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NDS Group plc Business Review – Q4 FY06 Abe Peled, Chairman & CEO Alex Gersh, CFO
Cautionary Statement Concerning Forward-looking Statements <ul><li>This presentation contains certain “forward-looking sta...
NDS Today <ul><li>NDS is the leading provider of conditional access to digital pay-TV operators worldwide  NDS is also a l...
The Global Pay TV Market 2010 276.6 million Digital Pay  TV households Today 117 million Digital Pay TV Households Source:...
Digital Pay Television Households CAGR 18% Millions Source:  iSupply Corporation April 2006
End to End Solutions
Key Product Lines <ul><li>The world’s leading supplier of open end-to-end digital systems  for the secure delivery of ente...
Competitive Landscape
Conditional Access Customers
Interactive Customers Selected Projects
CA Market Share <ul><li>March 2006 Market Share by CA Vendor  Based on Digital Households </li></ul>Source – Digit June 2006
NDS Middleware Customers
Middleware Market Share <ul><li>March 2006 Market Share by Middleware Vendor </li></ul><ul><li>Based on Active Digital STB...
DVR Customers
IP TV Customers
Technology Leadership <ul><li>Investing in R&D to maintain leadership </li></ul><ul><li>VideoGuard and VideoGuard DRM, Val...
NDS Strategy Summary <ul><li>Support Current Customers to Grow Subs </li></ul><ul><li>Sell New Applications and Services t...
Key Actions and Status <ul><li>Support Current Customers to Grow Subs </li></ul><ul><li>NDS authorized sub base reaches 65...
Key Actions and Status <ul><li>Win New Pay-TV Customers </li></ul><ul><li>BOOM TV in Romania, Guangzhou Cable TV in China ...
Key Actions and Status <ul><li>Strategic Alliances and Acquisitions to Gain Market Share and Expand Reach </li></ul><ul><l...
Key Medium Term Trends  <ul><li>Multi Room Penetration </li></ul><ul><li>Low Cost Second Box Make Economics Positive for O...
NDS DVR Potential <ul><li>NDS has managed to achieve excellent take up rate of its DVR technology among its existing CA an...
NDS Technology Vision and Products <ul><li>Broadband distribution for mass media popular content will not be economically ...
NDS is focusing on Service and Content Protection <ul><li>SERVICE </li></ul><ul><li>A broadcaster is providing a service t...
NDS DRM Vision: Any Content, Any Network, Any Device Content Service Providers Devices <ul><li>Devices: </li></ul><ul><li>...
NDS VideoGuard DRM for PCs <ul><li>VideoGuard DRM Key supports broadcast/multicast: </li></ul><ul><ul><li>TV experience on...
VideoGuard DRM for Mobile <ul><li>Secure software embedded in mobile handsets </li></ul><ul><li>Optimized to secure chipse...
DVR the gateway to content  IP Messenger HELLO … ASHI <ul><li>PC </li></ul>WiFi /  Ethernet / RF Access to  PVR EPG and  s...
<ul><li>XSPACE  </li></ul><ul><ul><li>Integrated satellite broadcast & broadband and IP STB </li></ul></ul><ul><ul><ul><li...
<ul><li>Financial Review </li></ul>
Revenue Streams Conditional Access Integration, development  and support License fees and royalties New technologies
Revenue Model Annual Revenues from a Typical Platform Customer
Subscriber Growth Subscribers (Millions)
CA, PVR, Middleware &  Interactive Customers
FY 06 vs FY 05
FY06 Performance vs FY05
FY 06 Main Revenue Streams
Revenue Mix FY05 FY06
FY06 Operating Expenses $ m $30.7m up 19% $285.3m up 19.5% $42.5m down 2%
Balance Sheet at June 30
Cash-flow
Revenue Growth Guidance (mid point)
Operating Income Growth Guidance (mid point)
Guidance <ul><li>FY 07 </li></ul><ul><li>Revenue </li></ul><ul><li>$660m – $680m </li></ul><ul><li>Operating Income  </li>...
