AnnuAl RepoRt 2011

Foreword
Dear Shareholders,
Ladies and Gentlemen,
In the past 12 months we have witnessed
many disruptive events that
have impacted our business in a variety
of ways. As with the banking liquidity
crisis of 2008 / 9, the government debt
issues highlighted last year resulted in
a rapid destocking of supply chains in
anticipation of reduced demand. This
was particularly pronounced in the second
and third quarters of the year. The
earthquake and tsunami in Japan disrupted
supply chains around the world,
and this also slowed production. Over
the past quarter, a number of market
indicators have become positive and
we look forward to a market recovery
in the 2nd half of 2012. The significant
movements in exchange rates between
the Swiss Franc, Euro, US Dollar and
Japanese Yen had regional impacts but
were largely offset by metal price gains
when consolidating the accounts in
Swiss Francs.
Metal prices fluctuated around investor
sentiment and risk exposure but there
was a significant increase in the average
price of gold and silver. There were
several strong price spikes for gold and
silver during the year, which put pressure
on our working capital financing,
but also resulted in periods of record
receipts for refining activity. It is significant
that central banks were net purchasers
of gold worldwide during 2011
reversing a 20-year trend.
As part of the strategic studies undertaken
in 2010, several acquisition
targets were confirmed as optimal. In
the Advanced Coatings Division, Asia
was the focus and in April the Coatings
division of NECC Japan was acquired,
nearly doubling the size of this activity.
The acquisition also expanded our
geographic footprint with facilities in
Japan and Korea, while integration of
the duplicate offices / plants in China,
Taiwan and Singapore are underway.
While the earthquake did affect some
activities, overall results for 2011
exceeded the business plan. We also
realized that we needed to increase our
market position in silver-based powders
and flakes. With this goal in mind,
we acquired the production assets of
Henkel Corp. in Port Huron, Michigan
in December 2011. This production site
offers a diversification of our supply
base and an additional technology.
In order to consolidate our
Electrotechnics production in the
Americas, it was decided to close
Puerto Rico production and integrate
it into the Export, Pennsylvania plant.
This resulted in a more efficient use of
production equipment and the reduction
of 76 staff.
The organizational structure of the
company was reinforced during the
year with the partial verticalization of
the finance and treasury functions
around the world reporting into the HQ.
There were also transitions within the
EXCOM for the CFO and VP of Human
Resources.
We again added several new banking
partners to the portfolio of preciousmetal
working capital providers, and
enhanced our overdraft facilities in
Europe and Asia. Lease rates for gold
remained relatively stable, but we
have seen increases for silver over the
course of the year. For the first time in
the company’s independent history a
syndicate of three banks provided a five
year loan related to the acquisition in
Asia made in April 2011. Non-operating
gains were obtained in the first quarter
from forward metal sales executed during
2010.
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