Consolidated Figures

*Calculated on the basis of the securities issued, less treasury shares.
 

The SEZ Group

The SEZ Group develops, produces, markets and services  process equipment for microchip manufacturing. More than 90 of the leading microchip and wafer manufacturers belong to SEZ's regular client list. With its Spin-Process technology, a  globally patented method for surface preparation of silicon wafers, SEZ was able to firmly establish itself as a global technology  leader. Additionally, SEZ enlarged its product portfolio to include a wet bench technology in 2001, a step closer towards attaining its goal of becoming an overall supplier in the sector of silicon wafer surface preparation.
Since 1996, SEZ Holding Ltd. has been listed on the main segment of the SWX Swiss Exchange (SWX:SEZN). The group's largest facility is Villach, Austria. With further group companies in North America, Japan, Taiwan, Singapore, South Korea, Great Britain, France and Germany, and a representation in China, the SEZ Group is provided with a global service and distribution network.
 

Comment on the First Half of 2002

The SEZ Group experienced an excellent first half of 2001. Facing the difficult and volatile market conditions of the first six months of 2002, the SEZ Group benefited from its leading position in technology and established global  market presence. In particular, its long-standing presence in the Asia-Pacific region enabled the SEZ Group to  further strengthen its market position with multiple new orders from this growing region. About 50 percent of orders over the last six months came from these  markets. 43 percent of net sales were achieved with orders for systems targeted at 300 mm wafer processing. SEZ is an established strategic partner of all major semiconductor manufacturers. During the first half of 2002, SEZ participated in several joint development programs with various customers and invested about 20 percent of sales in strengthening its technology leadership position. Both steps are geared toward improving the conditions for profiting from an economic recovery. By fully integrating German HMReinraumtechnik GmbH, specialized in the development and manufacture of wet benches, and the acquisition of an independent drying technology through the takeover of American L-Tech Corporation in June 2002 (consolidation from 2nd half-year 2002), the SEZ Group also significantly reinforced its technological independence.  In the course of an increase in share capital in May 2002, by 1.2 million nominal shares at an issue price of CHF 73.50, the SEZ Group significantly strengthened its equity base.  On June 30, 2002, the equity ratio stood at 73.8 per cent (31 Dec 2001: 60.5 %) matching equity of 264.0 million (31 Dec. 2001: CHF 187.1 million). 

Course of business
During the first six months of the financial year 2002, the SEZ Group increased incoming orders compared with last year's period to CHF 108.8 million (half-year 2001: CHF 105.0 million). Consolidated net sales amounted to CHF 96.6 million over the first half of 2002 (half-year 2001: CHF 149.8 million). Around 7.4 percent of sales were achieved with wet benches from SEZ Germany. Compared with the beginning of the financial year, the order backlog improved by 25 percent, rising to CHF  59.0 million (1 Jan. 2002: CHF 47.1 million). The book-to-bill ratio for the period January to June 2002 corresponds to 1.13 (January to June 2001: 0.70). An operating income (EBIT) of CHF 3.0 million (CHF 37.7 million) not only reflects considerable investments in new technologies and markets but also the strengthening of the operative structure. For the first half of 2002, the SEZ Group shows a consolidated loss of CHF 2.1 million (mid-year net profit 2001: CHF 23.5 million), respectively, CHF √ 0.16 (CHF 1.90) per share (EPS).  A major share of demand stabilization is due to systems based on new technologies (300 mm wafers, miniaturization of structure width, new materials such as copper, low-k dielectrics). In the third quarter the SEZ Group received orders mainly from Japanese, US-based and European customers.  Orders from Asia-Pacific foundries , the main drivers in the first half of the year, have since slowed down. Moreover, foundry orders have shifted from primarily 300 mm to 200 mm technology driven equipment. Because of SEZ's strong international position in the area of single wafer treatment, the company is less affected by  individual regional downturns.

Research and development
Over the first half of 2002, the SEZ Group spent CHF 19.0 million on research and development matching an over-average sales share of about 20 percent. The main focus of R&D is on the development of a next generation modular platform for conditioning single wafers, particularly for cleaning wafers.  SEZ will be launching the new system platform in the financial year 2003. Additionally, an extensive effort is being put in the development of an state-of-the-art wet bench,  especially for the processing of 300 mm wafers. In order to provide effective on-site support to customers in the crucial US market and fast-growing 300 mm application sector, the SEZ Group opened  a state-of-the-art cleanroom laboratory at SEZ America in  Phoenix (Arizona), featuring systems for processing 300 mm wafers. The new laboratory will noticeably extend application range and flexibility of the entire SEZ Group. Following the over-average investment volume in new technologies in the current financial year, the SEZ Group is, once again, aiming at a multi-year average sales share of about 15 percent for research and development expenditure.

Market and market position
After the global market for wet chemical wafer preparation equipment dropped by 20.7 percent to USD 1.6 billion (source: Dataquest, July 2002) in  financial year 2001, a further decrease of 20 percent is presumed for the current business year. Among the various regions, Asia-Pacific is expected to decrease the least. This development reflects the sustained trend in semiconductor manufacturing to increasingly outsource production processes to contract manufacturers located in this region. With its strong anchor and its own effective distribution and service structure in the Asia-Pacific region, the SEZ Group is provided with an excellent starting position to substantially profit from the region's potential. This also becomes clear in a geographical split of the SEZ Group's net sales after the first six months of 2002. About 50 percent (28 %) of net sales stemmed from the Asia-Pacific area, mainly from Taiwan and Singapore. The European market accounted for 20 percent (33 %) of sales, the U.S. contributed 19.4 percent (19 %), and Japan 10.6 percent (20 %).

Outlook
The positive trend of incoming orders from the first half of 2002 continued throughout the first weeks of the third quarter. Nonetheless, short-termed postponements in taking delivery cannot be excluded since leading microchip manufacturers have announced possible delays in fitting out production lines. The SEZ Group management assumes there will be no substantial recovery of the market for semiconductor equipment before the fourth quarter.

Comments on the half-yearly accounts
The consolidated half-year accounts have not been audited. All figures are prepared according to the International Accounting Standards (IAS) published by the International Accounting Standards Committee (IASC). All assets and liabilities of the foreign  subsidiaries' accounts in foreign currencies are converted into Swiss Francs at the end of the period under review (balance sheet date method). Expenses and income are converted at the average exchange rates for the period under review. The  differences that result from the application of these different conversion rates are allocated to or withdrawn from the  reserves on the balance sheet.
Long-term leasing agreements, which effectively constitute assets purchased with long-term financing, are entered as fixed assets at purchase price and depreciated over the duration of the lease.
Expenditure on research and development is not capitalized. Such amounts have been charged immediately to expenses as the conditions of IAS 9 for capitalizing development costs have not been met. These expenses include wages and salaries,  material costs, depreciation on fixed assets dedicated to research and development, as well as related overhead costs.
 

Consolidated Statement of Income

Consolidated Balance Sheet