AnnuAl report 2007

REFINING                ADVANCED COATINGS                WATCHES AND JEWELRY                ELECTROTECHNICS             

IntroductIon

Foreword 3

Metalorinbrief 6

Highlights2007 8

dIvIsIonal actIvItIes

Refining 10

AdvancedCoatings 12

WatchesandJewelry 14

Electrotechnics 16

FInancIal statement

Preciousmetalprices 18

Financialyear2007report 20

Consolidatedbalancesheet 21

Consolidatedstatementofincome 22

Consolidatedstatementofcashflows 23

Consolidatedstatementofchangesinequity 24

Groupcompanies 25

TheoperatingcompaniesoftheMetalorGroup 26-27

Governingbodies 28

Table of conTenTs

annual reporT 2007

2

Foreword

mentsduringtheyearwithincreased

lines.Threeofthefourbusinessunits

exceededbothbudgetarytargets

andthepreviousyearsresultsfornet

salesandEBIT.TheTechnologyProd-

uctsdepartmentincreaseditsfocus

ondevelopmentsinsolarpastesand

nanoparticleapplications.

Theshareholdingofthecompanydid

notchangesignificantlyduringthe

year.Sometransactionstookplace

betweencurrentshareholders.The

employeeshareholdingprogramwas

continuedand6%ofthesharesare

nowheldbythestaff.

DearShareholders,

LadiesandGentlemen,

Themetalmarketscontinuedtomain-

tainnearrecordhighpricelevelsand

severalhistoricrecordswerebroken.

Volatilityduringtheyearwasagain

highandabnormalleaseratefluctu-

ationsdevelopedduetophysical

metalshortages,tradingpositions

andrateincreasesresultingfrom

thebankingcreditcrisis.Indus-

trialdemandforourproductsinthe

Asianmarketsremainedstrongand

continuedimprovementsinmarket

shareinbothEuropeandtheUSA

wereachieved.Theacquisitionofthe

JohnsonMattheyrefiningactivities

inHongKongputthecompanyin

aleadingpositiontoserveourcus-

tomerslocallyandgloballyforgold

refining.Ourbankingpartners,again,

reactedpositivelytoourdevelop-

3

RevenuegrowthinCHFtermsforthe

fourdivisionswas7%aheadof2006.

Onageographicbasis,therewas

goodgrowthinlocalcurrencyterms

inallsubsidiariesexceptItalywhere

thejewelrymanufacturingmarket

continuestodecline,inSingapore

asmoreleadframemanufacturing

movedtoChina,andinTaiwanwhere

pricecompetitionwassignificant.

Thiscourseofeventsduringtheyear

allowedthecompanytoachievean

operatingmarginof15%,whichis

nearly2%improvementoverthe

prioryear.Nomajorsalesofnon-

operatingassetsweremadeduring

theperiod.Netprofitfortheyearis

CHF42millionversusaprioryearnet

profitofCHF36million,i.e.repre-

sentinganimprovementof16%.

4

advanced coatIngs

Theoperatingprofitforthedivision

improved5%over2006.Market

sharegainsandnewproductsales

drivenbysubstitutioninEuropecon-

tributedtothispositiveresult.Strong

demandforpreciousmetalpowders

fromtheUSmanufacturingplantby

AsianandUScustomersimproved

salesby9%.Thecapitalexpansion

programattheSuzhou,Chinaplant

isunderwayandonschedule.Export

incentiveschemesfromChinawere

curtailedduringtheperiod,negatively

affectingmargins.

electrotechnIcs

TheElectrotechnicsDivisionhadan-

otherstrongyearin2007witha11%

increaseinnetsalesand15%im-

provementinoperatingmargin.Effi-

ciencygainsintheRedwitz,Germany

plantandconsistenton-timedelivery

fromtheCourville,Franceplantwere

majorcontributorstothefinancial

results.TheSuzhou,Chinaassembly

plantreachedbudgetarytargetsfor

theyearandamajorcapitalexpan-

sionprograminChinawasapproved

during2007.

reFInIng

NetsalesfortheRefiningDivision

increasedby8%drivenbyhigh

metalprices,marketsharegainsin

theAmericas,andtheadditional

facilityinHongKongviatheacquisi-

tionofJohnsonMatthey’sgoldand

silverbusiness.Platinumgroupmetal

volumeswereupsignificantlyover

thepreviousyearfurtherjustifying

thePGMrefiningexpansionprogram

whichisnearcompletion.Thecom-

panyisnowregisteredforgood

deliverybytheLBMA,LPPM,TOCOM,

NYMEX,DubaiandShanghaiGold

Exchanges.Metaloristhefirstforeign

registeredgooddeliveryrefinertothe

ShanghaiGoldExchange.

forwardto2010whichshowsacon-

tinuedincrementalgrowthpicture

basedonprojectedmarketactivity,

metalprices,andinvestmentplans.

TheBoardofDirectorsandthe

Managementwouldliketotakethis

opportunitytoexpressoursincereap-

preciationtoallourclients,financial

andbusinesspartnersandshare-

holdersfortheircontinuedsupport.

Aspecialthanksgoestoallourdedic-

atedemployeesaroundtheworld

whohavecontributedinachieving

anothergoodresult.

RichardRobinson

ChairmanoftheBoardofDirectors

Dr.ScottMorrison

ChiefExecutiveOfficer

business,anysignificantreductionin

demandforconsumerproductscould

impactaminorportionofthemarkets

servedbytheAdvancedCoatings

andWatchesandJewelryDivisions.

