RESULT DEVELOPMENT OF OKMETIC GROUP SLOWED DOWN, POSITIVE CASH FLOW FROM OPERATING ACTIVITIES CONTINUED TO INCREASE

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1 7 th August (10) INTERIM REPORT 1ST JANUARY - 30TH JUNE 2003 RESULT DEVELOPMENT OF OKMETIC GROUP SLOWED DOWN, POSITIVE CASH FLOW FROM OPERATING ACTIVITIES CONTINUED TO INCREASE The Group s net sales for the first six months was 26.7 million euro (2Q2002: 30.8 million euro). The operating loss amounted to -3.6 million euro (-2.6 million euro). The operating loss was due to the low demand, negative price development and the decrease in value of the US dollar. Cash flow from operating activities was positive and on the increase. The competitive situation continued to be tense. The result for 2003 is estimated to remain negative. REPORT IN BRIEF The demand for silicon wafers took a slow upward turn towards the end of Demand continued to increase during the period under review. The order backlog of the Okmetic Group increased. Net sales for the period under review amounted to 26.7 million euro (30.8 million euro). Operating losses were -3.6 million euro (-2.6 million euro). The decrease in net sales and result were due to the demand continuing to be low, the competition causing price erosion and the decrease in the value of US dollar. Thanks to the measures taken, the cost level decreased in comparison with the previous year. The equity ratio of the Group was 56.7% at the end of the period under review (62.2%). The Group has increased its hedging against economic risks. Cash flow from operating activities was positive by 0.9 million euro (0.4 million euro). The Group strengthened its sales resources by recruiting a new Vice President, Sales & Marketing, and Account Managers for the European and Far-Eastern markets. The personnel negotiations in accordance with the Act on Cooperation concerning the bluecollar employees working at the Finnish plants began on 4th August The projections for the near future are uncertain. Net sales of the Group are expected to fall short of the level of the previous year. The operating result is expected to be negative, as estimated earlier. MARKET SITUATION Total invoicing for the semiconductor industry increased during the period between January and June 2003 by over 10% in comparison to the corresponding period of the previous year, but did not exceed the levels of invoicing of the second half of the previous year (SIA, Semiconductor Industry Association). In terms of surface area, silicon wafer deliveries experienced an increase of 7% compared to the first half of the year 2002 (SEMI, Semiconductor Equipment and Materials International). During the beginning of the year, the growth concentrated on the larger wafers. Okmetic retained its market share in its strategic market areas.

2 7 th August (10) NET SALES Net sales for the Okmetic Group amounted to 26.7 million euro (30.8 million euro). The decrease in net sales resulted from a low level of demand, the price erosion brought about by fierce competition and the decrease in value of the US dollar. Not all currency denominated sales are hedged on exchange rate deviations. In terms of demand, no major changes took place during the year. In terms of product groups, the sales progressed in accordance with the company strategy and the share of special products (MEMS, POWER) increased. 2Q2003 (average 2002) ICprime 39 % (47 %) MEMS 28 % (25 %) POWER 33 % (28 %) The order backlog of the Group increased during the period under review. RESULTS The operating loss of the Group was -3.6 million euro (-2.6 million euro). Operating loss represented 13.6% of net sales (8.3%). The decline was due to the decrease in product prices and the value of US dollar having a greater impact than the cost-cutting programme. The current development programme has resulted in savings in both material and personnel costs. The decrease in the cost level provides a good starting point for the result recovery once the intensification measures taken in relation to sales begin to have an impact. FINANCING AND EQUITY RATIO The Group s financing situation remained stable. Cash flow from operating activities was 0.9 million euro during the period under review. Liquid assets amounted to 3.4 million euro at the end of June. The dollar denominated hedging of sales by currency forwards cover a period of less than one year. A total of 0.6 million euro of exchange profit from closing down currency forwards has been entered as income in financing activities. The reduction in the level of hedging of sales that results form the closing down of the currency forwards has been covered with options. The parent company has hedged itself from changes in electricity prices by derivatives until the end of next year. The interest securities of the Group have increased. The equity ratio of the Group was 56.7% at the end of June (62.2%) and the shareholders equity per share was 4.32 euro (4.86 euro).

