254,770

Other comprehensive income

(144)

892

(1,105)

(357)

19

(338)

Net income

7,574

7,574

521

8,095

Total comprehensive income

7,430

892

(1,105)

7,217

540

7,757

Dividends paid

(7,465)

(7,465)

(605)

Treasury stock

(216)

(216)

(216)

Business combinations (1)

-

1,381

1,381

Transactions between shareholders (2)

(1,202)

(1,202)

(1,202)

Other changes

(6)

(6)

(6)

Shareholders' equity at 06/30/2019

1,572

74,061

(3,476)

184,618

(5,624)

(1,567)

249,583

4,831

254,414

  1. Concerns the Group's acquisition of a majority stake in the South African group Interwaste and the Italian subsidiaries Mecomer and Depo.
  2. Concerns the buyout of 7% of non-controlling interests without obtaining control in the subsidiary Taris in Peru.

CHAPTER 3 - Consolidated financial statements at June 30, 2019 37

3.5

CONSOLIDATED STATEMENT OF CASH FLOWS

In thousands of euros

06/30/2018

06/30/2019

Notes

NET INCOME

9,516

8,095

Share of income of associates

(322)

118

Dividends from joint ventures and associates

71

-

Amortization, depreciation and provisions

26,611

35,304

Income from disposals

(31)

709

Deferred taxes

953

1,702

Other income and expenses

716

1,068

CASH FLOW

37,514

46,995

Income tax

2,141

3,292

Cost of gross financial debt before long-term investments

5,486

7,195

CASH FLOW before tax and financial expenses

45,141

57,482

Change in working capital requirement

(3,969)

8,152

Tax paid

(1,662)

(792)

NET CASH FLOW FROM OPERATING ACTIVITIES

39,509

64,842

Investments in property, plant and equipment and intangible assets

(24,486)

(32,988)

Disposals of property, plant and equipment and intangible assets

276

1,147

Increase in loans and financial receivables

(607)

(337)

Decrease in loans and financial receivables

56

357

Takeover of subsidiaries net of cash and cash equivalents

(2)

(68,797)

6.3.1

Loss of control over subsidiaries net of cash and cash equivalents

144

-

CASH FLOWS FROM INVESTMENT OPERATIONS

(24,618)

(100,618)

Dividends paid to equity holders of the parent

-

-

Dividends paid to holders of non-controlling interests

(22)

(590)

Capital increase or decrease from controlling company

-

-

Cash and cash equivalents without loss of control

(14)

-

Cash and cash equivalents without gain of control

(1,580)

Change in shareholders' equity

14

(228)

New loans and financial debt

5,387

85,541

6.3.3

Repayment of loans and financial debt

(20,762)

(19,832)

Interest paid

(5,479)

(7,570)

NET CASH FLOW FROM FINANCING ACTIVITIES

(20,876)

55,741

TOTAL CASH FLOW FOR THE PERIOD, CONTINUING OPERATIONS

(5,985)

19,964

Net cash flow from discontinued operations

-

-

CASH FLOW FOR THE PERIOD

(5,985)

19,964

Cash and cash equivalents at beginning of year

52,278

66,806

- o/w in continuing operations

52,278

66,806

- o/w in discontinued operations

-

-

Cash and cash equivalents at end of year

46,131

85,895

- o/w in continuing operations(1)

46,131

85,895

- o/w in discontinued operations

-

-

Effect of changes in foreign exchange rates

(162)

(876)

- o/w in continuing operations

(162)

(876)

- o/w in discontinued operations

-

-

(1) Of which:

Cash and cash equivalents

47,594

94,326

Short-term bank borrowings (current financial debt)

(1,463)

(8

431)

38 SÉCHÉ ENVIRONNEMENT - INTERIM FINANCIAL REPORT AT JUNE 30, 2019

2019 Interim Report

3.6

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

AT JUNE 30, 2019

3.6.1.Basis for preparing the financial statements

The summary interim financial statements of Séché Environnement Group covering the interim period to June 30, 2019 were prepared in accordance with IAS 34 on Interim Financial Reporting. They do not contain all the information required by IFRS for the preparation of annual financial statements, but a selection of the most significant notes. These interim financial statements should be read in conjunction with Séché Environnement's annual financial statements for the year ended December 31, 2018, published on March 22, 2019, which were prepared in accordance with IFRS as adopted by the European Union and are available at http:// www.groupe-seche.com.

To prepare its interim financial statements at June 30, 2019, Séché Environnement Group applied the same standards as for the preparation of its consolidated annual financial statements at

December 31, 2018, with the exception of IFRS 16 "Leases", which applied for the first time for the six month period ended on June 30, 2019 and the impact of which is described in Note 6.2.2, and IFRIC 23, which had no impact on the financial statements at June 30, 2019.

The financial statements were approved by the Board of Directors on September 5, 2019.

Figures are expressed in thousands of euros with no decimal point. Figures rounded up to the nearest million may, in some cases, lead to insignificant disparities with respect to the totals and sub-totals presented in the tables.

Standards applicable from January 1, 2019

Subject to any regulatory changes, the following standards applied as of January 1, 2019:

Standards

Applicable from

Subject

IFRS 16

January 1, 2019

Leases

Amendment to IFRS 9

January 1, 2019

Prepayment Features With Negative Compensation

Amendments to IAS 28

January 1, 2019

Long-term Interests in Associates and Joint Ventures

Amendment to IAS 19

January 1, 2019

Plan Amendment, Curtailment or Settlement

Annual Improvements to IFRSs 2015-2017 Cycle

January 1, 2019

Annual improvements to standards, 2015-2017 cycle

IFRIC 23

January 1, 2019

Uncertainty Over Income Tax Treatments

The impact of the first-time adoption of IFRS 16 is described in Note 6.2.2.

CHAPTER 3 - Consolidated financial statements at June 30, 2019 39

Standards adopted by the IASB but not yet applicable as at January 1, 2019

Standards

Applicable from

Subject

IFRS 14

January 1, 2016

Regulatory Deferral Accounts

IFRS 17

January 1, 2021

Insurance Contracts

Amendments to IFRS 10 and IAS 28

Postponed indefinitely

Sale or Contribution of Assets between an Investor and its Associate or

Joint Venture

Amendments to References to the Conceptual

January 1, 2020

Amendments to References to the Conceptual Framework in IFRS Stan-

Framework in IFRS Standards

dards

Amendments to IFRS 3

January 1, 2020

Definition of

a

Business

Amendments to IAS 1 and IAS 8

January 1, 2020

Definition

of

Material

An assessment of the impact of applying these standards and amendments is under review.

3.6.2. Other accounting

principles

3.6.2.1. Measurement method

The summary consolidated financial statements at June 30, 2019 are presented using the historical cost method, with the exception of the following assets and liabilities which are reported at fair value: derivatives, financial assets and liabilities measured at fair value through profit or loss and those measured at fair value through other comprehensive income and not subsequently reclassified to profit or loss.

3.6.2.2. Comparability

■ ■ Change of consolidation method, measurement method and presentation

The Group has applied IFRS 16 on Leases since January 1, 2019.

IFRS 16 provides a single lessee accounting model, requiring lessees to recognize an asset representing their right to use the leased asset for the duration of the lease term and an associated liability for lease payments. In the income statement, the lease expense is replaced by the amortization of the asset and by interest on the lease liability.

The Group has a dedicated IT solution to collect contractual data and perform the calculations required by the standard.

It followed the "modified retrospective" approach to apply the new standard, under which it recognizes a lease liability on the date of initial application measured at the present value of remaining lease payments, and a right-of-use asset adjusted by the amount of any prepaid or accrued lease payments; all the impacts of the transition are recognized in equity.