However,withtheirrecentorcur-

rentreorganizations,thesedivisions

shallbebetterpositionedfortighter

economicconditions.Inaddition,con-

tinuinginfrastructureimprovements

inthedevelopingworldandsustained

highmetalprices,duetosupply

constraints,andasahedgeonuncer-

taintywillhelptheElectrotechnics,

RefiningandAdvancedCoatingsac-

tivitiesduetotherobustnessoftheir

businessmodels.Substitutionofpre-

ciousmetalsbynon-preciousorlower

valuepreciousmetalswillcontinue,

butwearewellplacedtomeetthese

changesandhandlethemascommer-

cialopportunities.Capitalexpenditure

fortheyearamountedtoCHF24mil-

lion,asubstantialincreaseover2006.

Thisadditionalexpenditurewasap-

provedinordertoexpandcapacities

inSwitzerland,andcapturemarket

opportunitiesinAsia.Inthisrespect

robustbusinessplanswerereviewed

toassurethefutureprospectsofthe

company.Consideringtheabove,we

havedevelopedabusinessplangoing

5

watches and Jewelry

Netsalesofthedivisiondeclinedby

12%duetointernalizationofpro-

ductionbyluxurywatchbrandsand

highgoldpricesreducingconsumer

jewellerypurchases.Prioryearrecon-

ciliationissuesformetalaccountshad

aone-offnegativeeffectonprofit-

ability.Adivisionalleadershipchange

tookplaceduringtheyearandare-

structuringprogramisunderway.

ProsPects For the Future

Themarketsectorsinwhichweoper-

ateareshowinggoodlevelsofactivity

andmarketindicatorsremainposi-

tive,evenifsomesignsofeconomic

instabilityareappearing.Althoughwe

haveseennoeffectstodateonour

a global grouP

Foundedin1852inLeLocleintheheartofSwitzerland’swatchmakingindustrywhichwasthenrapidlyexpandingatthetime,the“preliminaryrollingfactory”ofMartindePury&Cieprovidedservicestothewatchmakersoftheregion.Theseincludedtheoperationofagoldsmelterandthemanufactureofwatchcases.Forover140yearsthesmelterwasinthehandsofbankers–theBanqueduLoclebetween1864and1918,andthenfrom1918to1998theSociétédeBanqueSuisse(SBS),whichgaveitthename“MétauxPrécieuxSAMetalor”.Metaloreventuallyoutgrewitsbankingandwatchmakingroleandin1950begantoofferservicestoanumberofotherindustriesacrosstheworldhavingcommonneedsforpreciousmetalsservicesandproducts.

metalor In brIeF

leadingnamesinindustry,fosteringthedevelopmentofnewmarketsegmentsforpartnerslookingforpreciousmetalsbasedinnovation.

Metalorhasfourdivisions,eachcorrespondingtoagroupofspecificmarkets:Refiningfortherecyclingandprocessingofpreciousmetalsandtheproductionofpurepreciousmetalsiningotsandotherforms;AdvancedCoatingsforelectronicanddecorativeapplications;WatchesandJewelry,whichincludessemiandfinishedproductsfortheluxuryjewelryandwatchsectors,andElectrotechnics,servingtheelectricalcontactsmarket.AtpresenttheMetalorGroupincludessome17companiesonfourcontinentswithatotalstaffworldwideof1365employees.

RelocatedtoNeuchâtelin1947theMetalorGroupcontinuedtogrowandexpand,addingnewfactoriesinFranceandtheUnitedStatestoitsnetwork,followedmorerecentlybyHongKongandChina.Metalor’sindustrialdestinywasfurtherstrengthenedin1998whenagroupofSwissinvestorsfromindustryacquiredamajorityshareholding.AsofApril2001thename“MetalorTechnologies”becamepartofthecorporatelogoofallGroupcompanies.

InnovatIon and qualIty

Theknow-howwhichMetalorhasdevelopedovertheyears,theexceptionalqualityofitsproductsanditsabilitytoanticipatemarkettrendsandrequirementshaveearnedthecompanyareputationforexcellenceallovertheworld.TodayMetalorsuppliespreciousmetalsandadvancedmaterialstopartnersinindustriesasvariedanddemandingaselectronicsandelectricalengineeringandthemanufactureofdeluxewatches.Thecompany’sabilitytoinnovateandcomeupwithreliabletechnologyhasattractedthe

6

2007 2006 2005 2004 Net sales(excluding PM value, in CHF million) 310.5 290.5 247.9 270.4 EBIT (in CHF million) 48.0 40.4 21.4 17.3 Net profit (in CHF million) 42.0 36.3 40.8 24.5 Headcount (Full Time Equivalent - December 31) 1 342 1 191 1 151 1 288

Dark grey : countries in which the

Metalor Group is present through its subsidiaries.

2007

310.548.042.0

1 342

KEY STATISTICS

7

REFINING DIVISION

CONTINUED SUCCESS

The Refining Division enjoyedanother year of great success. TheNet Sales of the division reached arecord level benefiting from strongprecious metal prices and markets,wider geographic coverage and abroad customer base. A focusedcampaign on technical and logisticsimprovements contributed to thereduction in throughput time in therefining processes.

The refineries in Switzerland andthe USA continued their strongperformance and were able to takefull advantage of favorable marketconditions while keeping costs undercontrol. Our refining service in HongKong expanded its business andsuccessfully integrated the gold andsilver business acquired from JohnsonMatthey in May 2007. The refineryin Suzhou, China has successfullycompleted its first full year ofoperation and has been acceptedas an official bullion supplier to theShanghai Gold Exchange.

HIGHLIGHTS 2007

ADVANCED COATINGS DIVISION

FURTHER DEVELOPMENTS IN THEFAR EAST AND STRENGTHENEDCUSTOMER RELATIONSHIPS

In 2007, the Advanced CoatingsDivision continued to evolve to caterfor shifting market needs, pursuedits consolidation within Europe andinvested in the streamlining anddevelopment of its manufacturingactivities in the USA and Far Eastrespectively.

