celrun corporate 2

CORPORATE PRESENTATION

1H 2009

IPTV Specialized Global Company

Forward-looking statements in the presentation reflect Celrun’s current views with respect to future events and financial performance, and are subject to certain risks and uncertainties, which could cause actual results to differ materially from those anticipated. Although Celrun believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that its expectations will be attained. Celrun undertakes no obligation to publicly update

or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Disclaimer

EnglishLanguage

CELRUN HAS BEEN A TRUE LEADER IN NOT ONLY PRODUCT DEVELOPMENT BUT ALSO IN PROVISION OF TOTAL SOLUTION FOR IPTV STP.

1. Capital & Shareholders Structure

2. Core Competencies

3. Corporate Milestones

4. Major Affiliates & Subsidiaries

Company Brief


16.2%1.8%

1.7%

2.0%6.2%

72.2%

Dprotech CelrunSN TG Energy Shinhan PE Affiliate person Individuals

Company BriefCapital & Shareholders Structure

3

1

■ Capital & Market Capitalization

• Capital: KRW 15.7 billion

• Outstanding shares issued : 31,436,176 common shares

• Market Capitalization : KRW 85 billions(As of end of 1H 2009)

■ Shareholders Structure (As of end of 1H 09 )

■ KOSPI Listed Company

• Ticker 013240

1

Note: Percentile indicated in regard to shareholder structure above is only for illustrative purpose and may not be precise.

Dprotech of which major shareholder being Young Min Kim, current CEO of Celrun is major shareholder of Celrun Co., Ltd.

■ Issued Stock summary

• 1st Half end stock price : KRW 2,900(1H 09) VS KRW

2,110(2H 08)

• Par Value per share : KRW 500

• BPS : KRW 1,398 in 1H 09 VS KRW 1,244 in 2H 08


Company BriefCore Competencies

4

Comparative Advantage over other STB makers

Commercially

proven reliability

In-house solution

development

capability

In-house end-to-

end solution

Continuous R&D Efforts

Only Company with technology and Know-how from STB

manufacturing to system integration in Korea

Capability to establish business and strategic relationship for successful

implementation and operation with business partners

Intellectual Property

Protection for vital

technologies

Technological

Breakthrough

Price Competiveness secured by consolidation of procurement and

production activities with TG

Technological

ownership

Products lineups for state-of-the-art multiple media platform such as

IPTV/Satellite/Cable etc.

■ Celrun‟s Unique Business Model

• Commercialization of Head-end solution with various patents

including DRM/CAS for IPTV/VOD first time in Korea

• Offer STB and Head-end solution as package deal → Increase

dependence on vendor dramatically → Carry out project in

partnership

• Full spectrum of product portfolio from IPTV/VOD STB to hybrid

STB that allows satellite/Cable/Terrestrial signal??

• Launch of IPTV-enabled PC utilizing Trigem‟s H/W platform first

in the world → Proposal to IPTV operators → Accommodation of

IPTV PC by IPTV operators in near future

■ 2008 Sales Breakdown :

Products Amount(KRW „000) %

IP STB 70,442 53.8%

IPTV PC 10,500 8.0%

VOD server 6,303 4.8%

DMB/PMP 4,451 3.4%

Satellite STB 2,537 1.9%

Others 36,612 28.0%

Total 130,845 100.00%


Early Redemption of

KRW 30 bil CB

& KRW 15 bil

rights offering

Company BriefMajor Milestone

5

Among other things in the year 2008, management attention was focused on 1) straighten out group matters

including addition of subsidiaries and corporate governance reformation and 2) marketing efforts in order to

diversify source of sales revenues, expected to be recorded as sales in the year 2009.

COMMENT

2008 2009

TG USA

Subsidiary

OnTown

Subsidiary

KRW 33.6 bil

Supply Contract

With OpenSat Lds

Hanaro Telecom

Call Option Exercised

Skylife CAS Development &

HD STB Supply Contract

(KRW 9.7 bil)

Cash Dividend Decision

Woori Solar

Subsidiary

Conversion of

Hantle System AR

into Equity

Acquired &TV

Communications

stakes

Conversion of

TG Enregy AR

into Equity

Selection as preferred negotiator

for Skylife CAS provision

Hybrid STB

Supply Contract

with Opensat(EU)

LG Dacom

IPTV STB

Supply Agreement

Hybrid STB

Supply Contract

with Freetech(US)

Haansoft

Share Purchase

Agreement

Haansoft

Acquisition

Completed

Educational IPTV

STB Supply Contract

with Keysco

(KRW 13 bil )


Company BriefMajor Affiliates & Subsidiaries

6

■ Business network of Celrun

As of end of 2008, Celrun currently directly or indirectly has stakes in a total of 26 subsidiaries and affiliates including Trigem, CelrunSN

and TG Energy. Through synergy out of these affiliates and subsidiaries, current management of Celrun seeks to achieve strategic goal of

Celrun and its affiliates and subsidiaries as a group.

