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Report for the unaudited six months ended 30 June 2010

Metalor Technologies International SA

Neuchâtel, 9 August 2010 - For the six months ended 30 June 2010 the Metalor Technologies International SA group (“Metalor”, the “Group”) achieved Net Sales of CHF 167.9 million (2009: CHF 129.3 million), up 30%, and EBIT of CHF 28.1 million (CHF 17.1 million), up 64%. The EBIT Margin increased from 13% to 17% of Net Sales. The second quarter saw strong Refining division activity, and continued and clear confirmation of a return of demand in Advanced Coatings and Electrotechnics divisions. The closure of the Watch division was essentially completed as planned during the second quarter, and at a significantly lower cost than anticipated. The integration of the recently acquired Electrotechnics Americas activity is ahead of schedule and the business is trading above plan. Net Profit was CHF 32.7 million (CHF 10.0 million).

  • The Refining Division continued to perform strongly, allowing the division’s Net Sales to reach CHF 56.5 million, exceeding last year (CHF 55.1 million) by 3% . Refining EBIT margin was lower than the record levels of the same period last year due to higher costs, in particular with relation to sub-contracting charges. Demand for gold and silver refining continued to sustain activity while there was not any substantial recovery in platinum group metal volumes.

  • Advanced Coatings Division year to date Net Sales were 39% higher than last year at CHF 41.0 million (CHF 29.4 million), supported particularly by demand in the electrical and electronics industries in Asia. The benefits of the cost cutting in 2009 and increased New Sales helped deliver an EBIT margin significantly better than the same period last year.

  • Final shipments from Watch & Jewelry Division were made at the end of May 2010 and resulted in Net Sales of CHF 7.7 million (CHF 15.2 million) for an EBIT loss of CHF 1.8 million (loss CHF 5.4 million). The total Non-Operating costs of the closure are known with reasonable certainty and are anticipated to be CHF 4 to 5 million, of which CHF 0.6 million were already recorded in the first half. This was lower than anticipated despite an improved social plan due to final orders by customers of safety inventory and better than anticipated machines disposals. To date it was possible to find new jobs for 69 of the 119 affected employees.

  • Electrotechnics Division Net Sales benefitted from strong re-stocking as well as sustained underlying demand from customers. Net Sales year to date were CHF 65.5 million (CHF 29.7 million) up 121%, which represented a 36% growth of the existing business, as well as the impact of the acquisition of AMI Doduco’s America’s business effective at the beginning of 2010. The order book for Q3 is strong, although visibility into Q4 remains low. The division returned to profit despite the fact that the newly acquired Americas business was marginally loss making, albeit significantly less so than in our acquisition plan.

The sustained and significant resumption of demand in Advanced Coatings and Electrotechnics combined with continued strong trading in Refining has resulted in a most satisfactory performance for the Group as a whole, and all ongoing divisions are trading profitably. The restructuring measures taken during 2009 were aimed to position Metalor to benefit from recovery, and we believe the increase in EBIT margin underlines this.

Cash and equivalents less short-term borrowings plus net pending hedges were CHF 78.0 million (31 December 2009: CHF 84.2 million). This decrease reflected the acquisition of AMI Doduco Americas, an increase in working capital related to increased sales by Advanced Coatings and Electrotechnics, and loans to the employee participation plan to enable over 100 managers and key employees to invest in Metalor on a leveraged basis.

The mark to market values of our inventories including strategic metal holdings was CHF 112.2 million (31 December 2009: 111.0 million), compared to the book value CHF 85.0 million (31 December 2009: CHF 85.8 million), representing an unrealized gain of CHF 27.2 million. During Q2 the group sold CHF 9.8 million metals at book value realizing a Non-Operating Income of CHF 7.7 million. Additionally, as at 30 June 2010, the Group had sold forward for CHF 65.1 million metals with at book value of CHF 38.0 million. These forward contracts had a market value of CHF 8.8 million as at 30 June 2010, and this gain was also recorded as Financial Income.

We continue to explore a number of opportunities to grow the business, both organically and through acquisition.

Scott Morrison

Daniel Templeman

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