Kudelski Group delivers strong second half 2009 results

124 m actives smart cards / modules – 59.8 m units in service model

CHESEAUX, Switzerland — The Kudelski Group (SIX:KUD.VX), the world’s leading provider of media content protection and value-added service technology, announced today its 2009 annual results.

Sustained positive momentum for Digital TV

Digital TV segment revenues for the full year rose by 3.6%, or 5.9% at constant currency rates, to reach CHF 685 million. Digital TV sales in the second half were particularly strong growing by 27.3% compared to the first half. Digital TV operating income for the year rose from CHF 7.3 million in 2008 to CHF 67.5 million in 2009, following the completion of the transition to the service model in the first half 2009.

Strong fundamental Digital TV market drivers

Fundamentals in the Digital TV industry remain robust amid expectations for continued growth due to the ongoing digitization of transmission networks. Both in industrialized countries and in emerging markets, the Group continues to see a sustained extension of digital networks. This growth momentum is likely to sustain the Group’s growth for several years.

Moreover, the Group continues to benefit from a healthy pipeline of innovation with selected product lines, such as in particular common interface modules and mobile TV content protection solutions already materially contributing to the 2009 top line and others, such as Abilis semiconductor business, NagraID one-time password display cards and Nagravision widget creation and publishing platform expected to materially contribute to the segment top line starting this year (2010).

Stability of Middleware and Advertising

The Middleware and Advertising segment mainly consists of OpenTV. OpenTV managed to deliver a growing top line thanks to a strong aggregate performance of the Asia/Pacific and Africa regions. Overall aggregate revenues for these two regions amounted to CHF 50.4 million in 2009, rising by 20.6% in local currency compared to the previous year. Due to their continued top performance, these two regions now represent the top revenue contributor for this segment. Middleware and Advertising operating income rose by CHF 0.3 million to reach CHF 10.5 million in 2009.

Completing the full OpenTV acquisition

On November 27, 2009, Kudelski announced the closing of its tender offer to acquire the OpenTV shares not already owned. With the acquisition of the tendered shares, Kudelski increased its interest stake to 88.5% and its stake of voting rights to 96.1%. On February 24, 2010, OpenTV announced that it is redeeming all of its outstanding shares not yet owned by Kudelski. As a result, Kudelski expects to be able to complete a squeeze out of the remaining minority interests in March 2010 and subsequently delist OpenTV. The full acquisition of OpenTV will facilitate the alignment of the middleware roadmaps with the overall Group technology roadmap, resulting in more compelling solutions for customers. Following the completion of the transaction, Kudelski will drive a much closer integration of the Nagravision and OpenTV organizations and roadmaps. Nevertheless, Kudelski will maintain its modular approach allowing customers to implement selected components of its portfolio in conjunction with best-of-breed third-party products or to roll-out the full Group solution suite. Kudelski expects to increase R&D investments in the middleware domain to accelerate the upgrade of OpenTV product portfolio.

Significant new contract wins

During 2009, the Digital TV division has continued to win new contracts in both traditional and new business areas. Previously announced 2009 deals include German operator HD+, a subsidiary of SES ASTRA, Abertis in Spain, Canal Overseas (DTH operator in Vietnam), Korean operator SkyLife as well as the new long-term Dish contract in the US.

In addition to these contracts, the Group signed the following new agreements:

FLO TV – USA
Nagravision has been selected by FLO TV, a fully owned subsidiary of Qualcomm providing live Mobile TV services in the USA to supply OpenCA conditional access products and services. Nagravision is the undisputed world leader in mobile conditional access solutions, securing commercial services using the major mobile broadcast technologies including MediaFLO in the USA, CMMB in China and DVB-H in Italy and rest of the world.

TV Globo – Brazil
Brazilian television network, Rede Globo (also known as TV Globo and Globo), the 4th largest broadcast network in the world and the largest in Latin America, has selected Nagravision for its ambitious TVDR DTH project. The project includes the industry’s first geo-control technology and targets a replacement analogue receivers with high definition (HD) ready set-top boxes. The ground-breaking solution is based on a NAGRA Media ACCESS conditional access system. The solution runs on pre-integrated set-top boxes configured with geographical localiser chips (GPS modules) to receive local SD and HD content from a satellite broadcasting infrastructure.

Elisa – Finland
Finnish telco operator Elisa Corporation has deployed NAGRA Media Access conditional access solution for its next generation IPTV network. In Finland, Elisa has been a forerunner in almost every aspect of telecommunications technology. With 2 million private households and around 15,000 international corporate customers, Elisa is a highly innovative provider of communications services in the Nordic countries.

The integration and deployment of the Nagravision solution into the Elisa network occurred in just three months and the service will be launched in March.

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