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SITRONICS Overview. SITRONICS Introduction. Largest technology company in CIS and Eastern Europe Based in Zelenograd (the Soviet “Silicon Valley”), inherited soviet scientific and R&D potential in the field of electronics
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SITRONICS Introduction • Largest technology company in CIS and Eastern Europe • Based in Zelenograd (the Soviet “Silicon Valley”), inherited soviet scientific and R&D potential in the field of electronics • Headquartered in Moscow, with operations throughout EMEA, CEE, CIS & Russia • Provider of intellectual and technologysolutions in the field of: • Telecommunication Solutions; • IT Solutions; • Microelectronic Solutions; • Consumer Electronics; • Electronics Manufacturing Services; • Majority owned by SISTEMA (77% shares), representing 13% of its aggregated revenues for 2005 and being the fastest-growing business segment in its portfolio. • Exceptional growth over the past few years. • More than 4500 R&D staff, developers and programmers. • Exports to 60 countries (Europe, MEA, North America, South East Asia) SITRONICS Revenue and OIBDA (mln. USD) Telecommunication Solutions 26% 2005 Revs IT Solutions 49% 2005 Revs Consumer Electronics 13% 2005 Revs EMS 6% 2005 Revs Microelectronic Solutions 6% 2005 Revs SITRONICS is the largest high tech company in Central and Eastern Europe
Group strategic goals and strategy SITRONICS Strategy • Strategic goal: To become one of the leading players in the field of High-Tech. • Combination of low costs attributable to developing markets with access to competences of the developed markets • Transition of knowledge and competences from developed markets to developing ones • Leadership in fast growing markets RF/CIS/CEE/Middle East and Africa • Accumulation of R&D and scientific capacity of the Soviet heritage • Access to customer bases and technologies through M&A IT Solutions Telecommunication Solutions • INTRACOM and STROM Telecom integration in one company • Strategic alliances in the field of NGN development and marketing (Cisco, Motorola) • Focus on intellectual services and solutions (billing, CRM, NGN) • Post IPO M&A to gain access to new markets and technologies (Radio Access, OSS/BSS) • Prioritized consulting development • Priority to develop software outsourcing potential • Strengthen international strategic relationships (IBM, Oracle, Intel, etc.) • M&A in CIS (Ukraine, Byelorussia) in order to access new markets and resources • M&A in Europe/USA to access new customers Microelectronic Solutions EMS Consumer Electronics • Developing 0.13-0.18 micron technology -- targeting domestic orders in biometric IDs, defence, smart cards, RFID. • Focus on complete value-added chain coverage (chip production, packaging, smart cards) • Design centre set-up (fabless) • Relocation of obsolete production to VZPP. • Benefit from government support • Exploit advantageous geographic locations: • Prague (production of technologically advanced goods) • Zelenograd (heart of Russia) • Romania (cost effective mass-market production) • JV with foreign companies entering Russian market. • Focus on mobile digital and video products. • Establish own R&D (design, software and technical solutions development) SITRONICS product portfolio allows it to tap into successive waves of growth
SITRONICS Telecommunication Solutions – Overview Highlights Strategy • Strategic Goal: • To become one of leading players in the production of telecommunication HW and SW in the EMEA region. • Key existing capabilities: • Existing, proven technology base, well coordinated R&D team and product portfolio. • Complex and large scale implementation experience (MTS, MGTS) Key elements of growth: • Strategic alliances in the area of development and market-launch of joint solutions (CISCO, MOTOROLA, SIEMENS) • Increasing market demand for NGN and Billing/CRM solutions • High performing Sales network using synergies with acquired Intracom Telecom • M&A delivering extended sales channels, customer base and complementary product lines • Key Products / : • Solutions • Key Markets: • History: • Strengths: • Opportunities: • Fixed / Mobile network solutions • OSS/BSS, Billing and CRM • NGN • Wireline /wireless access & transmission equipment • Content Delivery Network • Terminal devices • System integration & Outsourcing • Russia, Ukraine, CIS, CEE, Middle East, Africa, USA. • Strom Telecom (acquired in 2002). Founded in 1993 in the Czech Republic on the basis of Tesla. • Intracom Telecom (acquired in 2006). Founded in 1977 in Greece • Experience working for clients with significant subscriber base • Advanced R&D Department and own IP products • Sound & well developed product line • Strategic partnerships with Motorola, Cisco and Ericsson • Leverage extensive experience with SISTEMA/OTE/Vodafone Group customers and convert into major external customer acquisition/references • Develop strong partnership with industry leaders • Combine product capability, low cost profile and sound financial position to grow external market-share Key competitive advantage lies in its strong experience in implementation of telecom equipment and billing systems for companies with significant subscriber base
