Von Roll Holding AG

Zurich, 2006-3-7

During the course of the financial year 2005, Von Roll succeeded in boosting gross orders by 11% to a total of CHF 482.3 million and sales by 9% to a total of CHF 461.9 million, thereby continuing the positive trend established in the previous year. The operating result, excluding non-recurrent factors, rose by 20% to a total of CHF 17.9 million, despite the increase in costs of raw materials.

Net income, which includes all extraordinary and non-recurrent factors, totaled to CHF 15.3 million, 17% down to the previous year. This decline is caused, amongst other influences, mainly by the accumulated negative exchange-rate differences associated with the sale of a minority shareholding (hazardous waste incineration plant) in the USA (see also Von Roll media release dated 23 December 2005). According to the IFRS regulations, Von Roll had to recognize that difference in the profit and loss statement, although it was already accounted for in the equity. Consequently, overall the transaction's impact on the company’s equity and cash flow was positive.

Market opportunities exploited

In line with general market developments, noticeable growth was particularly achieved in Asia. In America, the results were positively influenced by acquisitions, whilst in Europe sales figures on an already high level only made moderate progress.

The volume of orders received as compare to 2004, rose by 11% to CHF 482.3 million. This was mainly due to the development of the Business Unit Electrical, which achieved a 16% increase to CHF 374.6 million and at the same time topped net sales by 10% to CHF 344.5 million.

In the Business Unit Industrial orders received were down 5% to CHF 107.8 million, and net sales declined by 2% to CHF 103.7 million. The main focus in this area of business was on further improving the income and consolidating the operational structures.

Strengthening the core business and improving market presence

During the financial year of 2005, Von Roll successfully continued streamlining its corporate structure. Selling the company's shareholding in the South African distributor Calidus, but still maintaining shipments to Calidus, Von Roll took into account the strategic importance, without jeopardizing the market presence in South Africa. At the end of 2005, Von Roll disposed its 49% stake in the hazardous waste incineration plant in East Liverpool (USA), a remnant of previous business activities.

By setting up distribution companies in expanding markets, such as Eastern Europe, in 2005 Von Roll continued to strengthen its market position. In the rapidly growing Asian market, additional production sites were either built (in Shanghai, China) or enlarged (Bangalore, India). These activities reinforced Von Roll's all-important local presence in these emerging regions.

Continued improvement of Von Roll's equity ratio and cash situation

Although the sale of the shareholding in the hazardous waste incineration plant in the USA burdened the company’s earnings by CHF 9.5 million due to accounting requirements, which caused profits after tax to drop below the prior year figure, this disinvestment had a positive impact on both equity and liquidity. Thus, the transaction in question boosted the company's cash flow by CHF 15.3 million and increased its equity by CHF 3.2 million. In total, the equity ratio at the end of the fiscal year increased to 50.3% (compare with 40.7% in 2004) and cash totaled to CHF 46.3 million (as against 38.6 million in 2004). At the same time there was a remarkable decrease in debts.

Changes in the management

On 1 March 2006, Stephan Naef assumed the duties as CFO of Von Roll Holding Ltd., taking over from Werner Matzner. At the end of July 2006, Jack Craig, who currently heads the Business Unit Electrical, will withdraw from his duties to take retirement. His position will be taken over by CEO Walter Vogel.

Prospects From todays perspective, demand in most of Von Roll's target markets is developing solidly, with steady exceptional growth in Asia. Since Von Roll's corporate structure has been largely streamlined, no further substantial extraordinary influences on results are anticipated. The company's objective for 2006 is to again achieve substantial growth in both volume and income. After the first months of its new financial year, Von Roll is well on the way to achieving those objectives.

Von Roll: Key figures

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