In accordance with the provisions of the standard, on the transition date and after its application, the Group has excluded short-term leases and contracts involving assets of low value for the purposes of simplification.

During analysis, the following assumptions were also used:

The lease term used for each contract is determined on the basis of the non-cancellable period established contractually and any option to extend or cancel the lease if the Group is reasonably certain to exercise that option. For leases for which there is no contractual duration, the term used is that of the probable duration of use. For conventional "3/6/9" leases, a term of nine years was used in accordance with the conclusions of the ANC (French accounting standards authority) relating to commercial leases in France published on February 16, 2018.

The discount rate used is the average rate of the Group's debt for the France-Europe area and a rate determined country by country for the rest of the world.

The following table shows the impact of the first- time adoption of IFRS 16 on the opening and interim closing balance sheet:

40 SÉCHÉ ENVIRONNEMENT - INTERIM FINANCIAL REPORT AT JUNE 30, 2019

2019 Interim Report

In thousands of euros

12/31/2018

Property, plant and equipment

12,182

o/w land

-

o/w buildings

-

o/w technical facilities

-

o/w fixtures and fittings

-

o/w transportation equipment

-

o/w office equipment

-

Non-current financial operating assets

(177)

TOTAL ASSETS

12,005

Shareholders' equity (Group share)

2,413

Minority interests

204

Non-current lease liabilities

6,312

Current lease liabilities

3,076

TOTAL LIABILITIES

12,005

Impact of IFRS 16 transition

01/01/2019

06/30/2019

restated

27,344

39,526

42,657

1,644

1,644

1,900

16,373

16,373

22,037

6,627

6,627

11,995

-

-

1,677

2,661

2,661

5,017

39

39

32

(93)

(270)

(264)

27,251

39,256

42,393

-

2,413

2,864

-

204

-

19,657

25,969

29,938

7,594

10,670

9,591

27,251

39,256

42,393

Lease liabilities amounted to €36.6 million at January 1, 2019, broken down as follows:

■ ■ Lease liabilities newly recognized as operating leases at January 1, 2019 totaling €27.3 million, including €19.7 million in long-term liabilities; ■ ■ Finance lease liabilities totaling €9.3 million, which were recognized as financial debt at December 31, 2018, including €6.3 million in

long-term liabilities.

The Group applied a single rate of 3.26% for all French and European entities (the Group's average cost of debt). For countries outside Europe, each country's average cost of debt was applied. Restatements outside Europe are not material.

The impact of the application of IFRS 16 on income at June 30, 2019 breaks down as follows:

In thousands of euros

Finance leases

Operating leases

06/30/2019

EBITDA

1,869

4,339

6,208

Current operating income

(1,806)

(4,011)

(5,817)

Operating income

-

(69)

(69)

Financial income

(168)

(466)

(634)

TOTAL

(105)

(206)

(312)

CHAPTER 3 - Consolidated financial statements at June 30, 2019 41

■ ■ Other items affecting comparability

To enhance its financial disclosures, from the financial year beginning on January 1, 2019, the Group opted to deduct government investment grants from the gross amount of the investment concerned, as provided for in IAS 20 "Accounting for Government Grants and Disclosure of Government Assistance". This option, which is already used by other European companies in the waste recovery sector, better reflects the Group's business model in terms of its industrial investments.

Government investment grants, which were previously recognized in deferred income, are now deducted from the gross carrying amount of the asset and are recognized in income over the useful life of the depreciable asset as a reduced depreciation expense.

The impact of this change in method on the Group's financial statements is shown below:

In thousands of euros

12/31/2018

Impact of change in accounting method

01/01/2019 restated

Property, plant and equipment

235,907

(12,751)

223,156

Current financial operating liabilities

221,189

(12,751)

208,438

3.6.2.3. Use of estimates

To prepare the summary interim financial statements in accordance with IFRS as adopted by the European Union, Management is required to make estimates and assumptions that impact the application of the Group's accounting methods and the amounts recognized in its financial statements.

These estimates and their underlying assumptions are based on past experience and other factors considered reasonable under the circumstances. They serve as the basis for any judgment required for determining the carrying amounts of assets and liabilities when such amounts cannot be obtained directly from other sources. The real amounts may differ from the estimates.

For the preparation of the summary interim financial statements, the judgment exercised by Management in applying the accounting methods and analyzing the main sources of uncertainty in its estimates was the same as described in the financial statements for the year ended December 31, 2018, with the exception of the application of IFRS 16 (see Note 6.2.2).

3.6.3. Change in consolidation scope and other significant events

3.6.3.1. Main changes in the

consolidation scope

The list of the Group's subsidiaries and associates is presented in Note 6.3.2 "Consolidation scope".

Acquisition of Interwaste group:

On January 9, 2019, Séché South Africa Proprietary Limited took full control of the South African group Interwaste Holdings Limited and its subsidiaries.

With this acquisition, Séché Environnement aims to build a strong position in South Africa and southern Africa, thus taking advantage of the growth and transformation of waste markets as part of a circular economy approach.

Interwaste Holdings Limited and its subsidiaries were fully consolidated in the Group's consolidated financial statements from January 1, 2019, with the exception of Interwaste Industrial Cleaning Pty Ltd, which was consolidated under the equity method.

The acquisition price was €32 million, paid on February 27, 2019.

42 SÉCHÉ ENVIRONNEMENT - INTERIM FINANCIAL REPORT AT JUNE 30, 2019

2019 Interim Report

The provisional breakdown of the acquisition price at June 30, 2019 is provided in the table below:

In thousands of euros

Net assets and liabilities acquired (1)

Goodwill arising from the acquisition (see 6.4.1 Note 1)

Fair value of the transferred group

Cash and cash equivalents acquired

For the allocation of the purchase price the gross fair value of client contracts was measured at €4 million, which will be amortized over an average of four years from January 1, 2019 (see 6.4.1 Note 1).

In the first half of 2019, the Group completed all the work needed to allocate the acquisition price pursuant to the requirements of amended IFRS 3 on Business Combinations. This allocation remains provisional and may be adjusted slightly until December 31, 2019.

Acquisition of Mecomer group:

On April 17, 2019, Séché Environnement acquired 90% of the Italian group Mecomer, which comprises the companies Mecomer S.r.l. and Depo S.r.l. An option to purchase the remaining stake was set up, allowing Séché Environnement

On the acquisition date (at the ZAR/EUR exchange rate as of January 1, 2019)

32,344

117

32,462

4,949

the possibility of acquiring the remaining 10% over a renewable period of five years from April 30, 2019.

Through this acquisition, Séché Environnement is now at the forefront of the Italian hazardous waste management market with an established local presence at the center of one of the most industrialized regions in Southern Europe.

Mecomer group was fully consolidated in the Group's consolidated financial statements from April 1, 2019.

The provisional breakdown of the acquisition price at June 30, 2019 is provided in the table below:

In thousands of euros

On the acquisition date

Net assets and liabilities acquired

8,138

Goodwill arising from the acquisition (see 6.4.1 Note 1)

30,671

Fair value of the transferred group

38,809

Cash and cash equivalents acquired

190

The amount of goodwill was provisional at June 30, 2019 as the estimate of the acquisition price and its breakdown were ongoing at the closing date.