Production in Europe has beenconsolidated in Marin, Switzerlandafter the closure of activities in Rome,Italy and Noisy, France. Conversely,production capabilities at our plant8

in Suzhou, China have been greatlyexpanded to add gold products andproprietary solutions. A major qualityinitiative commenced to certify theUS Powder and Flake manufacturingsite in Attleboro, MA to TS16949quality standard by November 2008.

R&D activities have been consolidatedin Singapore for electroplating toprovide more reactive and proactivesolutions. However, technicalservice and customization arestill maintained close to all majorgeographic markets.

Partnering with customers within theAdvanced Coatings Division is notjust a cliché, but the backbone of ourbusiness model. In 2007, businessrelations with key customers havebeen reinforced and formalized forthe long term.

WATCHES AND JEWELRY DIVISION

CONTINUED IMPROVEMENTS TOBETTER SERVE CUSTOMERS ANDBOLSTER SALES

Continual improvements to betterserve its customers remained thefocus of the Watches and JewelryDivision in 2007. The qualityassurance programs introducedduring the year have allowedproduction to react quickly toever tightening customer qualityspecifications.Sales in 2007 benefited from apositive and continuing strong trendin the watch industry, together withthe record demand for ever largerand heavier watch cases in preciousmetals. The expansion of the divisionin 2006 into new luxury segmentsother than watches increased andconfirmed our industrial evolutiontowards this complementary segmentof finished components. Furtherinvestments in machine capabilitieswere implemented to sustain thisgrowth area.

ELECTROTECHNICS DIVISION

PROFITABLE GROWTH IN 2007

The Electrotechnics Division sawtwo significant accomplishments in2007 : approval of a second Chineseoperation and increased marketshare in Europe. We continued toincrease the value of our productsand services for our customers thanksto dedicated engineering people,more efficient and reliable processesand equipments, increased R&Dcapabilities, supply chain expertiseand geographical expansion.Several R&D projects have also beenlaunched and others acceleratedto offer new contact materials anddesigns in the future.

9

relIable PerFormance

meetIng customers’ needs

TheRefiningDivisionspecializesin

recoveringgold,silverandplatinum

groupofmetalsfromawiderange

ofpreciousmetalbearingmaterials.

Dependingonthepreciousmetal

content,thesematerialsareeither

highgrademetallicssuchasgoldand

silverdore,platinumandpalladium

scrap,karatscrapanddentalscrap

etc.,orlowgradematerialssuch

asworkshopwastes,spentmetal

catalysts,electroplatedmetallicscrap

andelectronicsscrapetc.Themater-

ialscomefrombullionandcentral

banks,mines,collectors,dealersand

industriesgeneratingpreciousmetal

waste.Onarrivalattherefinery,the

materialsarefirstevaluatedtodeter-

minethepreciousmetalcontent.The

preciousmetalsarethenseparated

fromimpuritiesintherefiningpro-

cesses.Finemetalsareeventually

convertedtobullionproductswhich

areaccreditedwithLBMA,LPPM,

TOCOM,COMEX,Shangai,Dubaiand

othermajormarkets.Specialtyprod-

uctssuchashighpuritygold(above

99.999%pure),silverpowders,plat-

inumandpalladiumsaltsarealsopro-

ducedtomeetcustomerneedsinthe

high-technologysectors.

TheRefiningDivisionoperatesfour

refinerieslocatedinSwitzerland,USA

andChina(HongKongandSuzhou).

Inaddition,ithasevaluationcenters

andsalesofficesaroundtheworld

inmajormarketsprovidingextra

conveniencetocustomers.Nomat-

terwherethecustomersarelocated,

ourproactiveandexperiencedsales

teamsarecloseenoughtodeliverdis-

tinctivefullrefiningservicesstarting

fromacceptanceofmaterialstofinal

settlement.

the quest For excellence

MaintainingitsreputationofSwiss

Excellenceisatoppriorityforthe

RefiningDivision.Continuousefforts

havebeenmadetoshortenevalu-

ationandrefiningthroughputtime,

maximizepreciousmetalrefining

yieldsandreducethecosts.Major

investmentsinnewrefiningtechnolo-

giesduringthelastfewyearshave

improvedrefiningefficiencyand

strengthenedourcompetitiveadvant-

age.

Metalor Refining Division operates the most advanced precious metal refining facilities in

the world. With refineries located near all the terminal markets for precious metals and

with a strong focus on customer service, the Refining Division has a worldwide reputation

in the precious metal industry for technical expertise, integrity and high quality products

supplied to the electronics and jewelry industries.

10

refining Division

11

TheevaluationserviceoftheRefining

Divisionishighlyefficient,fastand

accurate.Evaluationcentersper-

formsamplingandrapidanalysisfor

quicksettlementwithcustomers.

Thefinalanalysisisperformedat

oneoftherefineries.Highlyskilled

assayersandchemistsguarantee

theaccuracyoftheresult.Metalor

hasbeenanOfficialRefereeofthe

LondonBullionMarketAssociation

(LBMA)since2003andhasrecently

beenappointedOfficialRefereeby

theLondonPlatinumandPalladium

Market(LPPM).

Continuousinvestmentonnew

processingtechnologiesenablesus

tomakefulluseofourindustrial

capacitywhileintegratingenviron-

mentalprotectionconsiderationsas

wellasensuringsafetystandards

thatareproperlyadaptedtothe

fieldofrefining.Wehaveachieved

QualityStandardISO14001for

EnvironmentalSystemsandISO

9001:2000forManagementSystems.

contInuous eFForts

TheRefiningDivisionappliesthe

highestethicalstandardsinitsbusi-

nessrelations.Ithasoneofthelead-

ingduediligenceprogramstoqualify

itssourcesofsupplyand,withthe

assistanceoflike-mindedpeoplein

industry,NGO’sandgovernment

bodiesaroundtheworld,continues

toworkonstrengtheningitseffect-

ivenessinthisarea.

