ADB Group reports second-half 2007 business update

Thursday, November 1st, 2007
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GENEVA — Advanced Digital Broadcast Holdings S.A. (SWX: ADBN) reports today its second-half 2007 update on the progress of its business.

In second-half 2007, the Group continued the expansion of its customer and product base, in all segments of its activity. It also continued working on the improvement of its manufacturing and supply chain.

In Set-Top Boxes (STB), the Group announced in September the addition of T-Com Innovation to its customer base. It also won contracts to supply new generation of products to several customers: a High-Definition, Hybrid IPTV PVR to Telefonica Spain; a HD decoder to ‘yes’ in Israel; and a High-Definition IPTV PVR for the US IPTV market, which is expected to start deployment within year end. Since the beginning of 2007, the Group’s STB customer base has grown by 6 new customers, and its product mix continues shifting towards high-end.

In Software and Services, the Group’s affiliates have successfully introduced new products, some of which are being commercially deployed by its customers. In particular, Osmosys’ MHP™-based, end-to-end solutions are being deployed by INDI in Belgium and Multimedia in Poland, and EGG™, its latest innovative solution bringing 3D graphics to STBs is attracting massive market interest. In the US, Vidiom continues to lead the OCAP™ development wave with major players such as CableLabs and prominent MSOs, and progressively evolving from a pure services to a product company. Finally Simple, the Group’s start-up for new content and technology, keeps developing its customer base and business at a satisfactory pace.

The Group has been making significant progress regarding STB manufacturing and operations. In the third quarter of 2007, the Group has taken appropriate actions to consolidate its production in Thailand, where substantially all the Group products are now manufactured. One-off costs directly related to this move will have to be incurred in the remainder of 2007, and overall, supply chain has been sub-optimal. The Group believes this strategic decision will simplify its supply chain and materially improve its execution capabilities moving into 2008.

The Group has also decided to improve the organization of its STB affiliate by the creation of dedicated business units, so to better match market and customers dynamics. This new organization, which is aimed at increasing the effectiveness of the existing engineering, marketing, sales and management teams, will be fully deployed in January 2008.

Finally, following the amendment of certain terms of its strategic partnership with ITI Neovision as announced on August 9, 2007, the Group’s June 30, 2007 amounts receivable from this customer have been reduced by US$ 30 million. Standard payment terms are now being applied on product deliveries to this customer.

“We continue our efforts to align our overall efficiency with our demand” said Andrew N. Rybicki, Chairman and CEO. “We put a significant effort into consolidating substantially all our production in Thailand. The main steps have been successfully completed, and the next two months will be key. With the changes that we are conducting, including the new organization of our STB business, we will be in a good position to start 2008 on a solid basis.”