CHAPTER 3 - Consolidated financial statements at June 30, 2019 43

Acquisition of an additional controlling stake in the Peruvian company Kanay:

On March 29, 2019, Séché Environnement exercised its purchase options to acquire the remaining 51% stake in Kanay. This purchase of a controlling stake led to the revaluation of the stake previously held at fair value, in the amount of -€0.7 million, impacting operating income under "Other operating income and expenses" (see Note 9).

Goodwill of €4 million was recognized on this acquisition (see 6.4.1 Note 1).

The company is now wholly owned by the Group and is fully consolidated. This acquisition changed the consolidation method applied for Kanay, which was previously accounted for by the equity method.

New subsidiaries:

■ ■ January 2019: Séché Health Arequipa, a fully consolidated Peruvian company. This company was established on August 29, 2018 and began operating in the first half of 2019.

■ ■ May 2019: Creation of Séché Urgences Intervention, a fully consolidated French company. This company will begin operations in the second half of 2019.

The contribution of the material acquisitions described above to the main income statement items was as follows:

In thousands of euros

06/30/2019

Impact of

Interwaste group

Mecomer group

Kanay

06/30/2019

Reported

acquisitions

(1)

(2)

(3)

pro forma

REVENUE

342,286

43,205

32,346

9,964

896

299,081

EBITDA

63,595

7,902

5,656

3,303

(1,057)

55,693

CURRENT OPERATING INCOME

22,105

3,974

1,900

3,264

(1,190)

18,131

OPERATING INCOME

21,639

3,892

1,885

3,196

(1,190)

17,748

FINANCIAL GAIN OR LOSS

(8,432)

(1,113)

(607)

(44)

(462)

(7,319)

NET INCOME

8,095

1,877

917

2,614

(1,653)

6,217

o/w share of

521

303

155

148

-

218

minority interests

o/w Group share

7,574

1,575

762

2,466

(1,653)

5,999

  1. Consolidated from January 1, 2019.
  2. Consolidated from April 1, 2019.
  3. Consolidated from 01/01/2019.

44 SÉCHÉ ENVIRONNEMENT - INTERIM FINANCIAL REPORT AT JUNE 30, 2019

2019 Interim Report

3.6.3.2. Consolidation scope

Company name

Town, Country

% holding at 06/30/2019

Consolidation method

06/30/2019

Séché Environnement

Changé (France)

Parent

Parent

Alcéa

Changé (France)

100.00

Full

Béarn Environnement

Pau (France)

100.00

Full

Depo

Milan (Italy)

90.00

Full

Drakenstein Energy Pty

Johannesburg (South Africa)

100.00

Full

Drimm

Montech (France)

100.00

Full

Earth 2 Earth Pty Ltd

Johannesburg (South Africa)

100.00

Full

East Gauteng Energy Pty Ltd

Johannesburg (South Africa)

100.00

Full

Écosite de La Croix-Irtelle

Changé (France)

100.00

Full

Eden Waste Construction Ltd

Johannesburg (South Africa)

75.00

Full

Eden Waste Management Ltd

Johannesburg (South Africa)

75.00

Full

Eden Waste Operations Ltd

Johannesburg (South Africa)

75.00

Full

Énergécie

Changé (France)

74.60

Full

Envirowaste SA Pty Ltd

Johannesburg (South Africa)

100.00

Full

Gabarre Energies

Les Abymes (France)

51.00

Full

Greens Scrap Recycling Pty Ltd

Johannesburg (South Africa)

100.00

Full

IberTrédi Medioambiental

Barcelona (Spain)

100.00

Full

Interwaste Environmental Solutions Ltd

Johannesburg (South Africa)

100.00

Full

Interwaste Environmental Solutions Pty Ltd

Johannesburg (South Africa)

99.00

Full

Interwaste Holding Ltd

Johannesburg (South Africa)

100.00

Full

Interwaste On-site Pty Ltd

Johannesburg (South Africa)

49.00

Full

Interwaste Properties Pty Ltd

Johannesburg (South Africa)

100.00

Full

Interwaste Pty

Johannesburg (South Africa)

100.00

Full

IWE Fleet Sales Pty

Johannesburg (South Africa)

100.00

Full

Kanay

Lima (Peru)

100.00

Full

Limpopo Platinum Waste Pty Ltd

Johannesburg (South Africa)

70.00

Full

Masakhane Interwaste Pty Ltd

Johannesburg (South Africa)

65.00

Full

Mecomer

Milan (Italy)

90.00

Full

Moz Environmental Limitada

Johannesburg (South Africa)

100.00

Full

Opale Environnement

Calais (France)

100.00

Full

Platinum Waste Resources Pty Ltd

Johannesburg (South Africa)

51.00

Full

Sabsco Asia

Singapore (Singapore)

76.00

Full

Sabsco Limited

Kent (United Kingdom)

76.00

Full

Sabsco Malaysia

Petaling Jaya (Malaysia)

76.00

Full

Séché Alliance

Changé (France)

99.94

Full

Séché Développement

Changé (France)

100.00

Full

Séché Éco-services

Changé (France)

99.98

Séché Eco-Industries

Changé (France)

99.99

Séché Health Arequipa

Lima (Peru)

100.00

Full

Séché Énergies

Changé (France)

100.00

Full

Séché Environnement Ouest

Changé (France)

100.00

Full

Séché Healthcare

Changé (France)

100.00

Full

Séché South Africa

Johannesburg (South Africa)

100.00

Full

Séché Transports

Changé (France)

99.50

Full

Séché Urgences Interventions

La Guerche-de-Bretagne (France)

100.00

Full

Sénergies

Changé (France)

80.00

Full

SCI LCDL

Changé (France)

99.80

SCI Les Chênes Secs

Changé (France)

99.80

Full

SCI Mézerolles

Changé (France)

99.99

Full

Sem Trédi

(Mexico)

100.00

Sotrefi

Étupes (France)

100.00

Full

Sénerval

Strasbourg (France)

99.90

Full

Singapore MTT

Singapore (Singapore)

76.00

Full

Sodicome

Saint-Gilles (France)

100.00

Full

Solena

Viviez (France)

60.00

Full

Solarca SL

Selva Del Camp, Tarragona (Spain)

76.00

Full

Solarca Castilla

Puertollano (Spain)

76.00

Full

Solarca France

Marseille (France)

71.03

Full

Solarca Portugal

Setubal (Portugal)

76.00

Full

Solarca Qatar

Doha (Qatar)

37.24

Full

Solarca Russia

Moscow (Russia)

76.00

Full

Solarca USA

La Porte Texas (United States)

76.00

Full

Soluciones Ambientales Del Norte

(Chile)

100.00

Full

Speichim Processing

Saint-Vulbas (France)

100.00

Taris

(Peru)

100.00

Full

Trédi Argentina

Buenos Aires (Argentina)

100.00

Full

Trédi SA

Saint-Vulbas (France)

100.00

Full

Triadis Services

Etampes (France)

100.00

Full

UTM

Lübeck (Germany)

100.00

Full

Valls Quimica

Valls (Spain)

100.00

Full

Interwaste Industrial Cleaning Pty Ltd

Johannesburg (South Africa)

50.00

Equity

La Barre Thomas

Rennes (France)

40.00

Equity

Karu Energy SAS

Baie-Mahault (France)

24.00

Equity

SAEM Transval

St Georges les Baillargeaux (France)

35.00

Equity

Gerep

Paris (France)

50.00

Equity

Sogad

Le Passage (France)

50.00

Equity

CHAPTER 3 - Consolidated financial statements at June 30, 2019 45

3.6.3.3. Other significant events

In May 2019, Séché Environnement refinanced its financial debt over the medium term with an €80 million bond issue in two tranches:

  • €60 million maturing in 7 years (2026) with a coupon of 2.90%;
  • €20 million maturing in 8 years (2027) with a coupon of 3.05%.

