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INVESTOR RELATIONS 2006. Contents 1. Kaon Media Overview 2. D-STB Industry 3. Major Highlights 4. 2006 Business Plan 5. Appendix.

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Presentation on theme: "INVESTOR RELATIONS 2006. Contents 1. Kaon Media Overview 2. D-STB Industry 3. Major Highlights 4. 2006 Business Plan 5. Appendix."— Presentation transcript:

1 INVESTOR RELATIONS 2006

2 Contents 1. Kaon Media Overview 2. D-STB Industry 3. Major Highlights Business Plan 5. Appendix

3 1. Company Overview – Fast growth as a Major Maker Company overview D-STB, PVR, MHP, IP STB etc Core Products 112 (57 R&D: 52% of all )Personnel 3,664 Million KWN Total Assets May 11, 2001Foundation Ssangyoung IT Twin Tower, A 901, Sangdaewon-dong , Jungwon- gu, Seongnam-si, Kyunggi-do Address Hwa-Seop LimCEO Kaon Media is a quickly growing D-STB third generation company which leads time to market Kaon Media is a quickly growing D-STB third generation company which leads time to market Revenue CAGR 82% 1, ,

4 History 1-1. History Kaon Media is a key player in digital convergence history 2005 Released IP STB & next generation convergence STB 2005 Silver award as one of the 50 th high growth companies in Korea 2005 IBC best design award 2002 Developed a full line-up of all digital receiver products 2002 Selected by MCIE as first class company in the DTV industry 2002 Developed PVR 2001 Foundation 2003 Developed two-way data DVB-MHP STB for broadcasting for Ministry of Information and Communication 2004 Selected as next generation growth driving industry leader in the DTV combined receiver developer by MCIE 2004 Only company awarded the Advanced Technology Center (ATC) award by the MCIE 2004 Released next generation digital convergence STB KVR-1000 Selected by British What Satellite As Best Buy STB Selected as anexcellent product by Germanys Satvision 2006 Ranked 53rd high growth company in the Asia Pacific region 2006 Award from the Ministry of Commerce, Industry and Energy (MCIE) as a 100 bil. dollar electronics export contributor 2006 Released Multiroom STB

5 1-2. Digital Broadcasting Specialist Group Strong Skills in Technology Growth Driver = Expertise of the digital broadcasting specialist group Production Planning Sales & Marketing Management organized from specialists formally from S company Digital Broadcasting Specialist Group Digital Broadcasting Specialist Group Digital Multimedia Specialist Group Digital Multimedia Specialist Group Embedded Solution Specialist Group Embedded Solution Specialist Group Consumer Electronics Specialist Group Consumer Electronics Specialist Group World First digital hybrid products / World class next generation products / Excellence in industrial design / Possession of all world D-STB formats R&D personnel with strong expertise in digital broadcasting

6 Developed into a major D-STB company (Building of growth infrastructure] Yesterday ( ~ 2005 ) 1-3. No.1 Company in Global Digital Convergence Leap to multimedia convergence specialist group with the competitiveness of D-STB Established as a major D-STB company in a short period of time - Market adaptation based on high level of skill - Differentiated design - Industrys highest profitability Full scale market penetration for continuous growth - Penetration of broadcast company market - Establishment of global operations - Increased brand recognition Leap to a digital convergence Value Company [Time for leap] Today ( 2006 ~ ) Full scale growth in digital convergence products - Release of digital convergence products such as IP STB, DAB STB, PVR, PMP Technology specialized in digital broadcasting - Obtain technology in diverse fields such as digital multimedia (H.264, MPEG 4 etc.), consumer electronics, embedded solutions Growth driven from high-end products - PVR, IP STB, digital convergence products for broadcasting companies

7 2. Changes in D-STB Products Network connectability Functionality Home security DVR STB DAB/ Multimedia STB Two-way data broadcasting MHP STB Home network server D-STB PVR DVB-HD IP STB Solution (IP STB, Server, Middleware) D-STB & Kaon Medias development strategy D-STB developed as the key platform of future IT hardware - Evolution of stronger multimedia and network functional products Convergence process of D-STB Broadcasting reception Satellite, cable, ground wave Combo Products Internet capable IP STB Solutions Integrated Game, MP3, DVR, PVR functions Status of STB convergence Set-Top Box functions Charged with role of home network server & automation gateway Current Past Future

8 Progression of digital convergence - Maximization of flexibility for users STB industry at the corner of rapid digital convergence growth 2-1. Digital Product Market Trend Broadcasting (Digital TV) Broadcasting (Digital TV) Network (PC) Network (PC) Communication (Phone) Communication (Phone) ++ Digital Broadcasting Convergence Market - Mega trend is the formation of the digital convergence market Multimedia digital convergence (Evolution of D-STB)

