The Board of Management of Rood Testhouse International N.V. (‘Rood Technology’) announced today the 2003 results. The consolidated profit 2003 amounted to € 773,000 (2002: loss of € 5,794,000).

According to all industry analysts the downturn in the semiconductor market has come to an end. After a long time, during which hardly any new project started with customers, Rood Technology announced in December the signing of a strategic two-year contract with ZMD in Dresden for rendering value added test services. ZMD is a leading provider of application specific integrated circuits for sensor and wireless applications.

Rood Technology has initiated a research and development project aimed at creating new ways of generating IC Test software. This will significantly reduce cost and lead-time for writing test programs. In addition the Company has started a program to make the test software independent from the tester platform brand. This will allow Rood Technology to transfer test programs to different tester platforms in a very efficient way.

During 2003 an amount of € 140,000 has been capitalised under intangible fixed assets and subtracted from the personnel expenses.

The search for new equity has been successfully concluded. A group of private investors decided to support the Company by providing a 9% interest bearing subordinated convertible loan amounting to € 2,000,000. The thirteen quarterly instalments of the loan will be converted into newly issued ordinary shares of the Company at a fixed conversion price of € 0.1134. The loan is regarded as part of the equity in the consolidated balance sheet.

As a consequence, the so-called “Treuhandvertrag” has been cancelled in 2004 and the German subsidiary has been re-integrated into the group. Furthermore the banks have waived € 977,000 of their receivables on the Company, based on a cash repayment of bank debts amounting to about € 1,100,000. The waiver has been presented under other operating expenses. Financing conditions have been brought back to adequate market levels.

The operating income decreased by 14.7% from € 8.5 million in 2002 to € 7.3 million in 2003. The gross margin was 15.5% lower in absolute terms than the previous year. Eliminating the 2002 gross margin of the closed down Scottish operation, gross margin increased by 4.4%.

The average number of employees decreased from 194 in 2002 to 105 in 2003. During 2002 short time working was implemented up to 40%. This reduced the costs, but not the average number of employees. Furthermore, the 2002 personnel expenses include an amount of € 1,302,000 for costs of social plans.

Depreciation decreased significantly due to the low capital expenditure in 2001 and 2002, as well as the disposal of memory test equipment during those years.

The other operating expenses include also a book profit amounting to € 319,000 realised on the sale of some surplus equipment in 2003. The 2002 other operating expenses related to the Scottish operation amounted to € 870,000. Furthermore cost saving measures caused an overall decrease in costs.

A financial restructuring took place by the end of 2003. Therefore, interest expenses decreased only slightly from € 382,000 in 2002 to € 366,000 in 2003.

No corporate tax is charged related to the profit realised, because of compensation with tax losses from the past.

Due to the capital injection from the financial partner it was possible to buy new testing equipment for new projects. Capital expenditure was at a level of € 1,017,000 significantly higher than the amount of € 130,000 in 2002.

The solvency ratio improved strongly due to the injection of equity as well as the 2003 profit. The equity, as a percentage of total assets, increased from 6.9% at the end of 2002, to 37.1% as of December 31, 2003. Interest bearing debts decreased from € 5,123,000 to € 2,219,000, leading to a debt-equity ratio of 69.5% at the end of 2003.

No dividend payment to shareholders is proposed for the year 2003.

     Statement of Earnings, Balance Sheet & Ratios

Prospects

The forecasts of industry analysts are showing a European market growth of 15% in 2004.

Management believes that this will also have a positive effect on the activities of Rood Technology. They foresee in 2004 a gross margin increase of 15%, bringing the Company to an overall positive result.

The increased emphasis on the development of intellectual property will give the Company and its customers a major competitive advantage.

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