Customer Progression BSI CJ CableNet KDMC Topway Tata Sky Romania DTH Serbia Broadband Guangzhou Viasat Chongqing Guizhou ...
Business Plan <ul><li>High visibility - long term contracts & recurring revenues </li></ul><ul><li>Growth profile based on...
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Cautionary Statement Concerning Forward-looking Statements

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Cautionary Statement Concerning Forward-looking Statements

  1. 1. NDS Group plc Business Review – Q4 FY06 Abe Peled, Chairman & CEO Alex Gersh, CFO
  2. 2. Cautionary Statement Concerning Forward-looking Statements <ul><li>This presentation contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s views and assumptions regarding future events and business performance as of the time the statements are made. Actual results may differ materially from these expectations due to changes in global economic, business, competitive market and regulatory factors. More detailed information about these and other factors that could affect future results is contained in our filings with the Securities and Exchange Commission. The “forward-looking statements” included in this document are made only as of the date of this document and we do not have any obligation to publicly update any “forward-looking statements” to reflect subsequent events or circumstances, except as required by law. </li></ul>
  3. 3. NDS Today <ul><li>NDS is the leading provider of conditional access to digital pay-TV operators worldwide NDS is also a leader in the provision of end-to-end open software solutions including Middleware, Interactive TV applications as well as Personal Video Recording technology </li></ul><ul><li>NDS secures US$32 billion pay TV revenues, with: </li></ul><ul><ul><li>65 million active smart cards </li></ul></ul><ul><ul><li>41.6 million cumulative middleware </li></ul></ul><ul><ul><li>3.5 million cumulative DVRs </li></ul></ul><ul><ul><li>Over 40 TV platforms </li></ul></ul><ul><ul><li>In 25 countries and 15 languages </li></ul></ul><ul><ul><li>3000 employees globally over 2,500 are technical </li></ul></ul>
  4. 4. The Global Pay TV Market 2010 276.6 million Digital Pay TV households Today 117 million Digital Pay TV Households Source: iSupply Corporation April 2006
  5. 5. Digital Pay Television Households CAGR 18% Millions Source: iSupply Corporation April 2006
  6. 6. End to End Solutions
  7. 7. Key Product Lines <ul><li>The world’s leading supplier of open end-to-end digital systems for the secure delivery of entertainment </li></ul>
  8. 8. Competitive Landscape
  9. 9. Conditional Access Customers
  10. 10. Interactive Customers Selected Projects
  11. 11. CA Market Share <ul><li>March 2006 Market Share by CA Vendor Based on Digital Households </li></ul>Source – Digit June 2006
  12. 12. NDS Middleware Customers
  13. 13. Middleware Market Share <ul><li>March 2006 Market Share by Middleware Vendor </li></ul><ul><li>Based on Active Digital STBs </li></ul>Source – Dataix June 2006
  14. 14. DVR Customers
  15. 15. IP TV Customers
  16. 16. Technology Leadership <ul><li>Investing in R&D to maintain leadership </li></ul><ul><li>VideoGuard and VideoGuard DRM, Value@TV, XTV, MediaHighway </li></ul><ul><li>Orbis OpenBet, Visionik Games </li></ul><ul><li>Synamedia, Secure Video Processing (SVP), Mobile DRM, XSpace </li></ul><ul><li>Business solutions for pay-TV operators to profit from digital TV </li></ul><ul><li>Conditional Access, EPG, Broadcast Control, Middleware </li></ul><ul><li>Interactive applications, Games, Betting for fun or profit </li></ul><ul><li>Effective commercial distribution of television on broadband IP networks </li></ul><ul><li>Synamedia solution for broadband IP networks </li></ul><ul><li>Hybrid Satellite/IP distribution </li></ul><ul><li>Service protection and Content protection </li></ul>
