Reduction of par value and share buyback (PR0605)

Key data for fourth quarter of 2005 and for year overall

With the introduction of new “HD-ready” products in the 2005 business year Micronas has  taken up a strong position in the growing market for flat-panel displays. In addition, Micronas  acquired WISchip International, a US supplier of video compression and streaming  technology, adding innovative solutions to its own range of products for the future-oriented, high-definition TV markets. Inventory corrections at customers in the first half of the year and a decline in the demand for high-end CRT TV sets, which could not be offset in value terms by sales of products for flat-panel displays, led to a slowdown in the performance of the Consumer division. By contrast, demand in the Automotive division was very buoyant; the growth rate in the Hall sensors segment was well into double figures.

The Board of Directors is proposing to the ordinary Shareholders’ Meeting on March 3, 2006, a par value reduction of CHF 0.95 per share, i.e. from CHF 1.00 to CHF 0.05. Based on the total of 32 633 730 shares issued as at the end of fiscal 2005, this will result in a capital reduction of CHF 31 002 043.50. The payout will probably take place in June 2006. At the same time, the Board of Directors has asked UBS AG to conduct a share buyback starting February 13, 2006, up to a maximum volume of CHF 100 million, using a second trading line. No decision has yet been made regarding the application of the repurchased shares. The most likely option is a capital reduction. Another possibility is to use them for financing future acquisitions.

In the fourth quarter of 2005, the Micronas Group generated consolidated net sales of CHF 230.8 million, a rise of 2.5 percent on the previous quarter. In fiscal 2005 overall, sales totaled CHF 845.1 million, falling short of the previous year’s all-time high by 12.3 percent. Adjusted for currency effects, this represents a decrease of 12.6 percent.

The Group’s operating profit before depreciation and amortization (EBITDA) amounted to CHF 52.2 million, a slight quarter-on-quarter decline of 4.2 percent. In the reporting year, EBITDA totaled CHF 184.9 million. The operating profit (EBIT) reached CHF 25.0 million in the fourth quarter; EBIT for the 2005 business year overall was CHF 75.8 million.

The profit for the fourth quarter of 2005, including special tax provisions of CHF 9.2 million, was CHF 9.3 million. The profit for fiscal 2005 totaled CHF 49.2 million, equivalent to a profit in percent of net sales of 5.8 percent; earnings per share amounted to CHF 1.52.

For the first three months of 2006, we expect sales to be in the region of CHF 205 to 210 million and a balanced net result. In the 2005 business year, our new system solutions for flat-panel displays scored numerous design wins at major customers. The start of volume production at these customers is planned for various stages of the current year. It is therefore difficult to give reliable growth forecasts for the year as a whole. However, the order of magnitude should be around our long-term projection of 15 percent annual sales growth, with a profit for the period comparable with that achieved in fiscal 2005.

The Micronas Group is a leading independent supplier of innovative application-specific semiconductor solutions for consumer and automotive electronics. Its shares are listed on the SWX Swiss Exchange in Zurich.