Company Name Listing Capital Sales in1H ’09 Main Business Operation

Celrun KOSPI 15.7 34.7 IPTV/VOD solution & Set-top-box(STB)

TG Computer Non-listed 94.4 360 PC/Navigation/PMP

Haansoft KOSDAQ 12.2 12.9 Software Bundle / Thinkfree

Celrun SN KOSDAQ 14.1 7.4 Digitial Contents / Optic Communication

TG Energy KOSDAQ 12.8 2.2 ILM / Dye-sentisized Solar Cell

Dprotech Non-listed 13.2 1.6 Development of IPTV Head-end solution

IDCTech Non-listed 3 2.8 Kiosk manufacturing & distribution

OnTown Non-listed 0.03 0.7 Digital Contents / wholly owned by CelrunSN

TG USA, TG Japan,

TG GmbH, TG

Philippines, etc

Non-listed N/A N/AIncluding overseas entities of Trigem currently

under liquidation process

GROUP NETWORK

(unit : KRW bil)

http://www.trigem.co.kr/home


1. Outstanding Reference on IPTV

2. Synergy Maximization as Celrun

Group

3. Blue Print for Overseas Market

Expansion

4. Product portfolio – Part 1(H/W)

5. Product portfolio – Part 2 (S/W)

Highlights


HighlightsOutstanding Reference on IPTV/VOD STB

8

Target subscriber

1.2 mil

Target Subscriber

1.2 mil

Target Subscriber

0.5 mil

Samsung 25%

Humax 25%

Dasan Network 25%

Mirinet 12.5%

Maverick 12.5%

Celrun 80%

Hyundai digital

tech 20%

Celrun 90%

Gaonmedia 10%

Stream

ing

D&

P

Pro

gressiv

e D&

P

STB Vendor Accumulative

Unit Delivery %

Pro

gressiv

e D&

P

Local IPTV/VOD Market Weather Map

■ IPTV/VOD STB Unit Accumulative Delivery :

Over 2 Million Units

†Source: Company estimate

KT (Korea)

High and low-priced STB passed rigorous KT Bench-mark testing(BMT)

- Function : SD/HD VOD, Multicasting, Internet, Display Phone, Game

- Sales : 6,700 (Head-end S/W)

UPS (Japan)

Successfully developed and commercialized TD700 model for United

Power System (UPS) in Japan in 2001

- Function : VOD, T-commerce, VoIP, Home Security

- Sales : 100,000+

Leopalace21 (Japan)

Delivered 350K units with MPEG1/2, IPTV VOD, internet browsing

functions for Leopalace21 BB service since October 2001

- Function : VOD, Multicasting, Internet, VoIP, etc.

- Sales : 500,000+

Hanarotelecom (Korea)

Exclusive STB vendor for HanaTV, Hanarotelecom TV portal service

for 2 years since service commemoration (March 2006 ~ March

2008)- Function : HD VOD, HDTV, Karaoke, Game

- Sales : Over 1,000,000 units

Maginet (Korea, Singapore)

Celrun and MagiNet delivered Hotel VOD system together in many 5

star hotels located in Asia

- Function : VOD, Multicasting, Internet, etc

- Sales : 50,000+ STB Vendor Accumulative

Unit Delivery %STB Vendor Accumulative

Unit Delivery %


9

HighlightsSynergy Maximization as Celrun Group

■ Group matters straightened out

• B2B Group: Represented by Celrun and Consisted of Celrun SN, Dprotech, IDC Tech

• B2C Group: With Trigem at the center together with TG Service, TG Energy and Overseas TG subsidiaries

