INVESTOR RELATIONS 2006

Contents1. Kaon Media Overview 2. D-STB Industry3. Major Highlights4. 2006 Business Plan5. Appendix

1. Company Overview – Fast growth as a “Major Maker”

Company overview

D-STB, PVR, MHP, IP STB etcCore

Products

112 (57 R&D: 52% of all )Personnel

3,664 Million KWNTotal

Assets

May 11, 2001Foundation

Ssangyoung IT Twin Tower, A 901, Sangdaewon-dong 442-17, Jungwon-gu, Seongnam-si, Kyunggi-do

Address

Hwa-Seop LimCEO

Kaon Media is a quickly growing D-STB third generationcompany which leads time to market

Kaon Media is a quickly growing D-STB third generationcompany which leads time to market

Revenue

CAGR 82%1,107

694

118

2002 2003 2004 2005 2006

1,304

864

History

1-1. History

Kaon Media is a key player in digital convergence historyKaon Media is a key player in digital convergence history

2005 Released IP STB & next generation convergence STB

2005 Silver award as one of the 50th 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 an “excellent product” by Germany’s 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

1-2. Digital Broadcasting Specialist Group

Strong Skills in TechnologyStrong Skills in Technology

Growth Driver = Expertise of the digital broadcasting specialist groupGrowth Driver = Expertise of the digital broadcasting specialist group

ProductionProduction PlanningPlanning Sales & MarketingSales & Marketing

Management organized from specialists formally from S company

Digital BroadcastingSpecialist Group

Digital BroadcastingSpecialist Group

Digital Multimedia Specialist Group

Digital Multimedia Specialist Group

Embedded SolutionSpecialist Group

Embedded SolutionSpecialist Group

Consumer ElectronicsSpecialist Group

Consumer ElectronicsSpecialist 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

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

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

- Industry’s 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

2. Changes in D-STB Products

Network connectability

Functionality

Home security DVR STB

DAB/ MultimediaSTB

Two-way data broadcasting

MHP STB

Home network server

D-STB

PVR

DVB-HD

IP STB Solution

(IP STB, Server, Middleware)

D-STB & Kaon Media’s development strategy

D-STB developed as the key platform of future IT hardwareD-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

CurrentCurrent

PastPast

FutureFuture

ㅋ

Progression of digital convergence- Maximization of flexibility for users

STB industry at the corner of rapid digital convergence growthSTB 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) + +

ㅋ

Digital Broadcasting Convergence Market- Mega trend is the formation of the digital convergence market

Multimedia digital convergence(Evolution of D-STB)

•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 changesEnlargement 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

0

10

20

30

40

50

60

70

80

90

100

2000 2001 2002 2003 2004 2005

Satellite cable Terresterial IP STB

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 market’s 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

3-1. Broadcasting Business Market Penetration

Achieve 78 bil. KWN revenue in broadcasting business market in 2006Achieve 78 bil. KWN revenue in broadcasting business market in 2006

Broadcasting biz. market revenue planCAS possessed by Kaon Media

34688Number 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

China

Kaon Media’s CAS Main markets

Focus marketing on broadcasting businesses market with the CASs in the industry

* Note : Based on license contracts signed (internal analysis)

780

125

350

100 Mil. KWN

2004 2005 2006(E)

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.264 - 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 topenetrate communications businessmarket

Adapted HD broadcasting formats based on region

DVB-HD

DVB-HD

DVB-HD

DVB-HD

DVB-HDDVB-HD

ATSC

ATSC

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

3-2. Strong Company Brand Marketing

Company brand Revenue ratio

Policy for Kaon Media’s 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

2945

65

3555

71

Highest percentage of own brand in the industry

2003 2004 2005

Brand

OEM

3-3. Build Global Operation and System

Netherlands (W/H)Netherlands (W/H)

1 HQ, 4 factories, overseas sales office, 1 W/H, 1 IPC1 HQ, 4 factories, overseas sales office, 1 W/H, 1 IPC

China (IPC)China (IPC)

Production Plant Incorporate independent sales offices

Logistics Center

IPC (International procurement center)

Low-end model SKD line70kAlgeria

(Algiers)

Europe, Mid. East and neighboring region export

100kTurkey

(Istanbul)

Low-end model production

50kChina (Huizhou)

PVR, CAS, COMBO350kKorea

ProductCapacity

US operator US (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 locationsBuild production, logistics and sales operations in key locations

Dubai officeDubai office

U.S officeU.S office

Germany officeGermany office

Korea (HQ, F)Korea (HQ, F)

China (F)China (F)

Turkey (F)Turkey (F)

Algeria (F)Algeria (F)

China officeChina office

Norway officeNorway office

3-4. Future Growth Driver (IP STB Solution)

Only company possessing IP STB Total SolutionOnly 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)

MoviesMovies MusicMusic NewsNews GamesGamesContent

Kaon Media business range(IP STB + Server+ Middleware)

Differentiated IP STB Solution

Ordinary IP STB company business range

Ordinary IP STB company business range 150

350

600100 mil. KWN

KIP Series Revenue Forecast

2006(E) 2007(E) 2008(E)

4. 2006 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

- 130.4 billion KWN

* Profit Goal

- 13.9 billion KWN

(10. 7%)

* Stock price goal

- 20,000 KWN

* Market Cap

- 150 billion KWN

2006Business Plan

Key Executives

Appendix 1 : Major Executives

Kaon Media manpower comprised of digital broadcasting specialistsKaon 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 1st & 2nd generation US format (DSS) 1994

Developed digital camera for broadcasting and digital monitor 1992

Samsung Electronics general R&D center 1989

Professional Experience

Awards & 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

ExperiencePosition

(Responsibility)Name

2002. 08. SMBA Kyung-gi small and medium enterprise company export award

2002. 09. SMBA export prospect company certification 2003. 10. Chairman Award from the Presidential Commission on

Small and Medium Enterprise for venture companies2003. 11. Industrial packaging award and 20 million export award

on National Trade Day2004. 02. MIC’s annual information technology business award2004. 04. Maeil Economic newspaper’s excellent venture company

award in the field of information technology2004. 11. 70 million dollar export achievement award on National

Export Day2005. 12. Silver award as one of the 50 high growth companies in Korea2006. 01. Awarded by the MICE as a 100 bil. Dollar electronics

export contributor

Appendix 2 : Balance Sheet

Million KWN

Category 2005 2004 2003 2002

Current Assets 47,809 38,445 29,409 9,590

Fixed Assets 8,116 5,316 2,655 1,172

Total Assets 55,925 43,761 32,064 10,762

Current Liabilities 8,048 16,125 16,827 6,607

Debt & other liabilities 435 883 831 17

Total liabilities 8,483 17,008 17,658 6,624

Capital stock 3,664 2,875 2,875 1,821

Capital surplus 16,154 3,311 3,311 2,371

Earned surplus 26,663 20,327 8,129 54

Capital adjustments 961 240 91 -

Total capital 47,442 26,753 14,406 4,138

Appendix 3 : Income Statement (2006)

Million KWN

Category 1Q 2Q 3Q 4Q Total

Revenue 20,361 32,085 35,224 42,754 130,424

COGS 15,945 24,890 27,743 34,346 102,925

Gross Profit 4,416 7,194 7,481 8,408 27,499

Selling&generaladministrative expenses

2,680 3,760 3,760 3,568 13,587

Operating income 1,736 3,434 3,434 4,840 13,912

Non-operating income 324 149 180 224 877

Non-operating expenses 887 165 200 249 1,502

EBIT 1,172 3,418 3,882 4,815 13,287

Net income 880 3,084 3,478 4,313 11,755

Thank youThank you