  17. 17. NDS Strategy Summary <ul><li>Support Current Customers to Grow Subs </li></ul><ul><li>Sell New Applications and Services to Current Customers </li></ul><ul><li>Win New Pay-TV Customers </li></ul><ul><li>Capitalize on Convergence of Digital Broadcasting and the Internet </li></ul><ul><li>Strategic Alliances & Acquisitions to Gain Market Share and Expand Reach </li></ul>
  18. 18. Key Actions and Status <ul><li>Support Current Customers to Grow Subs </li></ul><ul><li>NDS authorized sub base reaches 65m, up 14.6% from last year </li></ul><ul><li>24.4m smart cards shipped this year </li></ul><ul><li>Good growth on all platforms </li></ul><ul><li>Sell New Applications and Services to Current Customers </li></ul><ul><li>21.2m middleware boxes shipped, 104% growth in total number of deployed middleware STBs this year </li></ul><ul><li>2.1 DVR boxes shipped to 11 customers, 150% growth in total number of DVRs deployed </li></ul><ul><li>Sky Italia launched interactive sport and betting applications using NDS technology </li></ul><ul><li>BSkyB became the first customer to use NDS RapiAD interactive ad platform </li></ul><ul><li>Cartoon Networks launched a series of games using games from NDS Denmark </li></ul>
  19. 19. Key Actions and Status <ul><li>Win New Pay-TV Customers </li></ul><ul><li>BOOM TV in Romania, Guangzhou Cable TV in China and Tata Sky in India have all selected NDS end to end solution to launch their digital television service </li></ul><ul><li>Serbia Broadband is the first customer to select VideoGuard Express solution </li></ul><ul><li>CANAL DIGITAL deploys NDS MediaHighway in Belgium </li></ul><ul><li>Premiere of Germany have selected NDS MediaHighway solution for its new hybrid boxes </li></ul><ul><li>Astro TV of Malaysia have also selected MediaHighway solution </li></ul><ul><li>Capitalize on Convergence of Digital Broadcasting and the Internet </li></ul><ul><li>SES Americom, Telekom Austria and TVB Pay Vision in Hong Kong have selected NDS Synamedia solution to secure their IPTV service </li></ul><ul><li>NDS announced Synamedia Metro, a fully integrated middleware solution, which is attracting a lot of interest </li></ul><ul><li>Orbis new customers this year include Tote, CentreBet, Victor Chandler and Heathorns </li></ul><ul><li>Orbis and NT Media launched the OpenBet Games and OpenBet Casino platforms on Victor Chandler, PremierBet and Ladbrokes who introduced the new BACKGAMMON game </li></ul>
  20. 20. Key Actions and Status <ul><li>Strategic Alliances and Acquisitions to Gain Market Share and Expand Reach </li></ul><ul><li>NDS XTV Ready initiative is gaining momentum with devices from Thomson, Archos, SanDisk, Maxian and Samsung </li></ul><ul><li>NDS is working with partners like DiBcom, Sinao, ARM, Pantech and SanDisk to integrate the VideoGuard Mobile solution into end to end systems </li></ul><ul><li>Working closely with the 30-plus members of the SVP Alliance, including IC and STB manufacturers, broadcasters, studios, and important industry associations, the SVP Licensing Authority has published clear and fair legal framework for licensing that will give SVP wide support in the industry </li></ul>
  21. 21. Key Medium Term Trends <ul><li>Multi Room Penetration </li></ul><ul><li>Low Cost Second Box Make Economics Positive for Operators </li></ul><ul><li>Second Box, US average moving from 2 to 3, Europe from 1 to 1.5 </li></ul><ul><li>DVR Penetration </li></ul><ul><li>Expect major push on DVR, US 100% HH, Europe 50% </li></ul><ul><li>HD Penetration </li></ul><ul><li>HD boxes and HD DVR will drive major replacement cycle and new NRE </li></ul><ul><li>Hybrid Sat/IP Set-top-boxes </li></ul>NDS Growth and Financial Performance Strongly Affected by Key Trends in our Major Customers