These transactions enabled Séché Environnement to refinance its recent international acquisitions, which were previously financed by drawing on the syndicated credit facility.

3.6.4. Explanatory notes to the financial statements

3.6.4.1. Notes to the balance sheet

Note 1 - Goodwill, intangible assets and property, plant and equipment

Goodwill

Software,

Intangible fixed assets under

Other intangible fixed

Property, plant

TOTAL

12/31/2017

patents

concession arrangements

assets

and equipment

290,620

10,512

61,837

20,784

792,690

1,176,444

Change in consolidation scope

561

561

Increases

1,513

7,759

1,793

54,075

65,140

Decreases

(381)

(100)

(940)

(40,819)

(42,240)

Other changes

(68)

73

-

(35)

(762)

(792)

12/31/2018

291,113

11,717

69,496

21,603

805,184

1,199,113

Change in consolidation scope

34,725

61

-

9,149

81,285

125,220

Increases

-

741

-

1,324

26,914

28,979

Decreases

-

(466)

-

(685)

(6,608)

(7,759)

Other changes

663

29

-

(68)

16,811

17,434

06/30/2019

326,501

12,082

69,496

31,322

923,585

1,362,986

AMORTIZATION

12/31/2017

-

(9,370)

(12,219)

(5,713)

(561,631)

(588,934)

Change in consolidation scope

-

-

Allowances

-

(1,053)

(3,774)

(734)

(46,032)

(51,933)

Write-backs

-

369

85

60

39,566

40,080

Other changes

-

-

-

-

146

146

12/31/2018

-

(10,054)

(15,908)

(6,387)

(567,952)

(600,301)

Change in consolidation scope

-

(6)

-

(275)

(32,118)

(32,399)

Allowances

-

(490)

(1,869)

(1,408)

(30,239)

(34,007)

Write-backs

-

467

-

698

5,988

7,153

Other changes

-

(1)

-

24

(824)

(800)

06/30/2019

-

(10,084)

(17,777)

(7,348)

(625,144)

(660,354)

IMPAIRMENT

12/31/2017

(25,894)

-

-

-

(846)

(26,739)

Change in consolidation scope

-

-

-

-

-

-

Allowances

-

-

-

-

(879)

(879)

Write-backs

-

-

-

-

399

399

Other changes

-

-

-

-

-

12/31/2018

(25,894)

-

-

-

(1,326)

(27,220)

Change in consolidation scope

-

-

-

-

-

-

Allowances

-

-

-

-

-

-

Write-backs

-

-

-

-

23

23

Other changes

-

-

-

-

-

-

06/30/2019

(25,894)

-

-

-

(1,303)

(27,197)

NET VALUE

12/31/2017

264,727

1,142

49,618

15,071

230,213

560,771

Change in consolidation scope

561

561

Increases

-

461

3,985

1,059

7,165

12,670

Decreases

-

(12)

(15)

(880)

(855)

(1,762)

Other changes

(68)

73

-

(35)

(616)

(646)

12/31/2018

265,220

1,663

53,588

15,215

235,907

571,593

Change in consolidation scope

34,725

55

-

8,874

49,166

92,820

Increases

-

251

(1,869)

(84)

(3,325)

(5,028)

Decreases

-

1

-

13

(597)

(584)

Other changes

663

28

-

(44)

15,987

16,634

06/30/2019

300,607

1,998

51,719

23,974

297,138

675,435

46 SÉCHÉ ENVIRONNEMENT - INTERIM FINANCIAL REPORT AT JUNE 30, 2019

2019 Interim Report

Goodwill:

The line "Change in consolidation scope" over the period to June 30, 2019, for €34.7 million, breaks down as follows (see Note 6.3.1).

■ ■ €30.7 million following the acquisition of Mecomer group;

■ ■ €3.9 million following the acquisition of Kanay; ■ ■ €0.1 million following the acquisition of

Interwaste group.

The Group examined its interim results in terms of its expectations and previous interim results. It concluded that the profitability achieved is in line with expectations.

The Group believes that its results show no evidence of impairment and it did not perform an impairment test.

Other intangible fixed assets:This item includes the fair value measurement of client contracts for €4 million, and intangible rights relative to the non-competeclause for €4 million following the acquisition of Interwaste group (see Note 6.3.1).

Property, plant and equipment:The impacts of the first-timeadoption of IFRS 16 and the reclassification of grants, which are now deducted from the corresponding asset (see Note 6.2.2) are recorded in "Other changes".

Note 2 - Investments in associates

Note 2.1Summary of investments in associates

The investments held by the Group in associate companies are as follows:

In thousands of euros

% held by Group

Shareholders' equity

Income from past year

Investments in associates

La Barre Thomas

40%

63

(47)

23

Gerep

50%

(388)

(140)

0

Interwaste Industrial

50%

0

0

0

Cleaning Pty Ltd

Karu Energy SAS

24%

(28)

(9)

0

Sogad

50%

672

136

320

Transval

35%

128

22

45

TOTAL

387

Note 2.2 Change in investments in associates

The changes in the Group's investments in associate companies were as follows:

In thousands of euros

Value at

Value at

Income

Change in

Dividends

Change in

Other

Value at

06/30/2018

12/31/2018

fair value

consolida-

changes

06/30/2019

through OCI

tion scope

La Barre Thomas

121

44

(21)

-

-

-

-

23

Gerep

0

0

(140)

-

-

-

140

0

Interwaste Industrial

0

0

0

-

-

-

-

0

Cleaning Pty Ltd

Kanay

2,887

2,590

-

-

-

(2,590)

-

0

Karu Energy SAS

0

2

(7)

-

-

-

4

0

Sogad

204

593

51

-

(325)

-

-

320

Transval

26

47

(2)

-

-

-

-

45

TOTAL

3,238

3,276

(118)

-

(325)

(2,590)

144

387

CHAPTER 3 - Consolidated financial statements at June 30, 2019 47

Note 3 - Financial instruments

Financial instruments in the balance sheet break down as follows:

In thousands of euros

06/30/2018

12/31/2018

06/30/2019

Non-current

Current

TOTAL

Non-current

Current

TOTAL

Non-current

Current

TOTAL

Equity instruments

1,469

(0)

1,469

1,213

(0)

1,213

883

(0)