• Collaboration on business feasible enough to create synergy between members of Celrun Group and Efficiency Improvement through integration of

procurement and manufacturing by TGK

Enhance mutual

cooperation on

business capable of

driving synergy

B2B Group B2C Group

Procurement/

Manufacturing

Integration

Collaboration

on Business

Development

TG Overseas Subsidiaries

http://www.trigem.co.kr/home


10

HighlightsBlue-Print for Overseas Market Expansion

Overseas subsidiaries

Major domestic/overseas partners & buyers


11

HighlightsProduct Lineups (H/W)

Buffer & Play IPTV STB

MMP: Multimedia Player

VOD only STB

PRODUCT HIGHLIGHTS

• VOD/IPTV STB with Progressive download & play technology – Overcomes Existing problems of Bandwidth Issues which optimize Telco‟s

CAPEX Efficiency

• Hybrid STB that blends Satellite and IP, Terrestrial and IP – Selling point for existing platform market not only IPTV markets

• IPTV PC that combine Celrun‟s IPTV Solution / Technology and Trigem‟s Computer Hardware – Ultimate Substitute Product for High-end STB

with Telco‟s IPTV solution embedded

• MMP that allows DivX play – As a B2C product for early adapter only, attempt to secure marketability by utilizing Trigem‟s distribution networks

■ VOD/IPTV STB Introduction

Progressive Download & Play

IPTV STB

Hybrid STB: Terrestrial +IP /

Satellite + IP / Audio IP STB

Business Partner providing

end-to end solutions including

H/E, CAS solutions


12

HighlightsProduct Lineups(S/W)

■ H/E Solution

H/E solution workflow H/E solution detailed composition

• Celrun developed end-to-end Head-end solutions by in-house Research & Development center which earns successful IPTV commercialization

reference and know-how by launching Celrun TV of which stake subsequently were sold to SK Broadband & TV(previously Hanara Media)

• Celrun‟s CAS were successfully delivered to Skylife for simulcrypt with NDS – the only commercialization reference amongst locally developed

CAS that meets up government policy toward CAS.


1. IPTV/VOD Market Outlook

2. IPTV STB M/S in Korea

Industry Overview


Industry OverviewIPTV/VOD Market Outlook

14

■ World IPTV Market Outlook

Global IPTV subscribers reached 11 million in 2007 and are expected to reach 62 million subscribers by 2012 with US$ 1.8 billion IPTV revenue in 2007

and US$ 17.5 billion by 2012.

■ Korea IPTV Market Outlook

In Korea, IPTV Subscribers in 2007 reached 1.13 million and in 2012 are expected to increase up to 3.48 million while IPTV Revenue in 2007 US$ 31.75

million and US$ 314.17 million in 2012.

World IPTV Market Outlook Korea IPTV Market Outlook

IPTV Subscribers (thousand people)

IPTV 수익 (million USD)

Source : Ovum (2008) Source : Ovum (2008)

IPTV Subscribers (thousand people)

IPTV 수익 (million USD)

Fast Developing Group Developing Group Slow Developing Group

Austria, Baltic States, Belgium, Canada,

Czech, Greece, France, Hongkong,

Korea, Norway, Portugal, Singapore,

Sweden, Swiss, Taiwan

Australia, China, Denmark,

Finland, Germany, Greece,

Hungary, Ireland, Israel, Italy,

Japan, Netherland, New Zealand,

Poland, Russia, Slovakia, Spain,

UK, USA

Brazil, India, Indonesia,

Malaysia, Mexico, Philippines,

South Africa, Thailand, Turkey,

Ukraine Vietnam

Characteristics per each Group

Countries with existing IPTV marketing and thus less CAPEX

and time consuming

Geographic coverage,

High CAPEX requirement,

time consuming

Inadequate Communication

Infrastructure

※ Grouping Criteria : IPTV Revenue Level for each countries, broadband status, Competitive status on

Digital TV platform

■ Group classification according to IPTV growth rate■ IPTV growth trend

IPTV industry growth trend is most likely to occur

worldwide, however, given infrastructure status for

each country and market situation, different growth

trend is foreseeable in different countries. Table to the

right supports just that point, according to recent

research paper released by Ovum.


Industry OverviewIPTV/VOD STB Market Share in Korea

15

■ Currently in Korea, three major Telcos serve IPTV/VOD market as of 1H 2009. Namely, these Telcos are SK Broadband(Previously

Hanaro Telecom), KT(Korea Telecom), and LG Dacom.