9 Continued growth with the acceleration of digital broadcasting switch over Further growth due to digital convergence 2-2. Changing D-STB Market World D-STB market size Enlargement of new growth opportunities due to market changes Changing D-STB market Broadcast based Communication based + MPEG2 centered Changes to MPEG4, H.264 video compression One-way broadcasting Two-way broadcasting T-commerce, VOD etc. New market formation Changes in video compression tech. standards Merging of broadcasting & communication Million units Satellite cable Terresterial IP STB

10 3. Major Highlights Long-term growth and stable profit generation - Focused penetration of high-end broadcasting business market - Focus on new broadcasting and 64 established in 40 nations Long-term growth and stable profit generation - Focused penetration of high-end broadcasting business market - Focus on new broadcasting and 64 established in 40 nations Focused penetration of new broadcasting companies Focus on PVR, Multi-Room market Supply contracts with Sky Life MHP, PVR - Supply minimum of 100,000 MHP STB beginning in 2Q - Exclusive PVR supply beginning in 3Q - Forecast domestic sales revenue of 25 billion KWN Oligopolistic market positioning in specific nations in satellite and broadcasting business markets - India: 1 satellite company, 2 cable companies - Indonesia: 1 ground wave plus mobile broadcasting company - Pakistan : 1 satellite company, 1 cable company, 1 ground wave company - Iceland : 1 ground wave, 1 MVDS company - Rumania: 1 satellite company Goal to increase of revenue ratio of PVR from broadcasting markets to more than 15% Simultaneous achievement in both stability and profitability Through provision of differentiated functionality and convenience actively correspond to broadcasting markets needs Provide diverse convergence functions such as 6 channel simultaneous recording internet, PVR, DAB, DVR, MP3, Games Defend broadcasting company market profits Actively correspond with European World Cup with special Multiroom products

11 3-1. Broadcasting Business Market Penetration Achieve 78 bil. KWN revenue in broadcasting business market in 2006 Broadcasting biz. market revenue planCAS possessed by Kaon Media Number of CAS TH 3H 2H 1KaonCompany 60% of 2006 revenue to be made in broadcasting business market Conax Cryptoworks Nagravision NDS Iredeto Viaccess ChinaCrypt TFCAS E. Europe, Scandinavia, India E. Europe, Turkey, Austria W. Europe, S. America, Asia N. America, Korea, UK, India Europe, Africa, India, Middle East W. Europe, Middle East, CIS China Kaon Medias CAS Main markets Focus marketing on broadcasting businesses market with the CASs in the industry * Note : Based on license contracts signed (internal analysis) Mil. KWN (E)

12 Develop MPEG4, H.264 technology for entering HD quality STB market - Conversion to digital HD broadcasting is a signal for reorganization of the industry - Focused penetration in DVB-HD adoption areas (Europe, Asia, Africa, Australia) Develop MPEG4, H.264 technology for entering HD quality STB market - Conversion to digital HD broadcasting is a signal for reorganization of the industry - Focused penetration in DVB-HD adoption areas (Europe, Asia, Africa, Australia) 3-2. Penetration of DVB–HD Market Obtaining core technology that will lead the DVB-HD market 1. Obtain DVB-HD core technologies MPEG4, and H Develop MPEG4, H.264 chips and possess application technology 2. Obtain technology that allows commercial use of middleware applications such as MHP and PVR 3. Obtain HD based IP TV Solution to penetrate communications business market Adapted HD broadcasting formats based on region DVB-HD ATSC Foundations developed for DVB-HD in Europe Turkey production plant Europe, N. America, Dubai, U.S. office and China office Logistics center in the Netherlands Foundations developed for DVB-HD in Europe Turkey production plant Europe, N. America, Dubai, U.S. office and China office Logistics center in the Netherlands

13 3-2. Strong Company Brand Marketing Company brand Revenue ratio Policy for Kaon Medias own brand Reliable quality and high technology brand image Marketing high-end products with own brands to establish premiere brand image Harmonize growth and profits accordingly for high growth / high profit brand leverage effect Price 10% higher than OEM products If new market penetration and strategic market expansion are needed, follow ODM as an option Brand policy Using company brands for high-end / high margin product to improve profitability and achieve long-term growth objectives Using company brands for high-end / high margin product to improve profitability and achieve long-term growth objectives Highest percentage of own brand in the industry Brand OEM