883

Financial loans and receivables

7,823

1,183

9,006

7,672

1,144

8,816

7,915

711

8,626

Financial assets

9,292

1,183

10,476

8,886

1,144

10,030

8,799

711

9,509

Trade and other receivables

41,163

153,429

194,592

39,480

157,184

196,664

44,298

187,541

231,839

Other financial operating assets

199

29,926

30,126

1,070

31,134

32,204

775

31,780

32,555

Operating loans and receivables

41,362

183,355

224,718

40,551

188,317

228,868

45,073

219,320

264,394

at amortized cost

Derivatives - Assets

-

-

-

210

32

242

-

-

-

Other instruments at FV through profit or

-

-

-

-

-

loss

Financial instruments at FV through

-

-

-

210

32

242

-

-

-

profit or loss

Cash and cash equivalents

-

47,594

47,594

67,425

67,425

94,326

94,326

TOTAL FINANCIAL ASSETS

50,654

232,133

282,787

49,646

256,919

306,564

53,872

314,357

368,229

Financial debt

322,510

75,671

398,181

380,599

36,377

416,976

485,560

54,673

540,232

Derivatives - Liabilities

466

53

520

630

74

705

331

100

431

Other financial operating liabilities

566

215,767

216,333

430

222,751

223,181

2,139

252,211

254,349

TOTAL FINANCIAL LIABILITIES

323,542

291,491

615,033

381,659

259,203

640,862

488,029

306,984

795,013

Note 3.1 Financial assets

Note 3.1.1 Loans and receivables at amortized cost

In thousands of euros

06/30/2018

12/31/2018

06/30/2019

Non-current

Current

TOTAL

Non-current

Current

TOTAL

Non-current

Current

TOTAL

Deposits and guarantees

3,563

432

3,995

3,222

409

3,630

3,573

255

3,828

Loans

1,471

71

1,542

1,911

55

1,966

1,761

78

1,839

Concession operating receivables

2,788

680

3,468

2,540

680

3,220

2,582

378

2,959

Financial loans and receivables

7,823

1,183

9,006

7,672

1,144

8,816

7,915

711

8,626

Trade and other receivables

41,163

153,429

194,592

39,480

157,184

196,664

44,298

187,541

231,839

Government

-

19,187

19,187

-

18,407

18,407

-

21,829

21,829

Tax receivables

179

964

1,143

1,055

2,453

3,508

764

1,403

2,167

Prepayments

-

2,373

2,373

-

2,554

2,554

-

2,354

2,354

Social insurance receivables

-

335

335

-

182

182

-

413

413

Amounts receivable on disposal of fixed

-

1,815

1,815

-

2,668

2,668

-

1,222

1,222

assets

Other receivables

20

4,631

4,651

16

4,245

4,260

11

4,261

4,272

Current account receivables

-

623

623

-

624

624

-

298

298

Other operating assets

199

29,928

30,127

1,070

31,134

32,204

775

31,780

32,555

Operating loans and receivables

41,362

183,357

224,719

40,551

188,317

228,868

45,073

219,320

264,394

Loans and receivables at amortized cost

49,185

184,540

233,725

48,223

189,461

237,684

52,989

220,031

273,020

48 SÉCHÉ ENVIRONNEMENT - INTERIM FINANCIAL REPORT AT JUNE 30, 2019

2019 Interim Report

On December 26, 2018, the Group sold, without recourse, receivables totaling €22.9 million, with accompanying insurance. It completed a similar transaction for €21.7 million on June 28, 2019.

Depreciation and impairment on loans and receivables at amortized cost break down as follows:

In thousands of euros

06/30/2018

12/31/2018

06/30/2019

Gross

Dep/

Net

Gross

Dep/

Net

Gross

Dep/

Net

impairments

impairments

impairments

Financial loans and receivables

9,014

(7)

9,006

8,904

(88)

8,816

8,854

(228)

8,626

Trade and other receivables

200,420

(5,828)

194,592

202,440

(5,776)

196,664

237,496

(5,658)

231,839

Other operating assets

30,151

(25)

30,126

32,232

(28)

32,204

32,583

(28)

32,555

Loans and receivables at amortized cost

239,584

(5,861)

233,724

243,577

(5,893)

237,684

278,934

(5,914)

273,020

Other financial operating assets

199

29,926

30,126

1,070

31,134

32,204

775

31,780

32,555

Operating loans and receivables

41,362

183,355

224,718

40,551

188,317

228,868

45,073

219,320

264,394

at amortized cost

Note 3.1.2 Cash and cash equivalents

In thousands of euros

06/30/2018

12/31/2018

06/30/2019

Mutual funds

15,198

20,138

25,120

Cash

32,396

47,286

69,205

Total

47,594

67,425

94,326

Note 3.2 Financial liabilities

Note 3.2.1 Financial debt

Changes in debt

In thousands of euros

06/30/2018

12/31/2018

06/30/2019

Non-current

Current

TOTAL

Non-current

Current

TOTAL

Non-current

Current

TOTAL

Financial debt liabilities

292,918

45,851

338,769

201,409

30,330

231,740

202,741

33,884

236,625

Effective interest rate impact

(780)

(837)

(1,617)

(1,483)

(479)

(1,962)

(1,252)

(464)

(1,716)

Bank loans

292,139

45,013

337,152

199,926

29,852

229,778

201,489

33,421

234,910

Outstanding bonds

25,000

25,000

50,000

175,000

-

175,000

255,000

-

255,000

Effective interest rate impact

(223)

(244)

(466)

(640)

(189)

(829)

(867)

(239)

(1,106)

Bonds

24,777

24,756

49,534

174,360

(189)

174,171

254,133

(239)

253,894

Lease liabilities

5,571

2,943

8,514

6,312

3,076

9,388

29,938

9,474

39,412

Other financial debt

23

1,495

1,518

0

3,019

3,019

0

3,586

3,586

Short-term bank borrowings

-

1,463

1,463

-

619

619

-

8,431

8,431

TOTAL

322,510

75,671

398,181

380,599

36,377

416,976

485,560

54,673

540,232

CHAPTER 3 - Consolidated financial statements at June 30, 2019 49

Changes in debt over the fiscal year break down as follows:

In thousands of euros

06/30/2018

12/31/2018

Increase

Repayment

Change in

Amortized

Foreign

Other

06/30/2019

consolida-

cost

exchange

changes

tion scope

effect

Bank

337,152

229,778

5,530

(14,169)

13,297

246

256

(28)

234,910

loans

Bonds

49,534

174,171

80,000

-

-

(278)

-

-

253,894

Lease liabilities

8,514

9,388

1,741

(5,675)

6,545

-

140

27,272

39,412

Other financial debt

1,518

3,019

303

12

55

-

4

194

3,586

Short-term bank

1,463

619

1,374

-

5,940

-

175

323

8,431

borrowings

Total

398,181

416,976

88,948

(19,832)

25,837

(32)

574

27,761

540,232

Bonds: The Group issued an €80 million bond in the first half of the year (see Note 6.3.3.).

Lease liabilities: The impact of the first-time adoption of IFRS 16 (see Note 6.2.2) is recognized in "Other changes".

50 SÉCHÉ ENVIRONNEMENT - INTERIM FINANCIAL REPORT AT JUNE 30, 2019

2019 Interim Report

Group debt:

At June 30, 2019, the Group's financial debt

broke

down as follows:

In thousands of euros

Type of interest rate

Amount

Maturity

Hedging

(before hedging)

Other bank loans

Floating

12,838

Less than 1 year

Floating rate debt

100,385

1 to 5 years

Interest rate hedging for

€105 million

-

More than 5 years

20,583

Less than 1 year

Fixed 0%<>

65,188

1 to 5 years

35,916

More than 5 years

Total

234,910

Bonds

Floating

-

Less than 1 year

-

1 to 5 years

-

More than 5 years

(239)

Fixed 2%<>

174,355

Less than 1 year

79,777

1 to 5 years

Total

253,893

More than 5 years

Lease liabilities

Floating

4,309

Less than 1 year

3,945

1 to 5 years

-

More than 5 years

5,441

Less than 1 year

Fixed 0%<>

21,030

1 to 5 years

4,687

More than 5 years

Total

39,412

Other financial debt

Floating

Less than 1 year

Other

-

1 to 5 years

-

More than 5 years

Fixed

3,586

Less than 1 year

-

1 to 5 years

-

More than 5 years

Total

3,586

Short-term bank borrowings

Floating

8,431

Less than 1 year

TOTAL

540,232

o/w current

55,188

Less than 1 year

o/w non-current

485,045

More than 1 year

CHAPTER 3 - Consolidated financial statements at June 30, 2019 51

Note 3.2.2 Hedging instruments

The financial instruments used by the Group are for hedging cash flows related to its financing. These instruments, which are traded on organized markets, are managed by the Group's Finance Department.