VOD/IPTV STB M/S Status based on accumulative shipments in 2008

IPTV Service Accum. Subscribers VOD/IPTV Type Vendor Policy Vendor Shipments†† M/S Remarks

Broad & TV 800,000 †Progressive

download & play

1st vendor Celrun 1,000,000 50.9%

2nd vendor Hyundai Digitaltech 5,000 0.3%

QOOK TV

(Previoulsy MegaTV) 800,000†

Streaming Dual vendorSamsung 200,000 10.2%

Humax 200,000 10.2%

Progressive

download & play

1st vendor Dasan Networks 500,000 25.4%

2nd vendor Millinet -

3rd vendor Maverick -

myLGtv 50,000† Progressive

download & play

1st vendor LG Electronics 30,000 1.5%

2nd vendor Gaon Media 30,000 1.5%

† Company Estimates 1,965,000

†† Estimates including inventory

Celrun position strengthened

• M/S of approximately 51% at 2008 year end

• Virtually monopolistic position with Broad & TV

• Supply contract with myLGtv at 2008 year end

expects to contribute more M/S gains

• 2009 onward, due to government aggressive IPTV

policy, Educational IPTV market is expected to

vitalized other than Telco IPTV market

• Overseas market revitalization most likely to occur

2010 and afterward with current economic situation

50.9%

0.3%

10.2% 10.2%

25.4%

0 01.5% 1.5%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

셀런 현대디지털텍 삼성전자 휴맥스 다산네트워크 미리넷 메버릭 엘지전자 가온미디어

공급수량†† M/S

CelrunHyundai

Digital TechSamsung Humax

Dasan

NetworksMillinet Maveric

LG

ElectronicsGaon Media

Units

Shipments


1. Business Model Paradigm Shift

2. Marketing & Sales Shift

3. Next Growth Engine Pursuit

Strategic Approach


Existing Business Model Enhanced(B2B only)

Existing Business Model(B2B & B2C in mingle)

Strategic ApproachBusiness Model Paradigm Shift

17

■ Major efforts were exerted on 1) re-grouping of existing business under B2C group and B2B group and 2)integration of procurement

and manufacturing in order to maximize efficiency. As a result, navigation business was transferred to relevant subsidiary and enhanced

main business, end-to-end H/E solution and STB specialty company.

Celrun

IPTV/VOD STB

H/E Solution

CAS (Conditiona

l Access System)

Hybrid STB

B2B B2C

Choice &

Focus

CAS for Satellite(Simulcrypt)

Hybrid STB(Export only)

Navigation

MMP

PMP

Enhance Existing BM

Transfer of business to relevant subsidiaries

B2B


Strategic ApproachMarketing & Sales Shift

18

■ Attempts to focus on 2nd or 3rd Tier Telcos instead of 1st Tier Telcos, and aggressive expansion into open market. Marketing activities

focusing on establishment of long term partnership by Head-end solution provision not only STB shipments

Overseas major partners & buyers

TransAct

SKB

KT

LG Dacom

ONSE

Cavalier

Alliance

Gold Line

M2B

MITV

Maginet

Leopalace21

United Power

USEN

NEO IndexMcom

TIT

Opensat

&TV

Communications

Major partners & buyers in Korea


Strategic ApproachNext Growth Engine Pursuit

19

■ To avoid sales dependency on hardware and to tap into software business, esp. CAS business which deems to be of indefinite

growth potential, Celrun will continue to find ways to expand business in CAS for next growth engine.

■ By developing and successfully implemeting in-house developed CAS simulcrypt with world CAS market leader NDS which

currently in place for Skylife known worldwide for its complex service structure, Celrun expects this simulscrypt implementation as

a turning point for aggressive oversea market tapping

Classification 2009 Market Size(E) 2012 Market Size(E) CAGR

World CAS Market Approx. KRW 1.2 tril Approx. KRW 1.6 tril 5.9%

Domestic CAS Market Approx. KRW 100 bil Approx. KRW 270 bil 22.0%

World & Domestic CAS Market Estimates

World CAS Market in 2008 & Market Share Domestic CAS Market in 2008 & Market Share

33%

29%

16%

5%

8%

9%

NDS Nagravision Motorola Irdeto Scientific Atlanta Others

73%

13%

10%

4%

NDS CONAX Irdeto Others

celrun corporate 2

Documents