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Report for the unaudited nine months ended 30 September 2010

Neuchâtel, 2 November 2010 - For the nine months ended 30 September 2010 the Metalor Technologies International SA group (“Metalor”, the “Group”) achieved Net Sales of CHF 245.2 million (2009: CHF 190.8 million), up 29% on the same period last year, and EBIT of CHF 40.9 million (CHF 26.7 million), up 53%. The EBIT Margin increased from 14% to 17% of Net Sales. The third quarter saw continued steady Refining division activity, and continued strong demand for the Advanced Coatings and Electrotechnics divisions. These results include impact of the closure of the Watch division. The integration of the Electrotechnics Americas activity acquired in January 2010 continued ahead of schedule and with trading ahead of plan. Net Profit was CHF 39.7 million (CHF 9.7 million) and benefitted from disposals of certain reserves of platinum group metals realizing gains CHF 17.9 million gains within Non Operating items.

  • The Refining Division continued to perform steadily, allowing the division’s Net Sales to reach CHF 82.4 million (CHF 81.2 million), just ahead of last year despite the fact that the extreme peaks of activity experienced at time during 2009 were not reproduced. Refining division’s EBIT margin was lower than the record levels of the same period last year due to tighter pricing and some product mix induced higher production costs. Demand for gold and silver refining continued to sustain activity while some modest recovery in platinum group metal volumes was noted.

  • Advanced Coatings Division year to date Net Sales were 36% higher than last year at CHF 60.8 million (CHF 44.8 million), supported particularly by demand in the electrical and electronics industries in Asia combined with strong performance in both Europe and the USA. 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 19.5 million) for an EBIT loss of CHF 2.3 million (loss CHF 8.9 million). The total Non-Operating costs of the closure are known with reasonable certainty and are anticipated to be in the region of CHF 4 million, of which CHF 2.7 million were already recorded in the first three quarters. 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 84 of the 119 affected employees.

  • Electrotechnics Division Net Sales benefitted from strong re-stocking in the earlier part of the year, followed by ongoing sustained underlying demand from customers. Net Sales year to date were CHF 98.4 million (CHF 46.8 million) up 110%, which represented a 45% 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 remains strong. Thanks to restructuring and a return of demand, the division had already returned to EBIT profit during Q4 2009 and in 2010 continued to grow EBIT despite the fact that, in line with expectations, the Americas business was just breakeven.

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.

The mark to market values of our inventories including strategic metal holdings was CHF 104.0 million (31 December 2009: 111.0 million), compared to the book value CHF 79.7 million (31 December 2009: CHF 85.8 million), representing an unrealized gain of CHF 24.3 million. During the second and third quarters the group sold some strategic metals realizing a Non-Operating Income of CHF 17.9 million.

Cash and equivalents less short-term borrowings plus net pending hedges were CHF 100.6 million (31 December 2009: CHF 84.2 million). This increase reflected cash generation from operations and strategic metal sales partly offset by 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.

We continue to actively pursue opportunities to grow the business, both organically and through acquisition.

Scott Morrison
CEO

Daniel Templeman
CFO

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