Wearemotivatedbythesupport

ofourcustomersandbankingpart-

ners.Thesignificantimprovement

inspeed,qualityandproductivityin

theRefiningDivisioninrecentyears

hasonlybeenpossiblethankstothe

effortsmadebyitsstaffmembers.

Withenthusiasm,theyhavedemon-

stratedthatperseveringwithastrat-

egyaimedatcustomersatisfaction

surelyleadstosuccess.

InnovatIve solutIons

global PosItIonIng

TheAdvancedCoatingsDivision

productsaredevelopedandmanu-

facturedatitsproductionsitesin

Europe,USAandAsia.Alloperations

areISO9001:2000aswellasISO

14001:2004certified,whichguaran-

teesthesuperiorqualityandreliability

ofitsproducts.Metalorprovidesa

globalsolutiontomeettheneedsof

companiesoperatingworldwideand

adaptingtohighlycompetitivetrad-

ingconditions.Inordertorespond

tochangesindemand,Metalorhas

expandeditsproductionsiteforpre-

ciousmetalchemicalsinSuzhou,

closetoShanghai,China.Thisplant

notonlyservesthelocalmarketbutis

alsoinapositiontoshortendelivery

leadtimesintheAsiaPacificArea.

excePtIonal PlatIng Processes

Thedivisionoffersawiderangeof

bothelectrolyticandelectrolesspre-

ciousmetalplatingproductsand

processesdevelopedovermany

years.Theplatingproductsrangeis

designedforbothelectronicand

decorativeapplications,ensuring

excellenttechnicalperformancein

termsofwearresistancecombined

withhighconductivityforelectronic

products(connectors,printed

circuits,semiconductors)andnoble

appearancefordecorativeproducts

(watches,jewelry,leathergoodsand

spectacles).

PrecIous metal salts, solutIons, anodes and crystals

TheAdvancedCoatingsDivision

producesacomprehensiverangeof

preciousmetalchemicalcompounds

assaltsandsolutions,aswellaspure

preciousmetalanodesandsilvercrys-

tals.

12

The Advanced Coatings Division is a renowned producer of precious metal

based solutions for a wide variety of industrial sectors including general electronics,

semiconductor, aeronautics, decorative, automotive and photovoltaics.

13

aDvanceD coaTings Division

extensIve range oF Powders and FlaKes

Silver,goldandplatinumgrouppow-

dersareproducedinvariousparticle

sizes,surfaceareasandmorphologies

usingchemicalormechanicalmeans.

Theproprietarypowderexpertiseis

extendedtothefabricationofsilver

flakeswhoseexcellenceiswidely

recognizedbyformulatorsofcon-

ductiveadhesives,inksandpastes

thatserveavarietyofelectronic

applications.

a sIngle Partner

Thedivisionreliesontheestablished

expertiseoftheMetalorgroupin

thefieldoffinepreciousmetalsto

offeracompleteservice:thesupply,

customizationanddevelopmentof

bestqualitypreciousmetalproducts,

processengineering,on-sitesupport

throughoutEurope,intheAsiaPacific

regionandintheUnitedStatesof

Americaaswellastherefiningof

spentsolutionsandscrap.Weprovide

aone-stop-shopenablingcustomers

toreducecomplexityandthenumber

ofsuppliers.

multIPle IndustrIal sKIlls

InnovatIon, qualIty and servIce as a vehIcle For growth

Preciousmetalsintheluxurymarkets

continuetoattractdemandaround

theworld.Eachyearseestheappear-

anceofnewdevelopmentsand

trends,goingfromyellowtoredand

towhitegold,platinumandmore

recentlypalladium.Overtheyears,

continuousinnovationhaspositioned

Metalorasthebenchmarksupplierto

theluxurySwisswatchmakingindus-

try.TheResearchandDevelopment

departmentcontinuallydevelopsnew

alloysinresponsetomarketdemands

aswellasindividualcustomerneeds.

Followingdevelopment,industrial-

izationisguaranteedbyateamof

skilledengineerstransformingthe

newalloysintosemi-finishedand

finishedproducts.

Thankstoourabilitytodeliverawide

rangeofpreciousmetalalloysinvari-

ousshapesandsizes(tubes,cases,

washers,wires,sheets,profilesetc.),

Metalorhasemergedasthepreferred

partnerofleadingwatchbrands

andjewelers.Quality,reliabilityand

customerservicehaveremained

thefocusofourorganization.This

approachhasallowedthecompany

toenterintootherareasofgrowth

suchasluxurytelephonesandfin-

ishedjewelry.Tosupportthisactivity,

thedivisionhassubstantiallyinvested

innewmachinery:digitallyoperated

machines,newpolishingprocesses,

etc.

The Watches and Jewelry Division specializes in developing, manufacturing, selling and

distributing precious metal alloys in the form of semi-finished and finished products for

the watch-making, jewelry and other luxury markets.

14

WaTches anD JeWelry Division

15

eFFIcIency and relIabIlIty to suPPort our customers

Risingpreciousmetalpricescoupled

withevershorterleadtimesare

puttingconsiderablepressureon

manufacturingandsupplychains.At

Metalor,theredesignofmaterial

flowshasconsiderablyshortened

productiontime.Greaterefficiency

andflexibilityhavebeenachieved

bydelegatingresponsibilityandde-

cisionmakingtoautonomousshop

floorunits.Byadoptingthisquality

assuranceprocess,theseunitshave

consistentlyimprovedinhousequal-

ity.Lastbutnotleast,investmentsin

machineryandsoftwarehavehelped

usreducethe“timetomarket”of

newproducts.