SITRONICS IT Solutions - Overview Highlights Strategy • Rebalancing the business portfolio • Prioritized consulting development • Priority to develop software outsourcing potential • Maintain current market share in distribution business • Regional expansion • Expansion of presence – the only pan-CIS SI company • Target acquisition of branded system integrators to gain access to new markets • Expand off-shore software programming to serve European and US clients • Research & Development • Expand resource facilities in CIS’ largest science centres - Kiev, Dubna and Novosibirsk • Tapping synergies with Sistema • Secure corporate IT contracts in the telecom, insurance and other industries • Brief overview: • Main business • activities: • Key Marketsand • Market Trends: • One of the largest IT Solutions companies in CIS/CEE • Established 1990 as Kvazar-Micro • Sitronics owns 51% of Kvazar-Micro • Systems integration, Software development and outsourcing, VAS, BPO • PC Distribution • Russia, Ukraine, CIS, Western Europe • Russian and Ukrainian IT markets are among fastest growing IT markets in the world • CIS/CEE IT markets are expected to grow faster than IT markets of Western Europe and America (15-25 % vs. 5% annually for the next 4-5 years) • Russia and Ukraine have the 3rd and 5th largest number of certified IT professionals in the world Revenue Breakdown (2005) Growth Rates of Eastern Europe IT Markets Distribution 78% of sales System Integration 22% of sales SITRONICS 51% owned subsidiary Kvazar-Micro is one of the biggest IT companies in Russia, CIS and Eastern Europe
SITRONICS Microelectronic Solutions - Overview Highlights Strategy • Enhance position as CIS/CEE largest semiconductor manufacturer Key strategic actions: • Launch new technology (0.18µ - 013µ), targeting sim-cards market and government orders in the field of biometric ID+s and defence contractors • Sustainable growth of the smart cards business in the field of SIM cards, financial, transportation and RFID cards • Diversification into high margin, complementary businesses (smart cards, flexible microchips packaging, power electronics production ) • Further development of the design centre, Introduction of a full range of ASIC-vendor services • Develop scientific/technological partnership with Russia’s top companies (RAO UES, Russian Railways, etc.) • Retain current market share in power management device through enhancing cost efficiency • Brief overview: • Main business • activities: Projects with industry leaders: • Designs, manufactures and distributes semiconductor products and components • Incorporates smart cards production facilities • The business has some of the most advanced mass-production facilities in the CIS (0.8µ - 2µ) • In-house R&D department • Anticipated transition to new technology (0.18µ - 0.13µ, on 8’’ wafers) and continued product diversification • Production of microchips on wafers (secondary power supply sources in accordance with the bipolar technology) • Production of packaged microchips • Production of flexible microchip modules (Planned for 2006) • Production of microchips for e-passports (Planned for 2007) • Production of smart cards (the full spectrum) and related solutions • 0.13-0.18 μtechnology transfer project with STM • Microchip packaging project with Infineon • JV in the field of Smart cards production with G&D Sales Breakdown Regional By Segment SITRONICS is the leading Russian company in the microelectronics segment providing a base for establishing the newest technologies for manufacturing of microelectronic components
SITRONICS Consumer Electronics and EMS - Overview Highlights Strategy • Brief overview: • Main products: • Key markets: • Become leading provider of EMS services in CIS (market share ≥15-20%) by offering a wide variety of complex services from logistics to manufacturing. • Focus on mobile digital and video products. • Establish own R&D (design, software and technical solutions development) • Exploit advantageous geographic locations: • Prague (production of technologically advanced goods) • Zelenograd (heart of Russia) • Romania (cost effective mass-market production) • JV with foreign companies entering Russian market. • Manufacturing and Research Expertise • Capitalize on technology innovations by setting up engineering R&D centers in partnership with leading international companies. • Mid-market brand sells consumer electronics under the SITRONICS brand with main focus on mobile devices and Video products • The largest and most technologically advanced electronics manufacturing sites located in Russia, Czech Republic, Greece and Romania. • Offers facilities for end-to-end OEM production. • State-of-the-art assembly sites • Clean room class 100,000 • Qualified R&D staff • Extensive quality control and ERP system • World renowned strategic partners and clients • SITRONICS CE main product lines include: • TV/Video products (LCD TVs, DVD and HTH, Set-top-boxes) • Portable/Mobile (Mobile Phones, Portable Digital Electronics, • Russia & Ukraine Growth Opportunities • Secure government orders • Further development of own R&D capabilities and design center • Product line diversificationby increase in value-added Hi-Tech products • Strategic partnerships with the leading brands to attain full loading of assembling facilities • To become manufacturing and logistics hub for our clients on their way to Europe Modern manufacturing capacity, extensive R&D expertise and strong brand awareness make SITRONICS one of the top Consumer Electronics companies in Russia