In thousands of euros

06/30/2018

12/31/2018

06/30/2019

Non-current

Current

TOTAL

Non-current

Current

TOTAL

Non-current

Current

TOTAL

Hedging instruments - assets

-

-

-

210

32

242

-

-

-

Hedging instruments - liabilities

466

53

520

630

74

705

331

100

431

The breakdown by type of instruments (asset and liabilities) is as follows:

In thousands of euros

06/30/2018

12/31/2018

06/30/2019

Nominal transaction

Fair value

Nominal transaction

Fair value

Nominal transaction

Fair value

amount

amount

amount

Swaps

20,000

(163)

20,000

(122)

10,000

(92)

Collars

95,000

(357)

95,000

(341)

165,000

(339)

Hybrid instruments

-

Total

115,000

(520)

115,000

(463)

175,000

(431)

At June 30, 2019, the maturity of the cash flow hedging instruments as follows:

In thousands of euros

Less than 1 year

1 to 5 years

More than 5 years

TOTAL

Swaps

-

10,000

-

10,000

Collars

40,000

125,000

-

165,000

Hybrid instruments

-

-

-

-

Total

40,000

135,000

-

175,000

52 SÉCHÉ ENVIRONNEMENT - INTERIM FINANCIAL REPORT AT JUNE 30, 2019

2019 Interim Report

Note 4 - Current and non-current provisions

In thousands of euros

06/30/2018

12/31/2018

Change in

Impact

Allow-

Write-

Write-backs

Other

06/30/2019

consolidation

on

ances

backs

not used

changes

scope

equity

used

Employee benefits (1)

6,210

6,217

1,432

200

709

(341)

-

(457)

7,760

Other non-current provisions (2)

14,040

14,203

2,843

-

946

(140)

-

(2,870)

14,982

NON-CURRENT PROVISIONS

20,250

20,419

4,275

200

1,655

(482)

-

(3,327)

22,742

Employee benefits (1)

-

-

-

-

0

-

58

-

58

Provisions for litigation

1,157

1,044

-

-

247

(741)

(156)

-

394

Provisions for other risks

2,176

9

-

-

40

(9)

-

-

40

Provisions for other costs

352

919

-

-

623

(58)

(37)

2,874

4,322

CURRENT PROVISIONS

3,685

1,973

-

-

910

(808)

(135)

2,874

4,815

TOTAL

23,935

22,392

4,275

200

2,565

(1,290)

(135)

(452)

27,556

(1) Provisions for employee retirement benefits and long-service

awards are calculated using the method described in the

accounting principles and valuation methods.

(2) Including the provision for 30-yearpost-operation monitoring.

Note 5 - Off-balance sheet commitments

Note 5.1 Off-balance sheet commitments arising

from normal operations

In thousands of euros

06/30/2018

12/31/2018

06/30/2019

Loans ceded before maturity (bills, Dailly Act)

-

-

-

Sureties

133,020

131,589

147,358

- Financial guarantees(1)

83,198

90,153

90,214

- Other guarantees

49,822

41,436

57,145

Secured guarantees

-

-

-

- Intangible assets and property, plant and equipment

-

-

pledged as collateral

- Securities pledged as collateral

-

-

-

Arising from partners' responsibilities in non-trading

-

-

-

property companies

TOTAL off-balance sheet commitments related to normal

133,020

131,589

147,358

operations

Including €90 million in sureties issued by financial institutions on the setting up of financial guarantees granted under the Ministerial Order of February 1, 1996.

CHAPTER 3 - Consolidated financial statements at June 30, 2019 53

Note 5.2 Off-balance sheet commitments given or received in connection with Group debt

In thousands of euros

06/30/2018

12/31/2018

06/30/2019

Business loans ceded

0

-

-

Sureties and letters of intent

46,226

34,348

41,599

Secured guarantees

4,716

14,052

13,189

Property, plant and equipment and intangible assets pledged

4,716

14,052

13,189

as guarantees and collateral

Securities pledged as guarantees and collateral

-

-

-

Mortgages

-

-

-

Borrowing commitments received

-

-

-

TOTAL off-balance sheet commitments related to debt

50,942

48,400

54,788

As part of its asset financing, the Company signed commitments not to sell the shares that it holds in Sénergies, Séché Éco- Industries and Mézerolles.

All of the above-mentionedoff-balance sheet commitments cover liabilities recorded on the balance sheet, with the exception of a €0.8 million guarantee.

In connection with its public service delegation contracts, Séché Environnement issues a performance guarantee to the contracting authorities.

Note 6 - Shareholders' equity

Note 6.1 Dividends

In the first half of 2019, the Annual General Meeting of Séché Environnement approved the payment of €7,464,845.40 in dividends for the 2018 financial year, representing €0.95 per share, for all types of share. Payment was made in July 2019.

3.6.4.2. Notes to the income statement

Note 7 - Income from ordinary activities

In thousands of euros

06/30/2018

06/30/2019

Revenue

287,780

342,286

o/w sales of goods

34,932

38,314

o/w sales of services

252,848

303,972

Other operating income

2,706

3,429

Transfers of expenses

510

298

REVENUE FROM ORDINARY ACTIVITIES

290,996

346,014

54 SÉCHÉ ENVIRONNEMENT - INTERIM FINANCIAL REPORT AT JUNE 30, 2019

2019 Interim Report

Note 8 - Current operating income

In thousands of euros

06/30/2018

06/30/2019

REVENUE FROM ORDINARY ACTIVITIES

290,996

346,014

PURCHASES USED FOR OPERATIONAL PURPOSES

(35,813)

(44,249)

EXTERNAL EXPENSES

(113,176)

(130,262)

O/W SUBCONTRACTING

(65,928)

(71,577)

TAXES OTHER THAN ON INCOME

(23,378)

(24,249)

EMPLOYEE BENEFIT EXPENSES

(66,828)

(83,659)

EBITDA

51,801

63,595

COST OF RENEWAL OF ASSETS UNDER CONCESSION ARRANGEMENTS

(4,719)

(4,792)

REHABILITATION EXPENSES FOR WASTE TREATMENT SITES

(794)

(1,012)

OTHER OPERATING INCOME AND EXPENSES

545

(1,825)

NET ALLOCATIONS TO PROVISIONS

(1,982)

116

DEPRECIATION

(24,182)

(33,977)

CURRENT OPERATING INCOME

20,669

22,105

Note 9 - Operating income

In thousands of euros

06/30/2018

06/30/2019

CURRENT OPERATING INCOME

20,669

22,105

Income on disposal of fixed assets (1)

59

(681)

Impairment of assets

(6)

(38)

Business combination effects (2)

(328)

(663)

Other (3)

(1,656)

915

OPERATING INCOME

18,738

21,639

  1. Mainly including -€0.7 million on the acquisition of a controlling stake in Kanay, which led to a change in the consolidation method (see Note 6.3.1).
  2. The amounts recorded under "Business combination effects" correspond to the amounts paid to review business combinations.
  3. The amounts booked under the heading, "Other", mainly refer to:

■ ■ In 2018:

  • -€1.8million euros corresponding to the contested GTPA tax reassessment on Séché Éco-industries
  • +€0.7 million corresponding to the net write- back of a provision concerning the contested property ownership tax reassessment on Séché Éco-industries
  • -€0.4million of expenses incurred or committed under a performance plan to optimize supervisory responsibilities.