Thedivisionoffersitscustomersa

refiningservicefortheirmanufactur-

ingscrapaswellasmanagingtheir

preciousmetalaccounts.Thereli-

abilityofthisserviceistheresultof

acombinationofknow-howand

uniqueskillsthatisprovingtobeof

paramountimportancetoourcus-

tomers.

comPlete solutIons

exPertIse In metallurgy

TheElectrotechnicsDivisionis

renownedforitsabilitytoconvert

silvermetal(Ag)forthepurpose

ofproducingmainlypseudo-alloys,

eitherbyextrusionordie-compaction.

Electricalcontactsareoftenmulti-

layeredandcombinetheproperties

ofsilverwiththoseofothermaterials

(tungsten,graphite,tinoxide,nickel,

etc.)inordertoensurehighelectrical

conductivityandstrongresistanceto

erosionandwelding.Thisexpertise

inmetallurgyiscombinedwithsig-

nificantknow-howinmanufacturing,

mixingandcompactingpowders.The

ElectrotechnicsDivisioniscontinually

upgradingitsproductrangeandthus

offersover2000typesofsemi-

finishedproducts,rivets,tips,assem-

bledcontactsandslidingcontacts.

guaranteed PerFormance

TheElectrotechnicsDivisioncon-

tributestothesafetyanddurability

ofelectricalappliances(switches,

contactors,circuit-breakers,relays)

intendedformarketssuchaselectri-

caldistribution,automation,transpor-

tation(automotive,aerospace,rail-

ways)andhousehold.Thequalityof

theElectrotechnicsDivision’sproducts

resultsinhightechnicalperformance

andrenownedreliability,makingit

apreferredsupplieroflargeworld-

widegroupsintheelectricalindustry.

Productivityisimprovingeveryyear

byautomatingitsproductionlines

andexpandingitsproductrange.The

continuousskillsimprovementsare

achievedthroughasustainedR&D

efforttodevelopnewmaterialsor

newprocessesforexampleinthe

fieldofbrazingandwelding.

a comPlete PartnershIP

Thankstoanorganizationbasedon

multidisciplinaryteamsandflexible

productioncapacitiesbothinEurope

andAsia,theElectrotechnicsDivision

isasupplieroftotalsolutions,in

partnershipwithitscustomers.The

ElectrotechnicsDivisionhasapres-

The Electrotechnics Division converts silver metal into electrical contacts, improving the

safety and durability of electrical apparatus throughout their working life. The Division

meets the increasing demands of the electrical industry with its expertise in metallurgy,

its organizational flexibility and its desire to innovate, working in partnership with its

customers.

16

elecTroTechnics Division

17

ence,directlyorindirectly,inover50

countriesinordertomeettheparticu-

lardemandsofmanycustomersina

markethavingdistinctcharacteristicsin

eachregionoftheworld.

Priorapprovalofmaterialsbythecus-

tomerisastagethatcallsforclose

relationshipsatalllevelsandadvanced

methodsofelectricaltesting.Allthe

R&D,production,andsalesteams

cancallonmanyyearsofexperience

inthesecertificationprocesses.The

ElectrotechnicsDivisionthereforeworks

incollaborationwithitscustomersright

fromthefirststagesofthedevelop-

mentofnewproducts.Itprovidesthem

withongoingadviceandexpertisefrom

theverystartoftheprocessofdesign-

ingnewapplications.Thecombination

ofskillsinelectricaltesting,applied

researchandmetallurgyhasenabled

Metalortodevelopinnovative

productsbasedonAgCW,AgCWC,

AgFe,AgZnO,CuCr,CuW,CuCand

AgSnO2.

TheElectrotechnicsDivisionalsooffers

theintegratedmanagementoflogist-

icalflowsinlinewithitscustomers’

needsinordertoensurejust-in-time

productavailability,makingconsign-

mentstocksavailableforitscustomers.

Metalorhastokeepabreastofchanges

intheindustrybysupportingcus-

tomersintheirtechnicaldevelopments

aswellasinthegeographicalexpansion

oftheirproductioncapacity.Metalor

thusofferslong-termco-operationto

itspartners,basedoncontinuousR&D

work,improvementinmanufacturing

processesandinvestmentinpeople

andmachinery.Theendcustomergains

benefitsfromalltheseaspectsthrough

reliableanddurableproducts.

18

PrecIous metal PrIces

Numbersandfiguresasusedinthesechartsaboveareonlyindicativeanddonotreflectactualquotesormarketprices.

12500

15000

17500

20000

22500

25000

27500

30000

32500

2003 2004 2005 2006 2007

Gold CHF/KG (UBS) in CHF moving average 38 days (s)© UBS AG

PrIce trend For gold chF/Kg 2003-2007

24000

25000

26000

27000

28000

29000

30000

31000

Jan2007

Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Gold CHF/KG (UBS) in CHF moving average 38 days (s)© UBS AG

PrIce trend For gold chF/Kg 2007

4000

6000

8000

10000

12000

14000

16000

2003 2004 2005 2006 2007

Palladium CHF/KG (UBS) in CHF moving average 38 days (s)© UBS AG

PrIce trend For PalladIum chF/Kg 2003-2007

12000

12400

12800

13200

13600

14000

14400

14800

15200

Jan2007

Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Palladium CHF/KG (UBS) in CHF moving average 38 days (s)© UBS AG

PrIce trend For PalladIum chF/Kg 2007

25000

30000

35000

40000

45000

50000

55000

60000

2003 2004 2005 2006 2007

Platinum CHF/KG (UBS) in CHF moving average 38 days (s)© UBS AG

PrIce trend For PlatInum chF/Kg 2003-2007

44000

46000

48000

50000

52000

54000

56000

58000

Jan2007

Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Platinum CHF/KG (UBS) in CHF moving average 38 days (s)© UBS AG