3 7 th August (10) PRODUCT DEVELOPMENT, INVESTMENTS AND DEVELOPMENT PROGRAMME Product Development expenditure amounted to 5.9% of net sales (6.4%). The most important development projects involved the SiC (silicon carbide) and SOI products. The rest of the development work has focused on lowering production costs. Significant results have been obtained especially in relation to MEMS wafers. Emphasis is also concentrated on the development of the MEMS product group. The extensive investment programme to diversify and increase production capacity was completed in The 1.4 million euro investments of the period under review were made in relation to the final stages of the programme. The development programme launched within the Group has progressed according to plan. The objective of the programme is to extend the customer base, to intensify marketing, to improve productivity and to increase flexibility. PERSONNEL Personnel amounted to 490 (639) at the end of the period. The number of personnel has been adjusted to correspond to the current market situation. During the summer there was more personnel at work than in the previous quarter mainly due to summer workers. EXCHANGE RATE DEVELOPMENT AND STOCK EXCHANGE A total of 2.0 million shares were exchanged between 1st January and 30th June 2003, which signifies 11.9% of the total number of shares, 16.9 million. The lowest quoting of the period under review was 1.45 euro, the highest quoting was 2.57 euro per share and the average quoting per share was 1.95 euro. The closing rate of the period was 2.25 euro. The market value of the entire stock capital was 38.0 million euro. The ownership share of Etra Invest Oy of the stock capital of Okmetic Oyj has on 9th July 2003 increased to 870,200 shares, which equals 5.15% of the stock capital of the company, exceeding 1/20 of the stock capital of the company.

4 7 th August (10) EVENTS AFTER THE PERIOD The Group strengthened its sales organization by recruiting a new Vice President, Sales & Marketing, as well as Account Managers who compliment the existing resources in relation to the European and Far-Eastern market areas. The new recruits start in their new jobs during the summer. Due to the estimated growth not being sufficient, personnel negotiations in accordance with the Act on Cooperation began in the Finnish factories on 4th August A reduction of 40 bluecollar employees is discussed in order to proportion personnel to demand. PROJECTIONS FOR THE NEAR FUTURE Uncertainty in the markets continues and competition remains tense. Demand is expected to recover slowly. The net sales of Okmetic for the entire year is expected to fall slightly short of the level of the previous year and the result is expected to be negative, as estimated earlier. The demand for silicon wafers must increase significantly in order for the results to improve. Cash flow from operating activities is expected to be positive. The growth of the semiconductor industry is expected to be approximately 10%. The slow growth in the beginning of the year is expected to strengthen towards the end of the year. The growth in the year 2004 is expected to be significantly stronger (SIA, Gartner Dataquest, IC Insights, Advanced Forecasting). Should the estimate hold true, the utilisation rate of the plants would increase and the industry would finally, after a long recession, be more balanced when it comes to supply and demand. In terms of surface area, the silicon wafer deliveries are expected to increase by approximately 10% during the year, peaking at the end of the year. The growth estimate for 2004 is 15-20%. The growth estimates for the special products of Okmetic (MEMS and SOI) are slightly better than the overall estimate. The development programme that aims at improving the performance of Okmetic is progressing according to plans and continues intensively. In Vantaa 7th August 2003 The Board of Directors

5 7 th August (10) CONSOLIDATED INCOME STATEMENT 1,000 euro January 1- January 1- January 1- June 30, June 30, December 31 Net sales 26,715 30,849 57,738 Operating expenses -30,346-33,408-63,889 Operating profit/loss -3,631-2,559-6,151 Financial income and expenses ,054-1,970 Profit/loss before extraordinary items -4,310-3,613-8,121 Extraordinary items Profit/loss before taxes -4,310-3,613-8,121 Income taxes ,802 Net income -4,310-3,691-6,319 CONSOLIDATED BALANCE SHEET 1,000 euro June 30, June 30, December 31, Assets Fixed assets Intangible assets 931 1,213 1,172 Tangible assets 106, , ,059 Investments Total fixed assets 107, , ,475 Current assets Inventories 7,515 8,898 8,645 Receivables 10,361 12,104 9,219 Cash and cash equivalents 3,408 3,309 3,751 Total current assets 21,284 24,311 21, , , ,090 Shareholders equity and liabilities Shareholders equity Share capital 11,821 11,821 11,821 Other shareholders equity 61,196 70,178 66,818 Subordinated loans 6,608 6,576 6,598 Total shareholders equity 79,625 88,575 85,237 Minority interest - 7,232 - Liabilities Deferred tax liability 14 1, Long-term liabilities 16,930 13,561 19,184 Short-term liabilities 32,179 32,146 31,655 Total liabilities 49,123 47,548 50, , , ,090