■ ■ In 2019:

  • +€1.8 million euros corresponding to the contested GTPA tax reassessment on Séché Éco-industries, which was written off by the tax authorities
  • -€0.8million of expenses incurred or committed under a performance plan to optimize supervisory responsibilities.

CHAPTER 3 - Consolidated financial statements at June 30, 2019 55

Note 10 - Financial income

Note 10.1 Financial income

In thousands of euros

06/30/2018

06/30/2019

Income from cash and cash equivalents

32

349

Cost of gross financial debt

(5,866)

(8,150)

Other financial income and expenses

(616)

(631)

FINANCIAL GAIN OR LOSS

(6,450)

(8,432)

The cost of gross financial

debt changed as follows:

In thousands of euros

06/30/2018

06/30/2019

Financial liabilities at amortized cost

(5,877)

(7,745)

Income on hedging instruments

10

(406)

COST OF GROSS FINANCIAL DEBT

(5,866)

(8,150)

Note 10.2 Breakdown of other financial income and expenses

In thousands of euros

06/30/2018

06/30/2019

Net income on the sale of financial fixed assets

0

(5)

Accretion of 30-year provisions

(575)

(585)

Impairment of equity instruments

-

(243)

Other impairment losses and provisions

(56)

(58)

Foreign exchange gain (loss)

(41)

140

Other

56

122

Other financial income and expenses

(616)

(631)

Note 11 - Taxes

In thousands of euros

06/30/2018

06/30/2019

Income before tax

12,288

13,207

Income tax payable

(2,141)

(3,292)

Deferred tax

(953)

(1,702)

Total

(3,094)

(4,994)

Nominal tax rate

25.18%

37.81%

56 SÉCHÉ ENVIRONNEMENT - INTERIM FINANCIAL REPORT AT JUNE 30, 2019

2019 Interim Report

The difference between the theoretical tax rate and the nominal tax rate is due to certain non-deductible expenses and the non-recognition of tax losses on certain entities.

Deferred tax assets on tax losses not recognized due to a lack of visibility about the recoverability time horizon amounted to €4.6 million at June 30, 2019).

3.6.4.3. Financial risk management

Note 12 - Exposure to credit risk

Credit risk is the risk of financial loss incurred by the Group in the event a client or counterparty to a given asset fails to meet its contractual ob- ligations. This risk comes mainly from amounts receivable.

The carrying amount of financial assets represents the Group's maximum exposure to credit risk. On the closing date, the maximum credit risk exposure breaks down as follows:

In thousands of euros

06/30/2018

12/31/2018

06/30/2019

Non-current

Current

TOTAL

Non-current

Current

TOTAL

Non-current

Current

TOTAL

Equity instruments

1,469

(0)

1,469

1,213

(0)

1,213

883

(0)

883

Financial loans and receivables

7,823

1,183

9,006

7,672

1,144

8,816

7,915

711

8,626

Financial assets

9,292

1,183

10,476

8,886

1,144

10,030

8,799

711

9,509

Trade and other receivables

41,163

153,429

194,592

39,480

157,184

196,664

44,298

187,541

231,839

Other financial operating assets

199

29,926

30,126

1,070

31,134

32,204

775

31,780

32,555

Operating loans and receivables at

41,362

183,355

224,718

40,551

188,317

228,868

45,073

219,320

264,394

amortized cost

Derivatives - Assets

-

-

-

210

32

242

-

-

-

Other instruments at FV through profit or loss

-

-

-

-

-

Financial instruments at FV through profit

-

-

-

210

32

242

-

-

-

or loss

Cash and cash equivalents

-

47,594

47,594

67,425

67,425

94,326

94,326

Total FINANCIAL ASSETS

50,654

232,133

282,787

49,646

256,919

306,564

53,872

314,357

368,229

The income, expenses, impairment or profits recorded in the financial statements for the first half of 2019 in respect of these financial assets mainly correspond to losses on trade receivables.

.Note 13 - Exposure to counterparty risk

Counterparty risk corresponds to the loss that the Group could suffer if one or more counterparties

failed to fulfill their contractual obligations. It concerns loans and receivables at amortized cost (financial or operating loans and receivables) and short-term investments of excess cash.

The balance of loans and receivables at amortized cost by maturity breaks down as follows:

In thousands of euros

06/30/2019

Net value

o/w not due

o/w due

(C and NC *)

0-6 months

6 months-1 year

More than 1 year

Financial loans and

9,122

9,122

-

-

-

receivables

Trade and other receivables

231,343

178,622

31,623

15,193

5,905

Other assets

32,555

31,473

640

80

362

TOTAL

273,020

219,216

32,263

15,273

6,267

* Current and non-current

CHAPTER 3 - Consolidated financial statements at June 30, 2019 57

The balance of loans and receivables at amortized cost by maturity at the close of the previous year breaks down as follows:

In thousands of euros

12/31/2018

Net value

o/w not due

o/w due

(C and NC *)

0-6 months

6 months-1 year

More than 1 year

Financial loans and

8,816

8,816

-

-

-

receivables

Trade and other receivables

196,664

163,338

28,246

1,888

3,192

Other assets

32,204

31,599

354

43

208

TOTAL

237,684

203,753

28,600

1,931

3,400

* Current and non-current

The Group considers that it is not exposed to any significant counterparty risk.

Note 14 - Exposure to liquidity risk

Liquidity risk is the risk that the Group may have difficulty honoring its debts when they mature. At June 30, 2019, the remaining contractual maturities of the Group's financial liabilities broke down as follows:

In thousands of euros

Book value

Bank loans

488,803

Lease finance liabilities

39,412

Other financial debt

3,586

Short-term bank borrowings

8,431

Trade and other payables (incl. income tax liabilities)

245,886

Liabilities for renewal of assets under concession

8,463

arrangements

TOTAL NON-DERIVATIVE FINANCIAL LIABILITIES

794,582

Hedging instruments

431

TOTAL DERIVATIVE FINANCIAL LIABILITIES

431

Contractual cash

< 1 yr

1 to 5 years

> 5 yrs

flows

548,472

42,507

233,007

272,957

40,899

10,224

25,738

4,937

3,586

3,586

-

-

8,431

8,431

-

-

245,886

242,952

2,934

-

8,463

8,463

-

-

855,737

316,164

261,679

277,894

431

175

256

-

431

175

256

-

58 SÉCHÉ ENVIRONNEMENT - INTERIM FINANCIAL REPORT AT JUNE 30, 2019

2019 Interim Report

Forthesakeofcomparison,theremainingcontractual maturities relating to the Group's financial liabilities broke down as follows on December 31, 2018:

In thousands of euros

Book value

Bank loans

403,947

Lease finance liabilities

9,388

Other financial debt

3,021

Short-term bank borrowings

619

Trade and other payables (incl. income tax liabilities)

213,990

Liabilities for renewal of assets under concession

9,191

arrangements

TOTAL NON-DERIVATIVE FINANCIAL LIABILITIES

640,157

Hedging instruments

705

TOTAL DERIVATIVE FINANCIAL LIABILITIES

705

Contractual cash

< 1 yr

1 to 5 years

> 5 yrs

flows

459,693

40,428

226,192

193,075

7,391

2,391

4,800

200

3,019

3,019

-

-

619

619

-

-

213,990

213,561

225

204

9,191

9,191

-

-

693,903

269,209

231,217

193,479

705

74

630

-

705

74

630

-

Financial leverage covenant:

Further to the debt refinancing completed in July 2018, the Group benefits from a single and more flexible leverage ratio with the constraint raised from 3.5x to 3.95x EBITDA. This limit can be further increased to 4.25x EBITDA should any acquisitions take place. Compliance with these ratios is checked twice a year on an annual basis for the periods ending December 31 and June 30.