PrIce trend For PlatInum chF/Kg 2007

PrIce trend For sIlver chF/Kg 2003-2007

100

200

300

400

500

600

700

2003 2004 2005 2006 2007

Silver CHF/KG (UBS) in CHF moving average 38 days (s)© UBS AG

440

460

480

500

520

540

560

580

600

Jan2007

Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Silver CHF/KG (UBS) in CHF moving average 38 days (s)© UBS AG

PrIce trend For sIlver chF/Kg 2007

METALOR TECHNOLOGIES INTERNATIONAL SA

FINANCIAL STATEMENT

Consolidated financial statementsAs of December 31, 2007

19

FInancIal year 2007 rePort

20

Ourmarketplacein2007wassub-

stantiallyinfluencedbyincreasesinthe

pricesofgoldandplatinum.Asinthe

previousyear,preciousmetalprices

werehighlyvolatile.Theincreased

preciousmetalfinancingneedsofour

activitieswerefullysupportedbyour

bankingpartners.

TheconsolidatedsalesoftheMetalor

Group,withouttheintrinsicvalueof

thepreciousmetal,amountedto

CHF310.5millionwhichis7%higher

thaninthepreviousyear.Theoperat-

ingresult(EBIT)increasedfrom

CHF40.4millionin2006toCHF48.0

millionin2007.Operatingcostswere

CHF3.0millionhigherthaninthepre-

viousyear.Netincomeamountedto

CHF42.0millionFor2007.

•TheRefining Divisionperformed

wellinallfacilities.Metalor’sglobal

presencewasenhancedwiththe

acquisitionofthegoldandsil-

verrefiningactivitiesofJohnson

MattheyinHongKong.Thisactivity

wasconsolidatedintheresultsfrom

Mayandwillshowfullimpacton

theresultsin2008.

•TheAdvanced Coatings Division’s

salesgrew2%comparedtothe

previousyear.Profitabilityimproved

further.ShortfallsinAsiawereoffset

byastrongEuropeandecorativeand

industrialmarketandrecordsilver

powdersalesintheUSA.Thetrans-

ferofproductionfromItalytoour

plantinMarin(CH)hadapositive

impactonlogisticsandproduction

costs.

•TheWatch and Jewelry Division’s

revenuesandoperatingresultwere

lowerthanin2006.Thedivision

hasbeenaffectedbysomeclients’

internalisationinthewatchindustry.

Prioryearreconciliationissuesfor

metalaccountsinfluencedtheresult

negatively.

•TheElectrotechnics Divisioncon-

tinuedastronggrowthinsalesand

profitability.Theturnoverincreased

by11%andtheEBITreached15%.

Amajorcapitalexpansionprogram

inChinawasapprovedduring2007.

TheGrouphasanetcashpositionof

CHF65.9millionat31.12.2007.

In2007adividendofCHF2500

pershare(CHF23.8millionintotal)

waspaidtotheshareholders.The

shareholder’sequityatyear-end2007

amountedtoCHF367.3millionor

67%ofthetotalbalancesheetvalue.

Inthecourseoftheshareholdingpro-

gramforkeyemployees274treasury

sharesweresoldto54employees.

Thetotalnumberofsharesremains

unchangedat10000.

InJanuary2008apartofourown

preciousmetalsinventoriesweresold.

Thistransactiongeneratedasubstan-

tialgainwhichallowstheBoardof

DirectorstorecommandtotheAnnual

GeneralMeetingthepaymentofa

higherdividendthanbasedonthe

operatingresultandthenetprofit

2007.

TheBoardofDirectorsproposesadivi-

dendpaymentofCHF6000pershare

(CHF57.0millionintotal).

21

CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2007(with comparative figures as of December 31, 2006)

in CHF 1 000 31.12.2007 31.12.2006

ASSETS

Cash and cash equivalents 75 698 30 466Trade receivables, net 251 327 284 162Other receivables 8 752 9 124Inventories (*) 76 773 72 965Prepaid expenses and accrued income 6 216 3 926

Current assets 418 766 400 643

Financial assets 1 953 1 995Property, plant and equipment 123 151 116 729Intangible assets 1 043 944Deferred tax assets 5 714 2 408

Non-current assets 131 861 122 076

TOTAL ASSETS 550 627 522 719

LIABILITIES AND SHAREHOLDERS’ EQUITY

Trade payables 70 718 68 940Other payables 17 888 13 306Provisions for liabilities and charges 35 346 37 273Short-term borrowings 11 512 6 037Accrued expenses and deferred income 12 436 9 889

Current liabilities 147 900 135 445

Long-term borrowings 3 24Provisions for liabilities and charges 8 360 7 909Deferred tax liabilities 27 109 27 065

Non-current liabilities 35 472 34 998

TOTAL LIABILITIES 183 372 170 443

Share capital 800 800Share premium 29 903 27 456Retained earnings 339 740 328 762Treasury shares (3 188) (4 742)

Shareholders’ equity 367 255 352 276

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 550 627 522 719

(*) The market value of inventories as of December 31, 2007 amounts to KCHF 135 080 (December 31, 2006 : KCHF 119 994)

22

CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDING DECEMBER 31, 2007(with comparative figures for the year ending December 31, 2006)

in CHF 1 000 2007 2006

Net sales (excluding precious metals) 310 518 290 452Cost of goods sold (excluding precious metals) (172 380) (161 761)

Gross profit 138 138 128 691

Sales and logistics (39 864) (37 737)Finance and administration (36 201) (36 764)Other operating costs (11 540) (10 095)Operating costs, total (87 605) (84 596)Precious metal leasing fees, net (3 631) (5 157)Other operating income 1 125 1 505

Operating result before precious metal price fluctuations 48 027 40 443

Recovery of provision for precious metal price fluctuations 279 2 282

Operating result after precious metal price fluctuations 48 306 42 725

Financial income 10 322 10 618Financial expenses (12 513) (12 976)

