SEZ

SEZ Group Reports 2005 Results After Six Months
- High net sales confirmed for first half-year; full-year sales expected to reach approximately CHF 300 million
- Profitability impacted by intensive market penetration
- Sustainable improvement in margins expected in fourth quarter

During the first six months of its current fiscal year, the SEZ Group (SWX Swiss Exchange: SEZN) increased consolidated net sales by 7.5 percent to CHF 156.4 million (first half of 2004: CHF 145.5 million). Operating income (EBIT) in the first half-year 2005 was CHF 6.2 million compared to CHF 23.9 million in the same period last year. The EBIT margin was 4.0 percent compared to 16.4 percent in the first half of 2004. Consolidated net profit was CHF 6.2 million (CHF 16.2 million) corresponding with earnings per share (EPS) of CHF 0.38. During this reporting period, SEZ Group also recorded CHF 132.6 million in new sales orders (CHF 163.7 million). The decline in profitability was primarily due to intensified market penetration and continued price pressures.
Amidst this background, SEZ will outsource parts of its production to new EU member countries in Eastern Europe. This step, in connection with considerable optimization measures taken in supply chain management and tool configuration, will enable cost reductions. Despite this, profitability will still be impacted in the third quarter due to intensive market penetration costs. From the fourth quarter onward, SEZ expects a sustainable improvement in margins. For the full fiscal year 2005, the SEZ Group expects net sales of approximately CHF 300 million.

The most dynamic of all sales regions, Asia-Pacific recorded a 61.4 percent share for the first half of 2005 (first half 2004: 58.5 percent). Europe represented the second strongest region – mainly due to deliveries in the first quarter of 2005 – with a sales share of 25.4 percent (10.4 percent). The Japanese sales share dropped to 6.6 percent (25.4 percent), whereas order intake from Japan increased sharply in the second quarter. Sales in the U.S. represented 6.6 percent (5.7 percent) of group sales. More than 60 percent of equipment sales in the first six months were placed for Da Vinci™ systems, and nearly 70 percent of equipment sales were for 300-mm wafer processing systems. Single-wafer wet processing systems comprised 93 percent of net sales, while service and spare parts accounted for 7 percent.

In the first six months of 2005, the SEZ Group received new orders totaling CHF 132.6 million (CHF 163.7 million). On 30 June 2005, the SEZ Group registered an order backlog of CHF 53.8 million (CHF 88.2 million), and the book-to-bill-ratio stood at 0.85 (1.13). While 75 percent of ordered systems are intended for 300-mm production, more than 50 percent of the orders were for tools based on the Da Vinci platform.

The technological transition from batch to single-wafer processing occurring in the wet-chemical clean-process segment of microchip manufacturing, gained momentum again in the first half of 2005. In the first six months, the SEZ Group was successful in establishing its single-wafer technology for the volume production of memory chips (DRAM). A strategic win for SEZ included the decision made by a major Korean memory chip manufacturer to initiate replacement of its existing batch systems with SEZ's single-wafer systems. Additionally, Japan-based Elpida Memory Inc., another key memory chip manufacturer, placed orders for SEZ Spin Processors for use in its DRAM manufacturing lines.

Owing to the development of new products for critical cleaning steps and the removal of photoresists that will contribute toward group sales from 2006 onward, SEZ could double the size of its currently addressable market. Independent market observers currently forecast a decrease of up to 10 percent in market volume for the wet-chemical-clean-market segment in 2005. Due to its market position and focus on expanding market share, the SEZ Group is once again expected to exceed market development and further enlarge its share in the overall market for wet-chemical systems, which is currently 15 percent.

Key figures after six months (unaudited)

in CHF million	06/05	06/04
Net sales	156.4	145.5
Profit from operations (EBIT)	6.2	23.9
Net profit	6.2	16.2
Order intake	132.6	163.7
Order backlog end of June	53.8	88.2
Book-to-bill-ratio	0.85	1.13

Quarterly key figures (unaudited)

in CHF million	Q2/05	Q2/04	Q1/05
Net sales	77.4	79.3	79.0
Profit from operations (EBIT)	1.4	12.5	4.8
Net profit	2.3	5.7	3.9
Order intake	63.6	82.4	69.0
Order backlog end of quarter	53.8	88.2	67.2

Average translation rates for January to June 2005:
EUR/CHF 1.54599; USD/CHF 1.20435

This press release includes the following tables (six months 2005): key figures, income statement, balance sheet, statement of cash flows and changes in shareholders' equity. Beginning today, the complete 2005 Half-Year Report is available on SEZ's homepage located at www.sez.com (Investor/Financial Reports).

Conference Call
Today, 17 August 2004 at 9:30 a.m. (CET), the SEZ Group will conduct a conference call with analysts, investors and editors. A replay of the call will be available on the SEZ Group's website beginning 17 August 2004 at 6:00 p.m. (CET). To participate in the call, please dial into one of the following numbers:
+41 (0) 91 610 56 00 (Switzerland)
+44 (0) 20 7107 0611 (United Kingdom)
+43 (0) 1 928 9575 (Austria)
+49 (0) 69 2 2222 0593 (Germany)

Upcoming Financial Dates
3 November 2005 Press release and conference call on third quarter 2005 financial results

About SEZ Group
The SEZ Group is the leading provider of single-wafer, wet-clean processing solutions for the global semiconductor industry, with an installed base of over 850 tools. The company maintains operations in Europe, Asia-Pacific, Japan and North America. Since 1996, registered shares of SEZ Holding Ltd. have been traded on the SWX Swiss Exchange under the symbol SEZN. Additional information about the company is available on the Internet at www.sez.com