  22. 22. NDS DVR Potential <ul><li>NDS has managed to achieve excellent take up rate of its DVR technology among its existing CA and Mediahighway customers (including those using competitive CA technologies) </li></ul><ul><li>These customers present a potential of 46.5m DVR households over the medium-long term </li></ul><ul><li>This number is based on current number of households so excludes any growth in the number of subscribers on these platforms as well as the winning of new DVR customers by NDS </li></ul>
  23. 23. NDS Technology Vision and Products <ul><li>Broadband distribution for mass media popular content will not be economically and practically cost-effective over the next >5yrs </li></ul><ul><li>The winning solutions will be hybrid delivery systems that can offer both; the top popular mass media and the ever lengthening and expanding tail of niches </li></ul><ul><li>Our pay-TV customers will evolve to embrace Broadband </li></ul><ul><ul><li>By using Broadband as a complementary delivery, e.g. Viasat </li></ul></ul><ul><ul><li>By employing Hybrid Sat/IP set-top-boxes to offer VOD, access to Web entertainment </li></ul></ul><ul><ul><li>By broadening their scope and becoming the “entertainment source” for their customers on all distribution means, e.g. Sky by Satellite, Sky by Broadband, Sky by Mobile, Sky on the GO… </li></ul></ul><ul><li>NDS is developing the products and solutions to enable this vision – VideoGuard DRM, MediaHighway advanced middleware, XSpace </li></ul>
  24. 24. NDS is focusing on Service and Content Protection <ul><li>SERVICE </li></ul><ul><li>A broadcaster is providing a service to his customers; this service needs protection </li></ul><ul><li>Service is (among other things): </li></ul><ul><ul><li>On going relationship with the customer (recurring revenue) </li></ul></ul><ul><ul><li>Added value to the subscriber (EPG, DVR, Interactive, etc.) </li></ul></ul><ul><ul><li>Keep your customer (Reduce Churn) </li></ul></ul><ul><li>CONTENT </li></ul><ul><li>A content provider wants to sell content to many people; this content needs protection </li></ul><ul><li>Content selling is: </li></ul><ul><ul><li>No relationship with specific customer </li></ul></ul><ul><ul><li>One-time revenue from specific user for specific content </li></ul></ul>vs.
  25. 25. NDS DRM Vision: Any Content, Any Network, Any Device Content Service Providers Devices <ul><li>Devices: </li></ul><ul><li>TVs </li></ul><ul><li>Cable Set Top Box </li></ul><ul><li>DTH Set Top Box </li></ul><ul><li>IPTV Set Top box </li></ul><ul><li>Terrestrial Set Top Box </li></ul><ul><li>DVD Player/Recorder </li></ul><ul><li>Video Game Console </li></ul><ul><li>Digital Media Adapter </li></ul><ul><li>Audio Receivers </li></ul><ul><li>Computing Devices </li></ul><ul><li>Mobile Handsets </li></ul><ul><li>Removable media </li></ul><ul><li>Portable Media Player </li></ul><ul><li>Multi-function Devices </li></ul><ul><li>Auto Entertainment Systems </li></ul>Mobile Devices <ul><li>- Music </li></ul><ul><li>Ringtone/Tune </li></ul><ul><li>Mobile Games </li></ul><ul><li>Video Games </li></ul><ul><li>Video </li></ul><ul><li>Still Images </li></ul><ul><li>Proprietary Data </li></ul>Computing Devices TV & Audio CE Devices <ul><li>Terrestrial Broadcast </li></ul><ul><li>Cable </li></ul><ul><li>Satellite </li></ul><ul><li>Telecom/IPTV </li></ul><ul><li>Wireless </li></ul><ul><li>Broadband </li></ul><ul><li>Fixed Media </li></ul>