Financial result (2 191) (2 358)

Non-operating income 1 026 9 592Non-operating expenses (1 633) (6 030)

Non-operating result (607) 3 562

Income before tax 45 508 43 929

Current income tax (6 875) (6 443)Deferred tax 3 411 1 153

NET INCOME 42 044 36 333

23

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDING DECEMBER 31, 2007(with comparative figures for the year ending December 31, 2006)

in CHF 1 000 2007 2006

Income before tax 45 508 43 929Depreciation, amortization and provisions 23 341 22 763Loss on sales of fixed assets, net 10 1 638Working capital changes, net 25 715 (53 556)Deferred taxes changes, net – (198)Income tax paid (6 600) (3 903)

Cash flows from operating activities 87 974 10 673

Purchase of fixed assets (24 116) (14 849)Proceeds from the sale of fixed assets 487 1 052Proceeds from the sale of long-term financial assets 713 –Proceeds from the sale of / (acquisition of) intangible assets (1 226) –Paid restructuring expenses (624) (3 811)

Cash flows from investing activities (24 766) (17 608)

Change in short-term borrowings 5 475 1 493Change in long-term borrowings net (21) (79)Sale of / (acquisition of) treasury shares net 2 803 555Dividend paid net (23 276) (18 478)

Cash flows from financing activities (15 019) (16 509)

Effects of exchange rate changes on cash and cash equivalents (2 957) (2 510)

Change in cash and cash equivalents 45 232 (25 954)

Cash and cash equivalents, at beginning of year 30 466 56 420

CASH AND CASH EQUIVALENTS, AT END OF YEAR 75 698 30 466

24

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDING DEC. 31, 2007(with comparative figures for the year ending December 31, 2006)

CumulativeShare Share Accumulated translation Goodwill on Treasury

in CHF 1 000 capital premium profits adjustement acquisitions shares Total

2007

Total equity as of 1.1 800 27 456 351 585 (12 209) (10 614) (4 742) 352 276Profit for the year – – 42 044 – – – 42 044Dividend – – (23 775) – – – (23 775)Acquisition of own shares – – – – – (323) (323)Sale of own shares – 2 447 – – – 1 877 4 324Goodwill acquired – – – – (927) – (927)Exchange difference – – – (6 364) – – (6 364)

TOTAL EQUITY AS OF 31.12 800 29 903 369 854 (18 573) (11 541) (3 188) 367 255

2006

Total equity as of 1.1 800 25 809 334 595 (8 013) (10 614) (5 607) 336 970Profit for the year – – 36 333 – – – 36 333Dividend – – (18 478) – – – (18 478)Acquisition of own shares – – 43 – – (43) –Sale of own shares – 1 647 (908) – – 908 1 647Exchange difference – – – (4 196) – – (4 196)

TOTAL EQUITY AS OF 31.12 800 27 456 351 585 (12 209) (10 614) (4 742) 352 276

grouP comPanIes(Asof31stDecember,2007)

Share capital Group ConsolidationCompany name Headquarter Currency (1 000) interest method*

Metalor Technologies International SA Neuchâtel,Switzerland CHF 800 N/A F

Metalor Technologies SA Neuchâtel,Switzerland CHF 11750 100% F

Metalor Finance SA Neuchâtel,Switzerland CHF 40400 100% F

Metalor Finance (Curaçao) N.V. Curaçao,N.A. CHF 10 100% F

Metalor Technologies (UK) Ltd. Birmingham,UK GBP 150 100% F

Metalor Technologies (Iberica) SA Barcelona,Spain EUR 822 100% F

Metalor Technologies USA Corporation NorthAttleboro,USA USD 1 100% F

Metalor USA Refining Corporation Attleboro,USA USD 1 100% F

Metalor Technologies (Hong Kong) Ltd. HongKong,China HKD 3501 100% F

Metalor Technologies (Hong Kong) Ltd.Taiwan Branch Taipei,Taiwan TWD 5000 100% F

Metalor Technologies (Hong Kong) Ltd.Korean Branch Seoul,SouthKorea KRW 2960089 100% F

Metalor Technologies (Suzhou) Ltd. Suzhou,China USD 2100 100% F

Metalor Technologies (France) S.A.S. Courville,France EUR 5079 100% F

Metalor Technologies (Deutschland) GmbH Redwitz,Germany EUR 767 100% F

Metalor Technologies (Italia) S.R.L. Milan,Italy EUR 100 100% F

Metalor Technologies (Sweden) AB Boras,Sweden SEK 100 100% F

Metalor Technologies (Singapore) PTE Ltd. Singapore,SG SGD 100 100% F

*F=FullConsolidation

25

the oPeratIng comPanIes oF the metalor grouP(AsofDecember31,2007)

26

swItzerland

metalor Technologies International SAAvenueduVignobleCH-2009NeuchâtelPhone +41327206111Fax +41327206625www.metalor.comE-mail:corporate@metalor.com

metalor Finance SAAvenueduVignobleCH-2009NeuchâtelPhone +41327206111Fax +41327206601

metalor Technologies SADivisionsAvenueduVignobleCH-2009NeuchâtelPhone +41327206111Fax +41327206605Fax +41327206614

DivisionsRuedesPerveuils8CH-2074MarinPhone +41327206111Fax +41327206602Fax +41327206612

DivisionGeneva officeAérogareFretEntrée1,BureauE45CH-1211Genève5AéroportPhone +41227986962

unIted states

metalor Technologies USA CorporationDivision255JohnL.DietschBoulevardNorthAttleboro,MA02763,USAPhone +15086998800Fax +15086951603

metalor USA Refining CorporationDivision255JohnL.DietschBoulevardNorthAttleboro,MA02763,USAPhone +15086998800Fax +15086951603