Non-compliance with these ratios constitutes default and, in the case of most lenders, makes all debt immediately payable.

The Group's main debt is subject to ratios which must be observed, failing which, the debt will be immediately payable.

RATIOS

Applicable in

Applicable in

2018

2019

Net financial debt/EBITDA

<3.5x

<3.95x

It being understood for the purposes of the covenant that, on a consolidated basis:

■ ■ Net financial debt is the aggregate of all financial debt as reported in the consolidated financial statements of Séché Environnement under the heading "Bank loans and other financial debt", less cash and cash equivalents and investment securities, as indicated in the Group's consolidated financial statements, with the exception of non-recourse financing and the impact of IFRS 16 "Leases". Non-recourse financing refers to any financing arranged to finance the acquisition, shortfall, operation, upkeep or maintenance of an asset or project

where the entity to which the debt is due has no recourse to any member of the Séché Group for the payment of any sum relative to such financing, and where reimbursement results essentially from the financial flows deriving from the operation of the asset or project in question;

■ ■ EBITDA means consolidated operating income before deduction of all depreciation and amortization expenses, provisions and write-downs, and other operating income and expenses.

At June 30, 2019, the Group had a bank leverage ratio of 3.20 vs. 2.98 at June 30, 2018 and 2.92 at December 31, 2018.

CHAPTER 3 - Consolidated financial statements at June 30, 2019 59

Note 15 - Exposure to interest rate risk

Séché Environnement's corporate debt, excluding hedging, is subject to a variable rate of interest.

The Group uses hedging instruments to cover against any rise in interest rates and optimize the cost of its debt. The new credit line requires a minimum of 50% hedging over a three-year period. The instruments used include swaps, caps, floors and collars. Their use is managed directly by the Group Finance Department.

Sensitivity analysis consists of calculating the impact of any upward or downward movement of the interest rate prevailing on the balance sheet date:

■ ■ A 1% rise in all interest rate curves would generate a gain in equity of €0.7 million linked to a change in fair value of the derivatives used as cash flow hedges.

■ ■ Conversely a 1% drop would generate a loss of €0.2 million.

Note 16 - Exposure to exchange rate risk

The exchange rate risk to which the Group is exposed stems from:

■ ■ The conversion of contributions from foreign subsidiaries outside the euro zone to the balance sheet and income statement;

■ ■ Bank debt denominated almost exclusively in euros being used to finance the investments of its foreign subsidiaries in local currencies (for subsidiaries not considered as long-term foreign investments).

Changes in foreign exchange income break down as follows:

In thousands of euros

06/30/2018

06/30/2019

Foreign exchange income, Europe

(20)

(96)

Foreign exchange income, Americas

(23)

545

Foreign exchange income, rest of world

2

(310)

TOTAL

(41)

140

At present, this risk is not subject to separate hedging at the Group level.

3.6.4.4. Earnings per share

Net earnings per share at the bottom of the income statement is the ratio of net income attributed to the parent company's shareholders to the weighted average number of shares making up the share capital of the parent company which are in circulation over the financial year, i.e. €0.96.

The Group has no dilutive instruments, so diluted EPS is equal to net EPS.

3.6.4.5. Key events since the closing of accounts

The Group is aware of no significant event occurring after the closing of accounts likely to have a significant impact on the Group's assets, financial position or operating results.

As far as the Company is aware, there were no legal disputes, arbitration or exceptional events occurring after the closing date that are liable to have or to have had in the recent past a significant effect on the financial position, earnings, activity or assets of the Company or the Group.

60 SÉCHÉ ENVIRONNEMENT - INTERIM FINANCIAL REPORT AT JUNE 30, 2019

2019 Interim Report

4

Report of the Statutory

Auditors on the interim financial

information at June 30, 2019

61

Period running from January 1, 2019 to June 30, 2019

To the Shareholders,

In accordance with the terms of our appointment at the Annual General Meeting and with article L.451-1-2 III of the French Monetary and Financial Code, we have performed:

■ ■ a limited review of the summary interim consolidated financial statements of Séché Environnement S.A. for the period from January 1 to June 30, 2019, such as they are appended to this report;

■ ■ checks on the information given in the interim activity report.

These summary interim consolidated financial statements were prepared under the responsibility of your Board of Directors. It is our responsibility to express our opinion on these financial statements based on our limited review.

I - Opinion on the financial statements

We performed our limited review in accordance with professional standards applicable in France. A limited review essentially consists in meeting with the members of the company's executive management who are responsible for accounting and financial matters and applying analytical procedures. A review is substantially less extensive than a full audit carried out in accordance with the professional standards applicable in France. As such, the assurance that the financial statements as a whole are free of material misstatement obtained via a limited review is a moderate one and not as high as that obtained through an audit.

On the basis of our limited review, and with regard to IFRSs as applicable in the European Union, we have not observed any material misstatements likely to call into question the fairness and accuracy of the summary interim financial statements or the image they give of the assets, financial position and results at the end of the first half-year period of the group comprised of the entities included in the scope of consolidation.

Without prejudice to the opinion expressed above, we draw your attention to Note 6.1 "Basis for preparing the financial statements" on the changes to the standards and interpretations applied by your company as of January 1, 2019, in particular the change in accounting method arising from the application of IFRS 16 "Leases", the impact of which on the financial statements at January 1, 2019 is described in Note 6.2.2 "Comparability" to the summary consolidated financial statements.

II - Specific verifications

We have also verified the information presented in the interim activity report in respect of the summary consolidated interim financial statements subject to our review. We have no comment to make on the truthfulness of this information or its consistency with the interim summary consolidated financial statements.

Nantes,

Rennes,

September 9,

September 9,

2019

2019

KPMG Audit

Mazars

Department of KPMG S.A.

Ludovic Sevestre

Franck Noël

Gwenaël Chedaleux

Partner

Partner

Partner

62 SÉCHÉ ENVIRONNEMENT - INTERIM FINANCIAL REPORT AT JUNE 30, 2019

2019 Interim Report

5

Statement

by the person responsible for the interim financial report

63

5.1

STATEMENT BY THE PERSON RESPONSIBLE

FOR THE INTERIM FINANCIAL REPORT

"I hereby certify that, to the best of my knowledge, the consolidated accounts for the half-year reporting period have been prepared in accordance with applicable accounting standards and provide an accurate image of the assets, financial position and results of the Company and the consolidated entities, and that the accompanying interim management report presents an accurate picture of the important events that occurred during the first six months of the year, their impact on the accounts, the main transactions with related parties as well as a description of the principal risks and uncertainties for the remaining six months of the year."

The Chairman and Chief Executive Officer

Joël Séché

Changé, September 10, 2019

64 SÉCHÉ ENVIRONNEMENT - INTERIM FINANCIAL REPORT AT JUNE 30, 2019

Société Anonyme (French limited company) with share capital of €1,571,546 - registered in the Laval Trade and Companies register under number B 306 915 535

Les Hêtres - CS 20020 - 53811 Changé Cedex 9

Tel.: + 33 (0)2 43 59 60 00 - Fax: + 33 (0)2 43 59 60 61 Tour Maine Montparnasse - BP 25

33 avenue du Maine - 75755 Paris Cedex 15

Tel.: + 33 (0)1 53 21 53 53 - Fax: + 33 (0)1 53 21 53 54

E-mail:actionnaires@groupe-seche.comwww.groupe-seche.com

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Séché Environnement SA published this content on 28 January 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 January 2020 17:44:08 UTC