14 3-3. Build Global Operation and System Netherlands (W/H) 1 HQ, 4 factories, overseas sales office, 1 W/H, 1 IPC China (IPC) Production Plant Incorporate independent sales offices Logistics Center IPC (International procurement center) Low-end model SKD line 70kAlgeria (Algiers) Europe, Mid. East and neighboring region export 100kTurkey (Istanbul) Low-end model production50kChina (Huizhou) PVR, CAS, COMBO350kKorea ProductCapacity US operatorUS (Irvine, CA) Europe (with Norway)Germany (Frankfurt) Digital cable STBChina (Beijing) Middle East, AfricaUAE (Dubai) Regions of operations Main materials, equipment sourcing China (Shenzhen) Europe, CIS regionNetherlands (Rotterdam) Build production, logistics and sales operations in key locations Dubai office U.S office Germany office Korea (HQ, F) China (F) Turkey (F) Algeria (F) China office Norway office

15 3-4. Future Growth Driver (IP STB Solution) Only company possessing IP STB Total Solution - IP TV market expansion through IP TV chipset co-development & co-marketing with Intel - Turn-key solution for server and middleware needed for IP STB including hybrid type products - Provide total solution for increased competitiveness and high profit generation KIP series revenue plan Domestic : Within 1 month of IP business launch, began supplying IP STB to Sports Toto, cyber apartment complexes, and communications business partnerships Overseas : Japan, EU, S.E. Asia – business development with hotel consortiums and backbone network companies N. America : Preparing for home automation IP STB business IP STB Middleware (S/W) Encoding Server (H/W) Streaming Server DRM, Authoring (S/W) Movies Music News Games Content Kaon Media business range (IP STB + Server+ Middleware) Differentiated IP STB Solution Ordinary IP STB company business range mil. KWN KIP Series Revenue Forecast 2006(E)2007(E)2008(E)

16 business plan Broadcasting business market penetration as digital broadcasting expands throughout the world Broadcasting business market penetration as digital broadcasting expands throughout the world Expected consumer and broadcasting business demand Added profit generation through patent registration of intellectual property Multi-room STB solution market penetration Develop exclusive PVR NDS XTV Middleware Product PVR market penetration as substitute for prior sales accounts Expand supply of PVR for broadcasting Co-operation with Chinese global electronics company Highel Penetrate new Indian broadcasting business market Initiatives to obtain CHINDIA, NORDIC markets Co-development and co-marketing ITPV chipset with INTEL Competitiveness and profit maximization through IP STB total solution development New product development for IPTV market * Revenue Goal billion KWN * Profit Goal billion KWN (10. 7%) * Stock price goal - 20,000 KWN * Market Cap billion KWN 2006 Business Plan

17 Key Executives Appendix 1 : Major Executives Kaon Media manpower comprised of digital broadcasting specialists CEO Hwa-Seop Lim Kaon Media President/CEO2001 Developed European format two way digital TV2000 Developed European format digital TV (first generation)1998 Developed European format digital satellite receiver (DVB-S)1996 Developed 1 st & 2 nd generation US format (DSS)1994 Developed digital camera for broadcasting and digital monitor1992 Samsung Electronics general R&D center1989 Professional ExperienceAwards & Distinctions Samsung Electronics color TV division Director (Production) Young-Ho, Lee Samsung Electronics General R&D Center, Samsung visual display division Director of R&D (R&D) In-Kee, Kim Samsung Electronics Overseas HQ, Samsung Panama sales office Executive Director (Overseas Sales) Hong-Kwang, Kim Samsung General R&C Center planning department, Samsung automotives strategic planning department Executive Director (Strategic Planning) Jin-Kyo, Lee Experience Position (Responsibility) Name SMBA Kyung-gi small and medium enterprise company export award SMBA export prospect company certification Chairman Award from the Presidential Commission on Small and Medium Enterprise for venture companies Industrial packaging award and 20 million export award on National Trade Day MICs annual information technology business award Maeil Economic newspapers excellent venture company award in the field of information technology million dollar export achievement award on National Export Day Silver award as one of the 50 high growth companies in Korea Awarded by the MICE as a 100 bil. Dollar electronics export contributor

18 Appendix 2 : Balance Sheet Million KWN Category Current Assets47,80938,44529,4099,590 Fixed Assets8,1165,3162,6551,172 Total Assets55,92543,76132,06410,762 Current Liabilities8,04816,12516,8276,607 Debt & other liabilities Total liabilities8,48317,00817,6586,624 Capital stock3,6642,875 1,821 Capital surplus16,1543,311 2,371 Earned surplus26,66320,3278,12954 Capital adjustments Total capital47,44226,75314,4064,138

19 Appendix 3 : Income Statement (2006) Million KWN Category1Q2Q3Q4QTotal Revenue20,36132,08535,22442,754130,424 COGS15,94524,89027,74334,346102,925 Gross Profit4,4167,1947,4818,40827,499 Selling&general administrative expenses 2,6803,760 3,56813,587 Operating income1,7363,434 4,84013,912 Non-operating income Non-operating expenses ,502 EBIT1,1723,4183,8824,81513,287 Net income8803,0843,4784,31311,755

20 Thank you Thank you


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