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Report for the unaudited three months ended 31 March 2011

Neuchâtel, 5 May 2011 - For the three months ended 31 March 2011 the Metalor Technologies International SA group (“Metalor”, the “Group”) achieved Net Sales of CHF 91.5 million (2010: CHF 78.6 million), up 16% on the same period last year, and up 23% on a like-for-like basis excluding sales of the Watch and Jewellery division closed in May 2010. The first quarter was exceptionally strong for both the Refining and Electrotechnics divisions whose Net Sales were up 29% and 25% respectively, while Advanced Coatings showed strong 8% growth.

EBIT was CHF 26.9 million, up 117% versus the CHF 14.5 million of the previous year. The Watch and Jewellery division had incurred EBIT losses of only CHF 0.5 million in 2010, and all three divisions contributed to this the strong growth as Gross Margins were increased while Selling, Legal and General and Administrative expenses remained flat versus Q1 2010.

Net Profit was CHF 34.6 million (CHF 26.3 million) and included, within Non Operating Items, gains of CHF 20.1 million from completion of the disposal program of certain reserves of platinum group metals.

  • The Refining Division performed very strongly, allowing the division’s Net Sales to reach CHF 33.9 million (CHF 26.2 million), up 29% thanks to high precious metals prices, strong and sustained refining volumes and careful metal and inventory control. Refining division’s EBIT margin was excellent as the sales performance could be leveraged into EBIT through careful cost control both in production and administration.

  • Advanced Coatings Division year to date Net Sales were 8% higher than last year at CHF 20.6 million (CHF 19.2 million), supported by strong performance in Europe while Asia performance was flat versus last year2010 due to a somewhat slower electronics sector demand, and in the latter part of March the first impact of the Japanese earthquake on electronics production in Asia. While none of Metalor’s customers were directly impacted, there has been considerable overall supply chain disruption.

  • Electrotechnics Division continued to experience very strong demand combined with very high silver prices, and Net Sales increased from to CHF 37.9 million (CHF 30.4 million), up 25%. The Americas activities acquired in January 2010 continued to grow both Net Sales and contribution to EBIT. The remainder of the division had just returned to modest profitability during the first quarter 2010, and the combination of very strong metal margins and carefully controlled manufacturing and administration costs allowed the division to increase EBIT to 20% of Net Sales, a 333% increase on the prior year period.

Strong trading combined with high precious metals prices put particular pressure on the Group’s working capital, in particular trade receivables increased CHF 54.9 million to CHF 175.6 million, although there was no deterioration in any of the divisions’ days sales outstanding ratios. Inventory fell from CHF 92.5 million to CHF 63.6 million including platinum group metal sales of CHF 30.1 million at book value (and CHF 51.2 million cash inflow), while trade payables remained steady. In view of high copper prices the Electrotechnics division could achieve significant purchasing savings by providing its suppliers with copper on a pool account basis, and as part of this initiative at 31 March 2011 the Group had an CHF 8.2 million copper position within inventory.

Cash and equivalents less short-term borrowings plus net pending hedges were CHF 135.4 million (31 March 2010: CHF 140.6 million), and the small decline was due to the significant investment in working capital, and accounts receivable in particular, in the last twelve months due to growth in both the business and metal prices.. This increase reflected cash consumed by operations offset by cash from strategic metal sales.

We continue to actively pursue opportunities to grow the business, both organically and through acquisition. On 1 April 2011 the Group completed the acquisition of the Coatings business of N.E. Chemcat Corporation. The acquisition cost will be financed 20% out of own cash and 80% using a term acquisition facility. The acquired business brings in excess of CHF 50 million Net Sales per annum to the Group including Japan and Korea as new markets, and has a similar EBIT margin to our existing Advanced Coatings division. Integration, in its early phases, proceeds smoothly to date.

Scott Morrison

Daniel Templeman

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