  26. 26. NDS VideoGuard DRM for PCs <ul><li>VideoGuard DRM Key supports broadcast/multicast: </li></ul><ul><ul><li>TV experience on the PC </li></ul></ul><ul><ul><ul><li>EPG </li></ul></ul></ul><ul><ul><ul><li>DVR </li></ul></ul></ul><ul><ul><ul><li>PUSH content </li></ul></ul></ul><ul><li>VideoGuard DRM Key supports VOD: </li></ul><ul><ul><li>Any PC, Any place </li></ul></ul><ul><ul><ul><li>Kids can take it to their friends </li></ul></ul></ul><ul><ul><ul><li>Watch at work </li></ul></ul></ul><ul><ul><ul><li>Watch on the road </li></ul></ul></ul><ul><ul><li>Support IPPV on the PC </li></ul></ul>
  27. 27. VideoGuard DRM for Mobile <ul><li>Secure software embedded in mobile handsets </li></ul><ul><li>Optimized to secure chipsets such as </li></ul><ul><ul><li>ARM TrustZone </li></ul></ul><ul><ul><li>Intel WTP </li></ul></ul><ul><ul><li>TI M-Shield </li></ul></ul><ul><li>Optional SIM/USIM supports mobile TV: </li></ul><ul><ul><li>2.5G </li></ul></ul><ul><ul><li>3G </li></ul></ul><ul><ul><li>DVB-H </li></ul></ul><ul><ul><li>DMB </li></ul></ul><ul><ul><li>WiFi </li></ul></ul><ul><ul><li>WiMAX </li></ul></ul><ul><ul><li>WiBRO </li></ul></ul>
  28. 28. DVR the gateway to content IP Messenger HELLO … ASHI <ul><li>PC </li></ul>WiFi / Ethernet / RF Access to PVR EPG and stored contents Nomad HDD device synchronization PVR Broadband network VOD VOD Weather Bluetooth mobile ecosystem
  29. 29. <ul><li>XSPACE </li></ul><ul><ul><li>Integrated satellite broadcast & broadband and IP STB </li></ul></ul><ul><ul><ul><li>Most cost effective solution </li></ul></ul></ul><ul><ul><ul><li>Popular, HD, premium broadcast </li></ul></ul></ul><ul><ul><ul><li>Niche, on-demand via IP </li></ul></ul></ul><ul><ul><li>DVR with broadband connection main entertainment gateway into the home </li></ul></ul><ul><ul><li>Seamless integration of Broadcast and on-demand Web based entertainment </li></ul></ul><ul><ul><ul><li>Allows linking of live broadcast to Web content, e.g. MTV to MTV Overdrive </li></ul></ul></ul><ul><ul><ul><li>Allows convenient access to premium Web content </li></ul></ul></ul>
  30. 30. <ul><li>Financial Review </li></ul>
  31. 31. Revenue Streams Conditional Access Integration, development and support License fees and royalties New technologies
  32. 32. Revenue Model Annual Revenues from a Typical Platform Customer
  33. 33. Subscriber Growth Subscribers (Millions)
  34. 34. CA, PVR, Middleware & Interactive Customers
  35. 35. FY 06 vs FY 05
  36. 36. FY06 Performance vs FY05
  37. 37. FY 06 Main Revenue Streams
  38. 38. Revenue Mix FY05 FY06
  39. 39. FY06 Operating Expenses $ m $30.7m up 19% $285.3m up 19.5% $42.5m down 2%
  40. 40. Balance Sheet at June 30
  41. 41. Cash-flow
  42. 42. Revenue Growth Guidance (mid point)
  43. 43. Operating Income Growth Guidance (mid point)
  44. 44. Guidance <ul><li>FY 07 </li></ul><ul><li>Revenue </li></ul><ul><li>$660m – $680m </li></ul><ul><li>Operating Income </li></ul><ul><li>$150m to $160m </li></ul>
  45. 45. Customer Progression BSI CJ CableNet KDMC Topway Tata Sky Romania DTH Serbia Broadband Guangzhou Viasat Chongqing Guizhou Hathway Foxtel Auna CNS Versatel Sichuan HOT YES-DBS Cablevision Sky Life Sky Italia Innova NetSat Sky LA Sky NZ DIRECTV US DIRECTV LA BSkyB Galaxy China Cable Networks
  46. 46. Business Plan <ul><li>High visibility - long term contracts & recurring revenues </li></ul><ul><li>Growth profile based on market transition from analog to digital </li></ul><ul><li>Well positioned to capitalize on the changes resulting from the evolving ubiquitous broadband world </li></ul><ul><li>Scaleable operating model </li></ul>

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