6 7 th August (10) CASH FLOW 1,000 euro January 1- January 1- January 1- June 30, June 30, December 31 Cash provided by: Operating activities ,431 Investing activities -1,396-12,098-24,742 Financing activities 178 9,641 18,693 Change in cash and cash equivalents ,060-1,618 PLEDGES, CONTINGENT LIABILITIES AND OTHER COMMITMENTS 1,000 euro June 30, June 30, December 31, Capital of the loans secured by mortgages 38,495 16,138 38,311 Mortgages given 45,074 45,747 45,074 Other pledges given 8,908-8,908 Leasing commitments 2,839 3,759 3,449 Derivative contracts/ Currency forward agreements: Contract value 9,091 19,096 17,518 Fair value 7,001 16,958 15,257 Hedging situation at the end of the period (+ profit, - loss) 2,090 2,138 2,261 Currency options: Purchased: Contract value 1, Fair value Written: Contract value 1, Fair value Interest rate swaps: Contract value 23,955-8,409 Fair value Electricity derivatives: Contract value Fair value Hedging situation at the end of the period (+ profit, - loss) Derivative contracts are for hedging purposes. The published fair value of an option is the contract value, which has been calculated using the closing quotation of the period.

7 7 th August (10) The market value of the interest-rate swap has been calculated as the difference between the undiscounted interest flows of the interest-rate swaps by using the market rate of interest pertaining to the rate at the end of the period. The amount of credit to which the interest-rate swap applies has been stated as the underlying asset value. The underlying asset value of the electricity derivatives is calculated based on the contract price and the market value is based on the closing market value of the period. KEY FIGURES SHOWING FINANCIAL PERFORMANCE January 1- January 1- January 1- June 30, June 30, December 31 Net sales 26,715 30,849 57,738 Net sales, change % Export and foreign operations share of net sales % Operating profit/loss % of Net sales Return on equity, % Return on investment, % Non-interest bearing debt 9,260 14,116 10,630 Net debt to net equity, % Equity ratio, % Capital expenditure 1,396 12,098 24,742 % of Net sales Depreciation 6,717 6,138 13,432 Research and development Expenditure 1) 1,574 1,961 4,060 % of net sales Average personnel during the period Personnel at the end of the period

8 7 th August (10) KEY FIGURES OF THE GROUP PER SHARE June 30, June 30, December 31 Earnings/share undiluted, euro Earnings/share diluted, euro Shareholders equity per share, euro Dividend per share, euro 0.00 Dividend per earnings, % - Price per earnings Development of share price Average trading price Lowest trading price Highest trading price Trading price at the end of the period Market capitalization at the end of the period, 1,000 euro 37,997 75,994 38,841 Development in trading volume Trading volume, transactions 2,004,286 1,847,677 4,097,207 In relation to weighted average number of shares, % Trading volume, euro 3,904,690 9,075,505 15,202,025 The weighted average number of shares during the period under review, adjusted by the share issue 2) 16,887,500 16,887,500 16,887,500 The number of shares at the end of the period, adjusted by the share issue 2) 16,887,500 16,887,500 16,887,500 Adjusted average number of shares during the period including the dilution due to convertible loans and options 16,005,512 16,760,439 16,099,136 Adjusted average number of shares at the end of the period including the dilution due to convertible loans and options 16,005,512 16,760,439 16,099,136 1) Research and development expenditure has been presented in gross figures and only long-term projects based on research program have been taken into account. 2) Per share figures have been adjusted in accordance with the guidelines issued by the Finnish Accounting Board (KILA) 390/1999 and have been adjusted to correspond to the current number of shares in the Company.

9 7 th August (10) QUARTERLY KEY FIGURES FOR / / / /2003 Net sales 13,334 13,381 Compared to previous quarter, % Operating profit/loss -2,227-1,404 % of net sales Profit/loss before extraordinary items -2,353-1,957 % of net sales Cash provided by: Operating activities Investing activities Financing activities Increase/decrease in cash and cash equivalents Personnel at the end of the period QUARTERLY KEY FIGURES FOR / / / /2002 Net sales 13,036 13,853 15,906 14,942 Compared to previous quarter, % Operating profit/loss -3, ,536-1,024 % of net sales Profit/loss before extraordinary items -4, ,012-1,600 % of net sales Cash provided by: Operating activities 684 3, Investing activities -10,132-2, ,762 Financing activities 5,729 3, ,466 Increase/decrease in cash and cash equivalents -3,719 4, ,233 Personnel at the end of the period The figures are unaudited. In the written interim report, the figures in parenthesis refer to the corresponding period in the previous year.

10 7 th August (10) OKMETIC IN BRIEF Okmetic is a growing technology company that manufactures high-quality silicon wafers and other products based on silicon, and markets these products to semiconductor and sensor industries worldwide. The company has plants in Espoo and Vantaa in Finland and in Allen, Texas, in North America. Okmetic puts emphasis on customer satisfaction and the high quality of products and services. The company is quoted on the Helsinki Exchanges under the symbol OKM. More information on the Company is available at Okmetic s home page at