Divisionlos Angeles office650SouthHillStreetSuite811LosAngeles,CA90017-1754,USAPhone +12136247687Fax +12136245532

Peru

metalor USA Refining CorporationSuccursal del PeruDivisionAv.ProduccionNacionales278UrbLaVillaChorillosLima09PeruPhone +5112515456Fax +5112515472

sPaIn

metalor Technologies (Ibérica) SADivisionsBolivia202-204E-08018BarcelonaPhone +34933030112Fax +34933073795

DivisionC/Albasanz14bis,1°GE-28037MadridPhone +34913757480Fax +34913044142

France

metalor Technologies (France) S.A.S.DivisionRuedesAquées,BP29F-28190Courville-sur-EurePhone +33237237844Fax +33237237467

Division11,rueLouisAulagneBP63F-69922OullinsCedexPhone +33472663210Fax +33478869068

DivisionImmeubleP.H.Spaak12-14,rueJulesFerryF-93110Rosny-sous-BoisPhone +33148125100Fax +33148125119

Division53,rueLafayetteF-75009ParisPhone +33140230029Fax +33140230198

germany

metalor Technologies (Deutschland) GmbHDivisionsKronacherStrasse66D-96257RedwitzPhone +499574624803Phone +499574624800Fax +499574624804

the netherlands

metalor Technologies (Deutschland) GmbHThe Netherlands BranchDivisionWeegschaalstraat3NL-5632CWEindhovenPhone +31402911265Fax +31402911266

legend

HeadOffice

Divisions

Refining

AdvancedCoatings

WatchesandJewelry

Electrotechnics

chIna

metalor Technologies (Hong Kong) ltd.DivisionsSuite1705-9,TheMetropolisTower10MetropolisDrive,HungHomKowloon,HongKong–ChinaPhone +85225214131Fax +85228451791

metalor Technologies (Suzhou) ltd.Divisions8ZhaoYangRoad,LoufengEastZoneSuzhouIndustrialParkJiansuProvinceChina215123Phone +8651265936181Fax +8651265936171

Shanghai liaison officeDivisionNo3Building,800ShenfuRoadXinzhuangIndustryParkMinhanhDistrictShanghaiChina201108Phone +862154423060Fax +862154420790

Dongguan Branch officeDivisionsUnitB213,WanbaoChengErhuanEastRoadChangan,DongguanGuangdongProvinceChina523856Phone +8676985443938Fax +8676985443933

taIwan

metalor Technologies (Hong Kong) ltd.Taiwan BranchDivisions6F,101Rei-HuStreetNei-HuTaipei,TaiwanChinaPhone +886277207775Fax +886277200303

sIngaPore

metalor Technologies (Singapore) PTE ltd.Division67TechParkCrescentTUASSingapore638074Phone +6568631600Fax +6568630102

thaIland

metalor Technologies (Singapore) PTE ltd.Bangkok Representative officeDivisionPrimeStateMiniOffice79/4Moo2,5thFloorSrinakarinRoad,NongbornPravejBangkok10260ThailandPhone +6623660719Fax +6623660720 27

unIted KIngdom

metalor Technologies (UK) ltd.Divisions74WarstoneLaneUK-BirminghamB186NGPhone +441212363241Fax +441212363568

Division104-105SaffronHillUK-LondonEC1N8HBPhone +442074055298

Fax +442074054844

sweden

metalor Technologies (Sweden) ABDivisionSagagatan22S-50635BorasPhone +4633444250

Fax +4633444260

Italy

metalor Technologies (Italia) S.r.l.DivisionsViaG.DiVittorio28I-20068PeschieraBorromeo(Milano)Phone +39025165181Fax +390255301021

board oF dIrectors

RichardRobinson

RobertLombardini

MartinBisang

Hans-JuergSchaer

DanielSchlatter

Chairman

Vice-Chairman

Member

Member

Member

corPorate management

DrScottMorrison

FredyHiltmann

DrYuxingShang

JacquesMichel

RichardLeVaillant

DrJeanFournier

ChristineTsai

KennethBeilstein

ChiefExecutiveOfficer

ChiefFinancialOfficer

GeneralManagerRefiningDivision

GeneralManagerAdvancedCoatingsDivision

GeneralManagerWatchesandJewelryDivision

GeneralManagerElectrotechnicsDivision

GeneralManagerGreaterChina

GeneralManagerUSA

audItors

28

HansIsler

DanielHumbel

Ernst&YoungLtd.,Geneva,Switzerland

Ernst&YoungLtd.,Geneva,Switzerland

governIng bodIes(AsofDecember31,2007)

© Copyright Metalor 2008. All rights reserved. Except as permitted by law, no part of this document may be reproduced or transmitted by any process or means without the prior consent of Metalor.

The Metalor logo, the Metalor© name and all product names referred to herein are the registred trademarks and trademarks of the Metalor Group of companies.

No guarantee nor warranty of any kind is given as to the information contained herein, including but not limited to accuracy, completeness, merchantability or fitness for a specific purpose. Metalor shall not be held liable for loss or damage which may result from reliance on the information contained herein.

Published by Metalor Technologies International SA,Avenue du Vignoble, 2009 Neuchâtel, Switzerland.

This annual report is available in English and French.

Design: > graffiti-communication.chPhotos: Metalor / > graffiti-communication.chPrint: IDM, Imprimerie des Montagnes, La Chaux-de-FondsEdition: English 1800, French 2000

CS – 0001EN / 02.2008 – 1800

REFINING                ADVANCED COATINGS                WATCHES AND JEWELRY                ELECTROTECHNICS             

Metalor Technologies International SAAvenue du Vignoble, CH-2009 Neuchâtel, Tel. +41 (0)32 720 61 11, Fax +41 (0)32 720 66 25info@metalor.com, www.metalor.com